© 5 Ey i ; i Gcover Page: Aint rojet insured by aa aane Issuedate sve W/2012-13 Published by 83a) ane dtr Tern: Santosh Blan, Chard Arr, eral aki Design Tunhoee The frand Development Crmpary Baa Alona Newstrack squarely news ‘magazine which provides current iniormaton ‘nthelilinsrarce and general nsirace ‘cviesof 85) dllznzand 30 henge. Fer futher nfration on theatcles apnenig inthis maggie paw contact ‘tech bln @naplians chondniarrs@bsaalioncain Feran everson the revletee vit eur \websteswrwhajyaian om View efornticn expesedheten ae iusuate andinfsratveinaatureand not binding on thecompamyrsuance she subjeetmaterofsaletaton, Edtoral address: Baal liana GE. laze, Aron Read erawadh, Pune -41 1066 FerleternalCieultion Only 02 Contents 03. Customer service over price- The way forward? Tapan Singhel, MD & CEO Bajaj Alianz General Insurance 04 Moving beyond products V Philip, MD & CEO Bajaj Alianz Life Insurance: Corporate Insurance Anticles 05. Redefining the growth story ‘Anamia Roy Rashtrawar Bajaj Alianz General Insurance 06 Oneyearthat changed the Reinsurance Landscape Rajeev Singh Bajaj Alianz General insurance 09 Boardroom risks put the spotlight on Directors & Officers Liability Insurance ‘Anup Dhingra, Marsh india 14 RiskManagement art of preventing a risk even before it happens 18 Provisioning for healthy organizations 20. Safely Parked Heid Pothe-Markmann 24 Ider betterreturns Nimish Airon Bajaj Aliarz Life Insurance, 26 "ULIP's with certain percentage of equity exposure can fetch betterreturns” Bajirao Desai, Crampton Greaves Ltd. 33. Offering value propositions to theemployee atin Gandhi, Rakot Nagrk Sahakari Bank 35 Group Term Life Insurance Debapriya Ray, Reliance industiies Lid Interviews 08 “Akey evaluation factor for service providers i their globel footprints & ability to service usin all regions” S$ Regunathon, BAST-South Asia 12 “In general insurance cover should take primacy over premium” Pradeep Kumar Sinha, Larsen & Turbo 17 “Corporateintermediation should be treated as consulting” At Singh Dhingra, Prudent insurance Brokers 27 "Wedo not see any long term challenges to growth” Arvind Laddha, Vantage Insurance Brokersand Risk Advisois PVL Lt. 28 "Returnsgenerated by Bajaj Allianz fall inthe top quartile” Gish Kumar Dua, Maruti Suzuki Ld. 29 “Yeildscan be optimizedifthe funds are ‘managed by asset management companies’ KCSamal NALCO 30 “Quality of serviceisan important determinant for us” NR Srinivasan, Mc Leo Russel Inda Ltd, 31 "Outsourcing helps in better management of fund” Shei Ravi, Karnataka Soaps and Detergents id 32 “Investing in both unit linked and traditional funds has diversified the risk on investments” ND Mishra, Rajasthan Rajya \Vidyut Prasaran Nigam Lid, 34 "Outsourcing offunds helps to reap benefits oflarge scale investment” Kran Kumar, Karnataka Bank Ltd Claimstrack 37 Aquartery review of claims handled iene Outlook 28 Market Qutlook and Fund Periormance Eee cera 40 Highlights ofthe financial results for FY2012-13 41 Snapshots of events and updates that happened at Bajaj AlianaCustomer Service over Price — The way forward? Deer Friends, ‘When purchasinga praductor service, never used to ask~ "What are we paying for?",mostlybecause thisquestion never crossed mymind, 1 sed to bargain for maximum dscounts and opted for the cheapest price for various commodities. However astime progressed, | realized thatthe purchaseswere notas expected. iascompromisingon either the qualty ofthe product or the service since | was more focused on saving Cost This aspect doesn't matter much if we are deeling with ‘commodities On theother hand fam purchasingan insurance cover hich in essence is “safety” or “protection” of my assets oF health 1 ‘need to considerservices beyond anything else Howeves, if llook at the current trends of purchasing insurance and, specifically corporate business, this principle is not followed. This is evident rom the rsein the disputesrelatedtoservices especially when it comes to claim settiement. The combined rato, ie, ratio of net aims, net commissions, operating expenses and net earned ‘premium ofthe General Insurance ndustrystands at around 117% and, sill dissatisfaction amongst claimants is common, What worties me themosts,thatthe discontent sstillrising at asteady ace. It made me curious to checkwhatthe reason fortherisecould be? On probing further, observed two things onethe pricing wasnot right ithe premium charged for the rist wasnt adequate. Intoday'sfree pricing regime, discounts and under pricingare common in the market and price sgiven priaity aver service and coverage. This tend wil not bbe sustaineble in long runasit will result in severe service deficiencies. Secondly the financial strength of mos of the companies seems to be weak.lamworriedthat he discontentmentamongstihe customer will ‘isefurtherif his trend continues. Asit's despite paying large ammount cof claims, an insurance company does not enjoy a good standing when, itcomestoclsim settlementasanindusty. Bajaj Allanz has always focused on a business model which is sustainable inthe long run andalsocustomercentric, At Bajaj Allianz we follow prudent underwriting norms; the undervniters ensure that the pricing is commensurate with the risks that are accepted. As a Newsradk sue au result we have alvays maintained our profitability and healthy combined ratio over the years. Our company has fcbust reinsurance programs and is supported by worldwide leaders in the reinsurance ‘domain, Today, we can say that our company hes one of the strongest balance sheet in the industry, This is the single most important factor for any customer since he is transfering Fis ris to an entity that wl protect themin caseof an unceranty and wil ensure thatthe cms are paidontime. The folowing pages willereel moreonthese aspect | wouldasoliketo stress that Baa Alianzis tnownin the industry forits exceptional customer service especialy in terms of claim settlement. ‘We were the first nsurer to maintain transparency in our claim settement performance which is shared transparenty with you through Newstrack on a quarterly bass, Our damm settlement rato for the last financial year was 958% and the grievance ratio was 0.16% ‘whichis amongst the best inthe industry. The resutofvaiousmarket and customer surveys does show that there is bath a strong fith and the«rstthat wehaveearned ove the years We shall continue with tie philosophy of writing the rk prudently pricing it right and providing theest customer sewiceas we havedonein the past. My bestwishesto all our customers ard internediaries for a mutually successtul new financialyear. Tapansinahel ND&CEO Bajej Allianz General nsurance 03Foreword Moving beyond products DearFriends, Life insurance is an important protection instrument that 8 now anailableto individuals aswell as groups. The composition of thegroup rmayvary necmsof age gender butshould haveacommon purpose of coming tagether other than jus the purpose of purchasing insurance I sucha group conforms to the underwriting guidelines the insurer, theywould beeligibiefoalieinsurance cover. Today group insurance has moved beyond providing only insurance products. Insurers now offer their actuatial stils and investment expertise tosey fora group of employeesto predict their labliesand this service is known as fund management services. Some of the lieiities are gratuity, superannuation, leave encashment, post retirement medical scheme, EDL etc, and these have to be managed efficiently so that these benefit are paid on time without the capital getting wiped out Such anassociationis gaining populartyasthese are also the core functions ofa life insurance company. This service has providedinsurers asmal winelow 'o engagewiththe corporate clients Moreover through their fund management expertise, insurers are better placed tomanagethesespecilizedneeds. Baja Alianzinvestmentteam has end sexpertisein managing funds, for several of its clients and all funds have performed well and beaten several comparable indices ike CNX, Nifty, CRISIL etc Inthe folowing pages you will hear from some of our customers about their expectationsand performance of ourservices. Inaéditin to managing the funds the team ako provides feedback to clentsonthe performance, sectors investedand is rationale etc. as per their requirement. The results are visible in their stock selection approach and fund performance of funds Ike Croup Equity Fund, Group Bluechip Fund besides the shortand long term debtplans. Over, the years we have builta formidable base of clients and managed to matchtheirexpectationlovel. The lie insurance space contracted 68% til FY 12-13. However Bajaj Alianz.recordeda grows of about 108 tl theend of FYI2-13 thereby ‘maintaining our positon asthe leader among the non-bank promoted life insurers. This can beatributed to some ofthe things thatwe iit rightinthese cifficlttimes, The currentyear would be tough forthe industry as al the nor-linked products have to conform tonew guidelines. Hence all such products, are in the process of designing to conform to the new guidelines. As insurers willbe filing new products itwil impact the approvaltimedine Asaresukwe expect twillcause some turbulence in theshor term for certain segments and markets. We may also have a temporary gap n 04 Nia) product availabilty. Thus NB topline is expected to contrac this year, and twlltakea few more quarters for telaunch of approved products, train the ales forceard therresultantchangeinoperatioral rent. We hopethat this entireprocesswould besmooth. However ourservice levels to our existing customers will remain unaifected by such changes since our processes are deployed on arobist platform and are timetested vehitip MD&CEO Bajaj Alianalife Insuranceoe Nensradeisue WV Redefining the growth story Despite the positive trend in the Insurance Industry the commercial lines of business showed a marginal growth. The reason for the same hasbeen attributed to thin pricing. However the industry is now moving towards correction. ‘Anamika Roy Rashtrawar Chief Marketing Officer, Bajaj Allianz General Insurance In year 2012-2013 India’s growth story tock a beating, While the developed world faced a recession India too was affected. At homme many large infrastructure projects were abandoned due to various policies ofthe government, Suddenly it seemed thatthe growth story wouldnowneed toberedefined. Inspite ofthe dul economic growth the generalinsurance sector has showna 1% growth, Primarily the growth is from the personal inesof businessvie- health and motor. The cmmerciallinesofbusinesshave shown a very marginal increase in terms of premium in the property ‘and construction segment dueto verythin pricing, There showever a rowing consciousness amongst reinsurers to appropriately price the insurance covers which has in turn seen a feeble correction in the pricing of large sks. The small and medium sector propery pricing for FLEXA covers has reached a level where only an upward revision is possible naw! ina situation when prices have reached rock bottom we are focused on working with our clients on identifying risk exposures and_ implementing loss control measures. Qur team of loss control engineers is ona constant move in inspecting risks and working with clients Liability nes of business are growing whichrefiect the growing rskot ltigatorsin amaturingeconomy.Thedemand forlabiltyinsurancets primarily from companies who have international operations and companies which are listed. Companies wil continue to purchase lability coversinthe near future. TheEmployee Benefit portfolio ofany organization today getsthe CFOs worried due to ising costs on a year on year basis.Itis an exceptional benefit provided by employerslestitismisused which inturnresuitsin increase of premium at renewals. Often | am questioned by our ‘rominentclient that premium keeps rising in group health policies wy dor't we more tose funding, Our answer is simple that as an Des insurer we can manage the rsts better cue to pooling of risks and our hospital network management. Besides working with clents periodically on the framework and loss analysis, our hospital ‘management team continuously works with our network hospitals on packagedeals for our customers, Our group mediclaim policies today are notjustan insurance policy, we offer weliness programs and ahost ‘of value added services which engages employees and their familesat various levels. Once you areinsured with Bajaj Allane you cen besure that your employees are satisfied and due to our continuous ‘engacementwith hospitals your renewalis reasonably priced, ‘We could not have build our book of business without the continuous support of our clients and partners. We hope the indian growth story continues andso does ourbusiness. 05One year that changed the Reinsurance Landscape Aseries of natural catastrophes made the year 2011 as one of the costliest in terms of economic and insurancelosses. This article talks about how these series of events changed the reinsurance landscape. Rajeev Singh, Heed Reinsurance, Bajaj Allianz General Insurance Theyear201 1 has een labeled by many global insurersas the year of natural disasters. tis also billed as the costlest year for natural asters Toknow ity, ead on- + Intvarch201 an earthquake measuring.0 an therichtersceleand the subsequent Teunami at the padfic coast of Tohoku, Japan resulted in thousands ofhuman casualties widespread damageand led to ene ofthe worstrucleaccidentofthis generation, TheWorld Bank’s estimated economic cost was US$235 billon. The insured lesses amounted to USS35 bilion, making it the costiest natural dsaster in history. The loss range included property, casualty, rmarine,auto,feaswellasbusinessinterruption. + 012011, adevasatng toodhit Thailand. affecing over 136 milion people andcausingdamagesworth US$ 45.4bilion, Mostofthiswas to the manufacturing industries and the 7 major industrial estate. Due to flooding meny manufacturer’s had to shut down their ‘operations fox months, with the failure of key suppliers multiple irsured's around the globe were affected, The insurance industy lesses amounted to over USS 15 Bilion. The insurance cemmpanies int only faced drectcleims of damage to property and equipment but also a majority of claims were due to production shut downs & supply chain disuptions ie, the contingent business interruption chins, 06 + The estimated economic losses ofthe Christchurch, New Zealand Feb201 tearthquake wereUSS 30bilion andthe insuredlosseswere $513bilion putting astirdin cost behind lapantsunarr andtloods in Thailand. This catastrophe saw huge amount of losses pertaining to property asa result of widespread liquefaction. Liquefaction isa phenomenon whereby sol substentaly losses strengthin response to earthquake shaking, causing it to behave lke 2 liquid. Many property owners are not only faced with having to repair or rebuild their homes, butalso with restoring thelanditself These slew of natural disasters in the year 2017 i, Tsunami Earthquakes and Floeds in the Asia-Pacific region had repercussions. The markets reacted since both the insurers as well as the reinsurers suffered substantial losses of over US$ 105 killon and this changed the reinsurancelandscape considerably Impacton reinsurance rates These disasters not only caused damages localy but also had a worldwide chain reaction because of the gobal and economic imerdependence. Reinsurance premium rose significantly, as the reinsurers insisted on premiums that commensurate with risk, Italso resulted in many re-insurers limiting their exposure to nat cat risks They used various measures ke ether not coveringthe perl or crafting tighter sub limits for natural catastrophes and reduced event limits cnNewarack sue V ‘strong reinsurance program of ary insurer wil signify the ability ofthe insurer to ensure that they have adequate protection andintheevent ofa big loss theirsolvency will not be wiped out. The reinsurers also extend their indepth technicalexpertiseinmajorlines of businessthrough their esearch, analysisand global experience. prorata treats Asmall numberof reinsurers even chose to exitthese markets. However, as a result of the catastrophes the demand for covers including the act of god petits increased substantally but the insurers were capped nottoextend the sad cover since the reinsurers sd not support this. In India in particular, previously the reinsurers allowed covering indian interests abroad but after the catastrophes ‘mostof thereinsurersdiscontinued the saidcover, In future, itis expected that the frequency and severty of weather ‘elated events wil further increese due to globalization and the fast «growth of the economies. The high values and concentrations could lead to increase in the economic and insurance losses in case of any catastrophe, Hence, apart from higher rates the reinsurers are abo emphasizing on stringent risk analysis and robust data colection. Todeythe reinsure's emphasize on collecting better information about the sk exposure belore underwriting the risk and are analyzing their «iskexposuresfrequenty.Forecamplethe Thailandandiapan calamity saw huge losses due to supply chain disruptions, As a result the insurer's/reinsurer’s today are seeking information on the clients supply chain management before undertaking the risk They request the clients to share data o! their suppliers not only to gauge the supply chain isk they are exposed too,but also advice them onstrengthening theirsupplychains Importance offinancial strength and expertise ofthereinsurer Forany dientthe basic requirementof aking aninsurancecoveristhat they should getthe claim within the stipulated tine period in case of anyunforeseentlosses. case theclaimissubstantilitpurely depends ‘onthe reinsurers cn how fast they can support the insurencecompany with thehelp of quickinterim payments. The insurance compary relies (on the reinsurers because they don’t have the requisite financial strengthorliqudity to setlelargecleims. ‘The reinsurance contract is an agreement between the insurance ‘company andthe einsurer fr the benefit and suppor ofthe insurance company. Hence itis deemed thatthe clients interest wll never be jeopardized. The financial strength or rating ofthe reinsurersand their pasttrackrecordsin claim payments are critical factors that determine the financial credbity and stength. Reinsurers with a gone rating havea faster claim paying abilty since they have a stronger balance sheet, better liquiity and are globally dverstied. The losses in a pariculer region could be a small percentage to their combined ratio \whencompared to anynormalsmaler reinsurer.Astrongreinsurance ‘rogram of any insurer wil sgnily the abilty ofthe insure to ensure that they have adequate protection and inthe event of a big oss their solvency wll not be wiped out. Apart from claims, the reinsurers also extend their in depth technical expertise in major lines of business Peer) through theirresearch, analysis and global experience. They areableto fer these services because they have the global experience and itis ‘most kely that they have covereda siilarrskelsewhere. Taaitionally it has been the philosophy of Allianz to always have reinsurer's with strong financial trength/balance seetsandrating. AS a result, all Alian2 entities get the suppor from the central security ‘vetting team (ST) which on # monthly basis advises on the financial strength and changes in the rating of the reinsurers, Similarly Bajaj Allianz’s reinsurance program s ledand supportediby the best security available in the market which includes the worldwide leaders in this domain. ur strong reinsurance programs have assisted us in settling major lossesin propery, avaton, marine and others othe satisfaction of the insured, In the year 2005 the city of Mumbai was floeded due to torrential rains. kwasone of he major catastrophesol the decade. Even, though Bajaj Allanz was ¢ relatively newentrant inthe market we had considerable exposurein the event. Balajlianz settled large number of dais, the quantum being 4 to 5 times ofits financial strength, primarily due to the support of the reinsurers. Such support of the reinsuresin adhering toour commitment andassurance to theinsured ‘was witnessed in theeventof various other theSitkim and J&Keerthquatesas wellasthe cyconesineastern coast. strophiceverts suchas Thereis aways a drectco-eation between the insuredsinterest and the insurers financial strength which finaly rests upon the financial, sirength of the reinsurer. Hence it becomes important forthe clientto have ital information aboutthe reinsurers and the terms. The insured should be extra cautious ofthe insurer's reinsurance program where theexoosureare ang tlie. incaseoflong duration projectsortabilty sks wells high ylue sum insured. Als, the dient hes to be very axtivealong with theinsurancecompanysothathey havecontinutyin the coverage and structure ofthe program. Ths saveryvita aspect for businesscantinity panning 07Beene “A key evaluation factor for service providers is their global footprints & ability to service us in all regions.” ‘SRegunathan, Vice President-Finance & Corporate Processes, BASFin South Asia spoke toNewstrackon, their considerations while choosing an insurer, and the company’s association with Bajaj Allianz General insurance. Interview Bajaj Allianz provides insurance solutions to BASF; could you pleaseshare yourexperienceinthis relationship? We are associated with Bajaj Alianz since 2006 and our experience in areas such as new risk covers, project insurance, claim recovery and services rendered have been excellent. We value the partnership and are looking forward to continual support for improved services to our employees. Whatwereyour considerations while choosing aninsurer? BASF being a global company, a key evaluation factor for service providers/vendorsweassociatewithistheir global loctpxintandability to.ervce usin all regions we operate in. Itersures efficiencies and a wellcoordinatedetfor. Being a global player, what is the difference in purchasing insurance globally andinindia? Insurance policies ans procedutesdifer from region to region. In nda, the insurance industry s regulated by IRDA, which hasdefined policies for insurance covers and settlement period. In the current framework, the local insurance companies face certain limitations, which harper their ability oservce global clients. They expect uniform standards for allregions they operate in. This s where, global layers like Bajaj Allanz gainduetotheirinternational footprint. Health insurance for employees is @ major employee welfare measure. How do you see this crucial welfare scheme change in the immediate future? Going forward, insurance wellre schames are becoming more temployee-riendly by removing the operatonal cificulty that employees face today Wit theincreasd fcus on healt and medical 08 = oe is fey s fo} oO emical alan ela Sey [hospitalization claims from employees, companies explore the possiblity of extending this welfare beneiit to cover employee parents and further cover their post-retirement tenure within in singe insurance policy, How hasBajajAllianz.added valuetothe relationship? We cherish the service and guidance offered by Baja Allianz. The company hasbeenaddingvalue withtsinputson rskcover for various businesses, projects, preventive measures and has abo been waking along in ensuring timaly settlement of clas; bet health insurance or ‘marine insurance, Whatare your expectations from aninsurer? Ofer world class service both to our businesses as wall as employees and ensuretimelysettementofclaims.Newsrade isue WV Boardroom risks puts the spotlight on Directors & Officers Liability Insurance One of the most discussed lines of insurance today is the D&O cover due to the recent surge in claims that have been highlighted in the public domain. Anup Dhingra, Practice Leader, Financial & Professional Risks (FINPRO) for Marsh India shares with us why this cover has become a regular feature of the risk management practices of many companies today, and the critical factors an organisation should considerbefore purchasing thiscover. In the 1972 cult classic “The Godfather’, the young don Michael Corleone telishis brother: Its not personal. I'sstrictlybusiness,"Butas the trlogy went on to show, personal and business worlds are not so easly split with Michael paying a temible personal price for re- establsting his business dominance. Intherealwotld company directorsand officersare exposed to greater personal lability than ever before. Directors & Officers duties and ‘personal isbilty ae covered by both Indian common lawand statute, For directors and the board, businesscan getvery personal indeed, with, the price of leading abusiness potentially very costy. Thankfully, some eventualities can be protected againstin advance, Under commonly decors and offices canbe heldvicariousy lable for acts ofthe company. The Bhopal gas leak of 1984 involved Union. Carbide india Limited (UCI) itresulted in the deaths of thousands of people and even mare permanent and partial disabilities. Seven of the company's directors and officers were convicted by Indian courts for ‘causing death by negligence. More recently, thecourts prosecuted the CEO of a large technology firm based in Bangalore after a cab diver contracted by the compary rapedand murdereda fernale employee, ability can also arise under statute, including: the Companies Act 1956, the Securities Exchenge Board of India 1992, the Foreign Exchange Management Act 1996, the Factories Act 1948, and various environmental and consumer protection laws. Each of these laws cartesits own definition of who isthe “deemed person in default" and this frequently includes the directors. Besides directors’ libities covered bythe Companies Act, liabilities may also arse from breach of fiduciary dutes, negligence, and ulra vires acts, all of which are subjective and fact based. Within the new Companies Bil, even independent directors could be held liable for acts of omission or commission that occurred with his/her knowledge, attributable through board process and with his/her consent or connivance or whereshe/hehad natacteddilgenty. EOD) 09Furthermore, as anincreasing numberof indian firmsgointernationa, through both inbound and outbound investments, companies and direciors aie increasingly exposed 0 risks driven by changes in legislation, egulaton and heightened shareholder activism in their target foreign investment markets. There are aso statutes with extra- territorial jurisdiction such as the US Foreign Corruption Practices Act andthe UKBriberyAct. India is not particulely litigious compared to many other nations. However, we have recently seen an increase in daims brought largely by three major stakeholder groups: shareholders, employees, and regulators Shareholders lodge the most clams, usually arising out of rmergers,takeoversand financiel disclosures, Employeeslodge thenext biggest volume of claims for isues such as wrongful termination, sexual harassment and discrimination, The remaining belance of chimsoriginatesfrom regulators. ‘Anumier of prominentcases have played outin Inia’ publicdomain, including: * Alaige Indian web portal claimed in 2 fing with the stock market Fegulator that @ non-executive director graduated from Stanford Univesity, thereby falsely representing that it had assembled an ‘outstanding leadership team, Sharehoklerssuccessfullysuedon this basis. *+ The Satyam case was India’s “Enron”. In 2009, the then chairman resigned after announcing that he had fasiied earnings and ‘overstated Satyam’sassetsby US$ billion, Theannouncementled to a stock colapse, an investigation by India’s Central Bureau of Investigation, the prosecution of three ofits directors ncluding the ‘uity chairman, and securities class actions by US shareholders. As recognisedbythe business media, the Satyam scam riggeredone of the biggest directors and officers (O&O) claims in Inca — USS75 milion in insured poiicy imi, However, the final settlements with shareholders aloneamounted to around US$125milion. * Asuit was filed in a US court against an officer and the company aleging wrongiul termination and harassment by one of the employees. The daim was finaly settled out of court and the damages were tote tune of US$5 milion. The inital defense costs and expenses. although estimated to be substantial, are notin the pubicdomain * A soft drinks majr settled witha former beauty queen for 1.45, crore over an alleged sexual harassment case against a senior executive. The allegations came soon after thecompany terrrinated a celebrity engagement contract with her, which she alleged was duetoher ejecting the serual overtures of thissenior offal, * Recently, the chairman and managing cirector ofeach of the top three telecom service providers were summoned by 3 special Central Bureau of Investigation (CB)) court on behalf of their ‘companies. The CBl didn’t name the three executives in its charoe sheet but the court summoned them, toquote the judge, because: “They were/are ‘alter ego’ of their respective companies. In this, situation the acts ofthe companies eretobe attributed andimputed tothem.” *+ The capital market regulator, the Securities and Exchange Board of India (SEB), fined a high-profile Indian businessman and ower ofa spawring conglomerate, and other directors, 50 crore (a record high} for dropping its proceedings through the consent procedure, ‘an out-of-courtike settlement, without admission of guilt by the accused. Two group firms of the conglomerate collectively pai, through their directors, tosetle the charges. Thetwo companies, its rectors and the chairman ofthe group were also debarred from accessing secondary marketswitha time bar Asthese cases suggest, actions against directors and officess are being brought for a notably wide range of wrongful acts. In Marsh's ‘experience over the past 18 months, we have noticed an increase in activity nclaims, witha mejoityinvolvingallegations of insider trading, self-dealing misstatementol accounts misteadingcustomers, bribery, failure to honour employment contracts, discrimination and harassment, false statements to government authorities, and more. ‘There have aso been aims for tax violations and breach of duty to rminority shareholders, and claims arising from mergers and acquistions. ‘D0 liatilityinsurance-Apotentialsolution DRO liability policies are one ofthe most popular liability productsand have been available in Inia for 15 years. Almost every insurer in the local market currently offers this soliton in its suite of products Unfortunately, companies mostly consider price the most important, it not the only, factor when deciding to purchase D0 lability insurance: ‘AUSS! milton limit policy can be obtained for lessthan the cost of an entry-level motorbike. the supplyside,many insurersoffera popular international poicy without aporeciatin the D&O policy’ relation to Indian law. The following legal efferences ae critical to consider when assessing DR liability policy wording * Section 201 of the Indian Companies Act states that @ company cannot indemnity director tillsuchtimethat s/he is foundinnacent by acourt of law. Even advancement of defence costs prior to there beinga findingin the director's avour couldbeinviclation of theAct. * Indianreguatorsalone have filed hundreds of criminal complaintsin outs for violation of securities law by persons as well as entities, which may lead to imprisonment or fines. Settlements indude consent orders or settlement between the reguletor and violators of securities lw. The SBI has passed more than 1,000 consent orders since Apri 2007 (when this system was introduced), and penalties havebeen as high as NRS0O milion.+ Non-admitted purchase snot permissible + “Vinginoflimits witha global master policy may save some cost; however, a the time of a claim this may create complications with the local tax, insurance, and/or exchange control regulatory authorities. It is important to seek expert advice when purchasing DRO liabilty insurance and managing a 80 claim, Asthe primary purpose of D&O fabilty insurance is to protect directors and officers from personal lability, itis important to “stress-est” the policy wording on coverage and exclusion clauses, and provisions such as severabilty and non- rescind abiity, especialy for scenarios where wrongdoing against the companyisaboalleged When assessing 0&0 insurance, its important for buyers to consider thefolowingchecttist: 1. Choose an insurer with commensurate geographic representation astheinsured. 2._Ensurelimits are adequate. Use objective criteriaifquestionedby stakeholders following an uninsured/underinsured claim. 3. Geprecedenceofcoveragetoindividualditectorsend officers versuscoverforcorporate entities 4. Localise thepolicy form toensure propertieatment of ndia- specifcissues suchastax-related demands, corporate indemnification (Section 201), consentorders,compoundable offences, allocationofdefense costs, nov-ivalidation of cover and severabiliy ofinnocentinsured'setc. 5. Determine fora multinational programme thelocalinsuredlimits forrespectve counties reversed cifference-in-conditons OIC) cover allecationof premium, and requiredon-the-ground service. Moreover, itis important that you satisfy yourself fully beyond the ‘writen policy coverageon the insurers intent, experience, capabilities and track record on processing claimsand ther settlement, Makesure yougetanofferyoucanitrefuse. The authors Practice Leader, Financial & Professional Risks (FINPRO) for Marsh Views expressed are personal Newsrak sue IV Bajaj Allianz launches Protect Platinum II The Bajaj Alianz Protect Platinum Il D&O Lablty insurance provides comprehensive cover for Directors and Officers of companies ranging from smal, family-owned companies to global conglomerates. The policy provides solutions tailored to commercial enterprises, financial institutions, non-profit cexganzetion, pubic ste, government linked or pivatelyheld compares. Ths plan isa par wth the covers oer by insurers intheinternational marketspecifcally the APACregion. The coverage feoturesin the policy are tailored tothe local legal emvironmentand according tothe insureds needs. Thisincludes ‘advancement of defense costs, legal representation cost for inquires coverage, company insurance for secures 35 well employment. practces lebity coverage and international insurance programs. Apart from the basic coverages, certain salen eaturesjextensionsare: *+ Broader definition ofinsured: The pole includes Domestic Partners Tustees Shadow & De-FactoDrectors. * Protected excess limit for Non-Executive Directors: The policy also provides addtional mit over and above the agaregate policy limit t0 the Non-Brecutve Directors or indoperdentdrectors. * Legal representation costs: The insurer, under this polis. is lable to pay to or on behalf of the insured al legal representation costs upto ful policy limit resulting from the inquiries. * New offering of securities: This 080 policy covers new offerings of securities Ike debt, secures, bonds, private placemenrsetc isaninbuiltcoves. * Counseling services extension: A very unique festue offered in the policy is the counseling services extension tnsurer wil pay to or en behalf of ech insured, incase he is undergoing any counseling session andis seeking the services of a pyychitrst, psychologist or a licensed counselor to address stress resling from the claim or an inquiry against. him, + Pecuniary Penalties:Fo: the lens having label eperations especialy in UK and United States are suscentble to the anti comuption laws fllowedin those counties. Under this policy we can envdrse the Pecuniary Penalties cover to broaden the scope osuitthelr requirement, “The recent launched Protect letinum cover can be termedas the latest form of D&O policy the insurance market. offers broad coverage!’ for the Directors and Officers of Indian coxpoxates to respond to the increased exposure to regulatory ‘actonsandltgatons, 11Beene “In general insurance cover should take primacy over premium” Larsen & Turbo (L&T) isa technology-driven company that infuses engineering withimagination. They offera wide range of advanced solutions, services and products. Pradeep Kumar Sinha, Senior Deputy General Manager, L&T spoke to Newstrack and provided us with his insights on project insurance, risk managementand the companies association with Bajaj Allianz General Insurance. Interview Bajaj Allianz provides insurance solutions to L&T, could you pleaseshare yourexperienceinthis relationship? We have a long standing relationship with Bajaj liane which dates back to their inception alter iberalization of the Indian insurance sector, They have led our insurance programs related to important portfofos lite projects, motor, health and liability With arather overall conservative underwriting approach, they have refrained from over- promising but by the same token have not disappointed us with their services bothin regard to underwriting aswellasclaims. Wehaveavery cordial relationship built on trust of lst several years which we expect to strengthen further with the passage of time. We believe that ‘members ofthe Bajaj Alianz team are movingin that direction, Todeal witha corporate clent of cur type, an insurer possibly needs tohavea strategic perspective and should be able to cater to varied ‘equirementsincludinganeffectiveadhisoryrole. ‘What wereyourconsiderationswhile choosing aninsures?. With a highly diverse and complex portfolio, we have to be selective about the insurers. While looking for compettive premium avod cheap prerrium bycompromisingon security or service of theinsurers Duetothe consistenteffective performanceBajajAlianzhas continued tobe one of our preferred insurers who as stated, also ead several of urinsurance programs. 12 L&Tis.abig engincering giant anda major player in infrastructure projects, what are your views in project. insurance with respect to value addition that ean be done by the insurer? ‘TheIndian insurance mart inits competivonisrmore premium rate- centric rather then cover-centric. However, speaking in general, insurance cover should take primacy over premium. There should be risk-based coverage and coverage-based rating. This intermediate processof coverege oltentendstoget overlooked, Integerd to on-shore projects principal-drven insurance clauses are required to be adhered to With greater interaction with the outside ‘word, new sare being forgedwith overseas parnersusuallyfrom the developed countries who expect insurance coves a available in their ‘countres or internationally to be available in India. nthe process new insurance requirements and clauses are coming up in the projects However, usually the insures having been brought up in the era of tarf, have 2 tendency to quoterituatstcaly from thecomfort zone of theerstwhile tari. The knowledgeandnimbleness of he underwriting spirit that should be there to respond to the new requirements is ‘generally lacking, Thus, there isa general tendency not to tailor the policy or provide the requisite add on covers which are otherwise avaiable in the international market. n the Indian insurance market there i also an artificial and rather fatuous restriction that for the ECVlessthan® 2500 crores he insurers cannot providetailored- poiciesor ‘new wordings other than what the now defunct tarifenvisaged. The market has tooutgrow such archaic provsions and keep pace with the international insurancemarket. Also adapt the business mode! of large ents. who are increasingly getting global both in services and products. Very limited insurance professionatzation of the buying ‘community hasnot made them suficertly demanding n this regard ‘AS a result in both buying and seling quite often the focus gets ‘confined to competitiveness ofthe prerrium rating, The insurers, GK, ‘and. IRDA should look into this matter and remove the fauit-ines among themso that they are able to provide aremedy to theaforessid stuationcollectvely, ‘What is the importance of risk management in the current scenario where price is the sole parameter that dictates a selection? This isan interesting question. One fels thatthings have come along ‘way from theearler days ofthe repeated need of riskinspection by the ‘engineers to the present de-tarf times when they lock more like endangered species. The general feeling to-day is that the risk- inspectionis not required because ofthe sharp fallin premium for the fire policies and also in certain sense for the projects. Thus, the ‘quotations given by the insurers are keeping in view the competitiveness in order to gamer business without going inta the ‘exact merits of therisksconcerned, ‘The tariff of earlier days was a voluminous, complex and rather abstruse document symbotcally weighing more than a kilogram in contrast tothe last tariff which was of the pocket-book size (and is being ironically stil being used for reference by the local insurance market) with stringent provisions for providing various discounts. ‘Thus it was very cifficult fora generaist to apply the tarif even for a rmedium-seplant. Hence, ear the iskengneerhadan inescapable ‘and mote pressing compulsion to arrive atthe correct premium rate though rskinspection was a0. part of his duty. He would give his recommendations for rskimprovementin hisrepert which unlessvery ‘compelling andsaving substantia premium, wasnotfolowed often by anycorporatectent. ‘Subsequently the fire tariff became simple symbolized by its pocket- book size. Risks were broadly categorized based on average rating within the concerned plant. Hence, rating a rskin comparison to the ‘earlier days could be done without thehelpofanrisk engineer. Further with de-taiffing, the earlier stringent noins gotdilutedand one could afford to commit mistakes. Thus, the mportance of rst encineer got undermined. Today many risks related to fire or projects are Lnderwitten based onthe brandimage ofa cientin generalinregard to physical and moral hazards. However, with emphesis on market share.the sarrehavenct becomeenough of adifferentiator.Asaresult the insures find therrselves in the unenviable position of robbing Newsrade isu Coe ny Peter (good clients) to pay Paul (claim-prone clients). Therefore, it ‘appearsthet thereative impoxtanceofrskengineer wentdownrotso much due tothe competitiveness and fal of premium ratesas dueto the simplification of Fire tariff and dilution in the stringent normsof adherencetothesame which was expected inthe taif-regime, However, a prudent insured in his ovn interest is not averse to rsk- inspection even today. It helps the insurer to understand his PML (probable maximum less i he has doubt about the capacity, It aiso helpsin understanding the subject matter of insurance which s useful 2 the time ofa claim n case of projects risk inspection during jis ife- ‘cle and especally on the eve of testing has been useful for us. Risk- inspection also smoother processing of a claim as an insurer having Inspected the risk s nat dogged by unnecessary doubts Further my experience in L&T suggests that a good company folows risk ‘managements an integral partof its phfosophy andbusiness without looking atthesame from theargle of premium. ‘Any other issues that you would lie to share with the insurers aboutthemarketandtheneedofthe hour? Insurance provides protective umbrella to the various business activites of & corperae client. Large corporates are getting more integrated with the outside wordin regard to preductsandservices. resulting in increase in variety end complexity of insurance requirementswhichalsoneedtobe of international standards. Keeping thesameinview, theinsurerswillhavetoupgrade their knowedge and het their appetite for new risks. Regi cayswillnct work. Collectively weallwillhaveto outgrow thatmindset. rented approach of the taciff 13Crees Today, riskisall around us andwhile it is something that cannot be completely eliminated, measures can be taken to reduce it. To know more about the significance of risk management, and howitis done at Bajaj Allianz General Insurance, readon Vikram Pal Singh, a risk engineer of Baiaj Alianz was on a routine risk inspection at one of the automobile manufacturer's in NOIDA, for \which a proposal had been received atthe local office in Delhi. Armed with a checklist of around 35-40 parameters, he proceeded to inspect the unitin order prepare aris inspection report. After agrueing 20, hour survey, spread over 2 deys he finally submitted «36 page report. This included a one page summary of the rise inspection along with various recommendations neaily subdivided into critical and general recommendations. Some ofthe citical recommendations mentioned byhimwere installation of flameproof electrical fitings, and automatic fire arresters at critical locations. In his assessment, if these recommendations are complied with, it can save a potential loss of several croresfor the clint, The reasons could varyfromibeing a small spark that could ignite an entrepint shop area, and alsorrinimize the chances of frespreading toother areas Such an inspection report is just one amongst the nearly 4500 inspeciionsina yer, oF 500 inspections a month conducted by a team 14 (025 rskengineersat Baja Alianzinorder to assess the risk profile ofa lent. Ariskmanagementreportis of crucial significance asithelpsthe ‘underwriting team to price the rk as per the prudent underwriting guidelines “As a result of the efficient risk management practices at Bajaj Alianz. risk managersprovide alotothelpinthe prudentselecticn of risks besides helping the client to strengthen their fire sefery practices Some of ourriskengineersare Allianz certified rsk engineers, Giving them aglobal exposure of safety practices. can confidently say thattheyare the pillars cf theurderwriting team in our company’ says V.P-Sharma, Head- Property Underwriting and iskManagement, Bajaj AlianzGeneral Insurance “In adction to the common practice of datawarehousing, its aiso the years of experience anda strong set of skills that every one of our risk ‘manacer’s possesses. Every rskrmanager at Bajaj Alianzis expected 10 follow the practice of conducting a fair inspection end mate a true report based on the level of rist. Additionaly, they are also tained to provide or suggest adequate preventive measures to ourients/customers, since all the risk managers at the organization are provided withsuch scrupulous raining’ adds Sharma, ‘Although therisk managementexercse onitsowndoesnot guarantee that accidents will never take place in future, it definitely reduces the probabilty of the occurrence af a loss to a great extent, At the same time, if at alla loss occurs; risk management practices adopted by the ent can help in minimizing theloss by way of immediate cortralsin, place and by checking spread ofriskto thesurrounding propery. the risk but er a loss has occurred. It isa continuous process which has A risk inspection is not only conducted betore acceptin: helped cients not only o understand their risks, but also how to adopt methods of minimizing them. ‘Risk comes unannounced and the benefits of risk management are usually realized by implementing a risk management program that suppoits the organizations’ overall «gods. Threuch these inspections ve could also provide some ofthe best practices dlients location This sharing of best practices is anautcome of the risk management exercise” said Abhay Guar RskConsultant-BajajAlianz General insurance. sed ina similar orreleventindusty to be folowed in our Some of the recommendations suggested based on the basis of risk inspections by ourteamand mplemented ty theclientsare: + Mediu velocity water spray system on heavy duty transformers \wasrecommended to be installed in aclent’slocation belonging {oa suger industry. Ths to suppres fire in a transformer unit, withoutellewingitto gooutof contro ‘+ Light beamsmoke detector was recommended tobe installed ina large godown and warehouse of a pherma cient spread over 10,000 Sq ft area where conventional smoke detectors would piove lutein case ofa freforeary detection oii. ‘+ Flameproof electrical fittings in a paint shop of an automobile rmanulacturer andin solvent storage dodowns where flammable ‘vapoursarepresentinateatile dyemanufacturing pant. ‘= Hydrocarbon leak detectors to be installed in a petrochemical plantas i illhelpin early detecton of leakage which may cause fire fromsmal sparks, ‘© Installation of jockey pumps to keep fire hydrant system in pressurized mode so as to ensure continuous maintenance of pressureinthewaterlineincaseofafir. ‘+ _Instllationof standby diesel driven frehydrant pumpforattemate supply of waterin en area prone to frequent power cuts. Tismay ensure that in case ofa fire and a power cut the fire hydrant is aralabletofightthe fre. 15erry Background ‘Ourclient, Garden silk Millis one of the largest textile companies inthe country, and has alargespreado! manufacturing units in various locations Given the nature ofthe industry, such factories/manufacturing unis are more suscepibleto risks and accidents. Since such nits usually have alot of raw material which can be highly combustible, t ould contribute towards the occurrence ofa fir or other rrishaps Hence safe storage methods and proper rskmanagement arecrucal.Inths case fire accident occurredat theyam storagein the drawtextursing aea ofthe factory. Despite having firefighting measures like ire hydrants itcaused considerable camiage tothe building, plant & machinery as wellas stock, Claims management by BajajAlionz The total estimated loss was ® 8 Crs. krespective of the claim size, Bejaj Alia claim settlement team ensured that an on account paymentof® 4Cswes paid outwithin 10-15 days ater the occurrence of ire, This paid outamount helped our clientwithalargepart of repairs and restoration ofthe manuifacturing unit. Owing to the prompt services provided, the team at Baia Alianz also received an appreciation etter acknowledgingthe customer service exhibited toughous thesextlement procedure, a GARDEN SILK MILLS LIMITED. Date Ang 3,20 Te Vie Posen. {ij Allane Cone sac CL. sim Dear Me Vaso, ‘Re: Ourlos du to Fire on04s8.21, ‘We and you very mc or raging On Accu Papen R40 ce Prey ‘Ts iecoantya commendsiermponc in ura eras goed eagle Phase convey ait fees to your dans tam at HO. speci MePaveenChisd and Mr. Swenvsan who hive sven ae vale sugetios or movement We ae cenit Biotin tomate gh standards ofcaomer svi ‘Trunking yor ence, Youmiray, (pons ee See det MeePeent Va Gardess nro sone tM ea 8 SNP Fa DS Hee TS anata ran be oe 16 RiskManagementby Bajaj Allianz ‘The risk engineers at Bajaj Allantz conducted a tisk inspection and analyzed the probable causes ofthe fire. They also made the following recormendationsto preventoccurrenceof ay futurerrishap orlower theextentofanyprobable futurewreckageareprovided. + Foretimely detection of fir, the installation of ire alarms ecrossthe stretch ofthe plant was recommended, as the absence ofthe same. ‘created adelay in conrollingthefreintime.ttwesalso suggested to, ‘use beam detectors in the sick storage area as they too can help, withan early detection offre. + Itisalso crvcal that al stock, .e, rawand unfinished materialiskept away from any electric board. Furtherore, all loose/un-insulated. wiringshould belookedatwith immediateattention, ‘+ Itwas also recommended that the communicating areas between, the material storage and process area should be separated wth a sturdy enough wallfireproof door which will help restrict the chances ofthe fie spreading and at theseme time have the capacity, towithstand thesame fortleast up to? hours.incase of any delay. + Lastly it has also been suggested that every employee atthe unit. shouldbe trained to handle such astuation efficiently, inaddtion to, ensuringthe presence of specalytrinedtire-ightingstaf Result Incorporating these recommendations would reduce the damage considerably in the premises in case of fre m future. This was alo ‘appreciatedby theNewsrade isue WV “Corporate intermediation should be treated as consulting” Prudent Insurance Brokers is one of the leading broking firms in India with placement capabilities acrossall ines ofcommercialinsurance. Ajit Singh Dhingra, Managing Director, Prudent Insurance talks aboutthe changes witnessed by the insurance industry over the years and his viewson the relationship with BajajAllianz, Interview \Whatare the visible changes that the general insuranceindustry haswitnessed overthe past 10years? Theindusty haschanged dramatically We would spenda greatdealof time earier expiaining tothe customer why he would benefit by using an appropriate intermediary or why they should consider a private sector insurance compary. Due to the tariff market, we developed a great deal of technical competency ard built up 2 large servicing infrastructure to be able to differentiate ourselves which held us in good steadwhen themarketde-tarifed. Today, thecustomerisspoiled for choice, There are 25 plus general nsurers with more coming into themarket. Thereare several creditleintermediarieswithwhom they canwork,i'sa completely aiferentmartet compared to 10yearsago. Ihaveseensomary pofessionalsand companies grow overthelast 10 years anditfeets wonderful tobe part ofthis great indusiryand asuper groupof professionals who leadit What according to you are the key factors taken into account by anyclient while deciding upon aninsurer? I beleve that mostclientdecsions are subjective, Since insuranceisan intangible service at the time of purchase, the decision taken is really boasedon perception. The key factosI beleve that influence centsare: daim paying abilty and wilingness of insurers as evidenced from references, cher clents that they have in the same sector, the recommerdation of the intermediary, and also (veryimportartly) the personal quelives of the person who represents the insurance company. What are your expectations from Bajaj Allianz, and has the company beenabletoextend thedesired support? Boje liane is considered by us tobe a sold and reputable company. They have high quality underwriting standards and are fair when paying claims. Our experience is that through the process of de- tarilfing, Bajaj Allianz had moved away from the corporate sector and focused more on retail and erenow making aseriousattempt to grow in thissector. We befeve that consistency over a period o time in the approach to the corporate sector is essential to have traction in the rmatket. Ce acy How do you think distribution will change in the general insuranceindustry inthenext S years? We believe that the next 5 years will be the story of Broking and Bancassurance. Today, bancessuranceis tyingtouse the muscle power of the lending institution 10 muscleits way nto accounts. Webelieve that corporate intermediation should not be treated as DISTRIBUTION butshouldbetreatedasCONSULTING. Bancassurance does notseekto provide advice to customers and we believe that over the next few years, there willbe a great deal of complants from customers to the IRDA when they il face problemsin claim settlement as they have not been approprately advised. Our view s that bancassurance wil evoWe intoa distribution setup which efficiently reaches outtoretal andSME cents while brokers wil be primarily operating inthe corporate space. ‘With the proposedregulatory change permittingsub-broking, wehope that this does not de-generate into “consolidation’, which would be negativefortheindustry. However, fsub-brokingis appropriately used for expansion of the distribution reach of the industry, then itis welcome. 17Special Feature Provisioning for healthy organizations The rising cost of health careand related services makes the employer sponsored health care program one of the most vital employee benefits offered. Over the years, this line of insurance has seen a dramatic change in terms of pricing and the benefits being provided. Thisarticle will take youthrough the health and wellnessprograms, offered by Bajaj Allianz Generallnsurancetoits patrons, ec ‘With the ising costof healthcare these days, itis becomingincreasinaly important for every person to have a good health insurance cover. ‘While its not rare tosee the growing prominence of retaifindvidual health covers today; what hasalvayshad its fir share of recognition on the health front has been Group Health Insurance. Today, a group health cover is one of the mos significant benefits being offered by employers to employeesandther families. Also, theemployersarewell aware ofthe pricesand termsbeing offeredby the health insurers. The real difference, however, es in the benefits and the seamless after- sales services offered by the insurance provider. With the extreme competivon present nthemarkettoday,tisofutmostimportancethat customers are offered a complete paclage of excellent services at viable prices, “The Beja} Aline health insurance program apert from previding financial aid from unforeseen medical expenses engages employees and ther families by providing them with a bouquet of value added services in the form of discounts on heath cae faites, conducting various wellness programs along with frst rate claims services. Thisis because of the company’s robust heath infrastructure and hospital rnetworkmanagemert. 18 paca. 4 Pricing & costcontrol Accoréing to the Tower Watson Global Medical Tiends Survey, India witnessed 22% growth in heathcare costs in 2006. This tend rate dipped to 12%in 2009 and again rose to 13%in 2012. This fluctuating trend isacontibutor towards the pricing of group heelth insurance. In the recent yeas, the premiums for group health insurance have been influenced by factorssuchas- rising cost of heathcare,improvernentin rmedical technology, advancement in diagnostic and treatment procedures, and other traditional factors lie health status, morbidity tables demographics andage profile, “At Bajaj Aliana, analytics is the definite determinant that help us design the iramework as well a decide the pricing of a group healthpolicy. The key aspects that are considered are customer demographics, prevous year claims ratio, nature of parental and dependent population, and thegeographical spread of demographyor the claiming population’, says Dr. Renuka Kanvinde, Assistant Vice President, Health Insurance, 89j2jAllanz Generallnsurance. Thehealth administration team at aja Allanz makes sure to provide its clients with elfectve solutions for cost control. The sclutions ‘provided by the team are at both policy level as well as atthe claims level. These solutions are provided keeping inline with the idea of reducing the monetaryburdenon the employerat thetimeotrenewal. Usually, the recommendations provided at policy level are related to methodssuchas + Experienceanalysis-Ithelpsthe dientto understand the key divers ‘of theclaims costsfor their health porttoto and corrective measures areshared depending on theanalyss results + Co-payment and subvlimits for room rents and select minor ailments, + Preventive careand promotinghealthyliving “Onaclaimstevel,costscan be reduced by meansofarating sericesat ‘our preferred netviork hospita so a5 to avail full benefits of discounts (on OPO/IPD/investigations, etc. All these solutions stress on the conservation ofthe sum insured for the employer. Adoption of such ‘methods willbring abouta paradign shift inthe healthcare services, thus helping to improve the claims management and increase profitably for thecustomer.” Dr Renukaexplains. Offering morethancostbenefits Statistics shows that about 10% cf ll group health population makes aims,so,tisonlyfairthatthe remaning90%also getsome beneftsof the premium paid. At Bojaj Alianz, the Health Administration team (HAT) came up with the concent of offering value added services ‘almost 2years ago. "Valieadded services offered by Bajaj Alone cover an exhaustive Ist of discounts and other innovative solutons. The discounts on products and services vary from 10-40% These discounts ‘on the OPD consultations, lab investigations, OPD cone procedures, tc, helps the customer to save on his “Out of Pocket” expenditures,” says Dr, Abhijeet Gosh, Senior Manager, Health Insurance, Bajaj Allianz Ceneral insurance. Same of the health and wellness initiatives that are being supported by the health teem at Bajaj Allianz towards ensuring heathier workforce ae- Healthtalksand sessions onIfestyle disorders and emphasizing on healthy tving, health checkups and camps, employee assistance programs, health risk assessments and disease management programs. “The most recent value added service for our clients has been the HealthCare poral. This portal is a one-stop-shop helps the users to Newsradk sue proactively manage their health by priortizing and integrating welinessinto their daly life. This porta ao offers benelits such as ve ‘chats with doctersand specialsts24*7, consukation andopinions from them,and other benefits ikecustomizeddiet chars, articles and write- Upson heathrelatedissues et.” adds Dr. Abhijeet. aims ‘A Bajaj liane, the HAT team tres to eliminate the opportunity of any customer grievance following the situation ofhositalization, Notonly does the company offer prompt servicesin ters of cashless fecities, butalso ensures thatallreimbursement settlements are done with the sare speed. What was previously atuineround time of 3 hours for the cashless facilty has now reduced to 40 minutes due to advanced Processes and systems. At the sarne time, there has also been a reduction inthe TAT for reimbursernent facilities. Additionally, the cashless facility is now offered at over 3000 neswork hospitals across the country thus enabling customers romallovertoavailofthe same seniceswithoutany inconvenience. Infrastructure and Value Chain Partners Health Administration Team (HAT) since its inception in 2004, the department has evolved great, and today has a robust infrastructure consisting of in-house doctors sophisticated technology and systerns, ‘a call center with round the clock assistance for all health related ‘queries, apidcleims servicing, and an internal fraud control unit which looks into any suspicious caims and carries out the requisite investigations In adcition to all these in-house benefits, HAT also has a network of more than 3,000 hospitals and 1,000 diagnostic centers. Aviling treatment at any ofthese empaneled hosptals/centersis beneficial for the clients as these hospitals provide a good packagerrate fr the mein procedure and excelent discounts on OPO and IPD treatments. Bajaj Alignz has recently tied-up with Association of Medical Consultants (ANC). With this te-up, the number of empaneled centers would 90 vwellbeyond 3,500. 19Bread r Heidi Potke-Markmanntee” shades, broken up bya biightsplas6F nd there Glesthing new cars from the Volkswagen Gioup (VW): ‘9 (tas fat 25 the eye can see. They are pared in neat ows r Heeatina the impresson that ruler was used to produces fledging me lurkingontheplent’s vehiclestoragecompound. Free-spiri {arelessl opened doors andhard hitinghail an domored asmatdentin these cars Redizng this, manufacture’s obtain trensport insu ‘over the tip that iakes the vehice from the factory and timated othe dealer or customer no matter wheth nce polis to storage ste fe jour ney dane by commercial vehicle, tain orcar-canying ship. When fl damage does occur, the insurance company covers the cost of the ‘vehicle orthereparsneededtorestreitots original condition maine sks recovered by AGCS as ieadinsurer Fotian Karsch, Team Director of Transport Insurance ard Risk Management at Vollswagen Versicherungsvermitiung (VWWV), handles several thousand claims each year from damage caused by pebbles to capsized carcannying ships. Overal, the number of vehicles are to Cae transported =| spor-related daims is falling, Weheve made isk ranacementof Faq cémpaunds atop priority,” Kers-Heais, VW fsa hired engineer, Torben Stadtaus, who serves as afecrn cal point of ‘confactBoth insideandoutsidethacompany. A ‘uidetines fll more than 80 ing with belt buctles hist have to.be covered up anc extending fo the exact ‘number ofjcentimeters separating the parked nother, "Wetest new prevent este preventionimessure at onesie cconnahantanaain ch Join inspettions conducted by VW and ACCS aré conducted 10 does his spending on life insurance and therelore"wedonotsee anylongtermchallenges togromth.” How has the broking industry evolved over the yearsin terms of Iifeinsurance business? The downturn ofthe past few years has lead the brokersto scale down theirlfeinsurancebusiness.asthey wait forthe markettostabilizepost the signficent changes in product guidelines and customer prelerences. However, weseearevivalofinterest amongstthe broking fraternity. The antcioared changes in regulations in respect of su- broking and rural distribution is likely to see increased contribution from brokersinthelife insurance business. Whatvalue adds dothe brokers provide toth With the plethora of insurance products being avaiable inthe market, thete is a clear need for an advisor who can help the individual in identiying their needs and aid them in choosing products best suited ‘othem. The ole ofthe broker therefore tact atiustadisor this dientsnatldtion tothistrokers should aso support theclentin going {through the process of actually purchasing the policy and managing daimsifthereare any. clients? Whatis he significanceofserviceinthisprice sensitiveindustry? Wiile itis true that price has become a primary decision making parameter individuals who investsignficant amauntof maneyortate a cover with a higher sum insured typically look beyond price. The abilty and the tack record of the insurer as well asthe broker in ron Terr iy providing requiredlevels of service domake adilference in such cases. ‘Wealso believe that service wil getits due share of importance when insurers and brokers develop a longer track record to showcase their service levelsto their potential customersovertime, Whataspects differentiate Bajaj Allianz fromitspeers? Bajaj Allianz stands out for its product innovation and fund ‘management amongst ts peer groups. This has helped itestabish its place among the leadersin theindustry and winthe trust of millonsof ‘customers, What are your views on the ini brokers? bajaj Aliane hashelped the brckersbyengaging closely wththem and helping them work their vay through these turbulent times. The training intiatives,reaciness to work closely withthe brokers to reach theircustomers providingsupportin termsof products are fewamong the various initiatives taken that has helped Bajaj Alianz become a preferredpartner, “The ability and the trackrecord of the insurer as well as the broker in providing required levels ofservice do makeadifference.” 27“Returns generated by Bajaj Allianz fall in the top quartile” Maruti Suzuki Ltd is one of the leading manufacturers of passenger vehicles in India, They have been associated with Bajaj Allianz Life Insurance since 2011. Newstrack spoke to Girish Kumar Dua, General Manager, Finance who provided us with insights on various aspects related to employee benefitschemes, Cee nT] What are the various terminal benefit schemes that you are running for your employees? Terminalbenefitschemesthet wre are running for our employees are Gratuity and Superannuation. Other statutory requirements like Provident Fund, Employee Deposit Linked Insurance (EDU) are also provided. Besides this, to support bereaved family in case of an unfortunate death of an employee, the company has the group term insurance scheme for payment on compassionate grounds (funded by company) and death relief fund which includes voluntary contribution from employees aswel ‘Are you self managing Employee's Group Gratuity/Superannuation funds or have outsourced it? Why did you consider ‘outsourcing thesefunds? Gratuityand superennuationfundshave been outsourced for ease of administration and are 28 managed by profesional fund managers, which cen help us generate beter returrs. hie higher returnsin case of gratuity would helpreduce the future service labiliy,n case ‘of superannuation. employees would benelit by having a higher retirement compus and better annuity past retirement. We at Maruti have proactively outsourced these funds duringthe calendar year 2009 8 2010 andare quite contentwith our decision todoso. ‘What are some of the critical parameters which you think the organization should consider while selecting the insurance company? ‘The critical parameters that one should keep in mind while electing the insurance partner should be its financial credentias, assets under management (AUM), profitabilt solvency margin, netavorth, risk adjusted returns generated under various fund optons being provided ty theinsurer ‘Which fund have you invested in and why didyouchosetodoso? We have invested in unt inked, debt and tradtional funds of insures in ordertohavea well divesifed portfolio across debt & equity ‘and to eam superior retums over a period of time, ‘Do youthinkinvesting inunitlinkedfunds could be more beneficial for an ‘organization as compared to traditional fund? ‘As compared to traditional funds, secure funds with 80:20 (Debt:Equity) combinations ‘on unit linked platform have generatedbetter returns over the period of last 2 years. While tradtional fund gives @ stable | conservative return every year, a unit linked fund with ust ‘an equity component ranging between 10: 15% can give an upside of 200-300 bass, points atalltimes over traditional fund.in case funitlinked funds onecan mitigate the rises and increase retuins by switching funds & ‘maintaining optimal contribution between debt &equiry. Please trace the journey of your association with Bajaj Allianz & how do ‘youmeasure/ rate the performanceofthe fund by BajajAllianz? (Our association with Bojaj Allianz which started in the year 2011 has been extremely fruitful and we are happy with the fund performance as well as thesenvces offered by the organization. We regularly monitor and compare the fund performance of various insurance players we are essocated with and feel happy to see that returns generated by Bojaj Alone fall in top quartile, We have invested in their secure fund and traditional plan and look forward to their consistent performance intimestocome. aj Allianz lived up to your expectations in terms of timely claim settlement and meeting your service requirements on time? Till date we have not withdrewn any fund from Bajaj Alianz for the fact that superior returns ae being generated in the portfolio Bajaj Aliana’s services have been prompt on portfolio updates and fund statements from timetotime,Newsrade isu “Yeilds can be optimized if the funds are managed by asset management companies” National Aluminum Company Ltd. (NALCO) the largest integrated aluminum complex has outsourced it’s terminal benefit funds to Bajaj Allianz Life Insurance, KCSamal, Executive Director, Finance, NALCO gave his, thoughts on various terminal benefitschemes, benefits ofinvesting in ULIP'sand theirassociation with Bajaj Allianz. Interview React What are the various terminal benefit schemes that any ‘employer should have for his employees and what are the other innovative benefits you would ike to see further being provided byinsurancecompanies? Besides the contributory Provident Fund and Gratuity scheme, which are backed by statutory provisions, the National Pension Scheme introduced by the Government is expected to be an excellent past retirement benefit scheme. The enlisted insurance companies should ‘gear up to provide desited support services to make the scheme successful The post retirerient medical benefit is another scheme ‘many companies arelooking into. infact. NALCO has beena picneerin introducing such a scheme. Insurance companies can bring in their expertsein providing such group benefitscheme. ‘Theemployee benefitfund of the company hasbeen outsourced. ‘What should be the advice to self managed funds or what they should consider whiledecidingtooutsource these funds? ‘The gratuity fund of our company has been out sourced, We believe that the yield can be optimized if such funds are managed by asset ‘management companies having adequate experience andespertise. ‘Whatare some of the critical parameters which theorganization should consider whileselecting the insurance company? When it comes to selecting an insurance company, the yield on investment no doubt is an important factor. However, the service uaity, the brand image, expertise, net wort, fizancial soundness, global exposure etc, ate some of the factors an orgarization should considerwhile outsourcing, Do you thinkinvesting in unit linked funds could be beneficial for and organization and what are the factors one should look atin investing inthe same? Unit liked funds have an element of risk du to exposure to certain degree of uncertainties. However, in a long term perspective such investments have delivered the desired yield. None the less, considering the primary objective of security and being an employee riented scheme, there should be a judicious balance between investmentsin unitlinked schemes and traditional schemes ‘Has Bajaj Allianz added value to the organization and lived upto the expectations in terms of meeting service requirements and deliveringthe desiredreturns? (Our assocition with Bajaj Allianz has added value in terms of service quality and efficient management of our fund. Bajej Allianz as a Company has an excelent brand image and has the support of a lobaty reputed insurance company. The company is result oriented andthe service quality hasbeen satisfactory. Bajaj Allianz is one of the firms selected by the Government of Indiato provide annuities for NPS. Willitleadtoa newassociation with the organization? urcompanyhas adopted the NPS scheme quiteearl primarlytoofier sustainable benefitin the formofpension toits employees. Theretired employees will have lot of expectations from the enlisted service ‘Providers, We expectbeing a prominent player in the insurance sector, the enlistment of Bajaj Alianz by the Government under the scheme villensure satistactoryservicesthe annuity holders “Bajaj Allianz as a company has an excellent brand image and has the support of a globally reputed insurance company. The company is result oriented and theservicequality has been satisfactory.” 29Pleasetrace the journey of McLeod Russel'sassociation with Bajaj, Allianz? (Our association with Bajaj Allanz commencediin the year 2007, when there was 2 need to widen the spectrum of insurance companies to ‘manage the employee benefit fund. Bajaj Alianz was one of themajor contenders and was chosen as the preferred partner for the contract due to their credentials and track record, We are heppy that our confidence in Bajaj Aliana’ ability was not belied, The returns have been betterthantheaverageand theirservice hasbeen impeccable. What are some of the parameters that an organization should consider while selecting the nsurancecompany. One looks at the general parameters of net worth, profitably, total assetsunder management (AUM),the client profleetc.whiledeciding (on an insurance compary. An orgaization’s ability in combating Lnforeseenadverse circumstances, which reflects nits tackrecord,s, aksoimportant. The quality of service isalso animportant determinant for us in McLead Russel. The support and financial muscle of the promoter industial group canals playapartin deciding an insurance company. The support that the promoter croup can provide at a difcuttimecanbeacomforting facor. ‘Do you think an organization should outsource their employee benefit fundsratherthan selfmanaging and why. Employee benefit fund management, generally speaking hasnot been 4a core function of senior management. Over the years, he managing lof employee benefit fund has become more complicated requiring adequate focus and expertise. Company managements, with ther 30 “Quality of service is an important determinant for us.” McLeod Russel the world's largest tea producer has been associated with Bajaj Allianz Life Insurance for the last five years. N.R. Srinivasan, Vice President (F&A), McLeod Russel India Ltd. expressed his views on benefits of outsourcing the employee benefit funds. Interview focus being elsewhere, neither had the time ner the expertise to satisfactorily managethe increasing corpus of employeebenefitfunds. Therefore, t became imperative te outsource the manegement of funds to third parties who would have the required expertise and focus to elfectivey menage the funds. This decision appears to have been provedcorrect ‘Whichfund have you investedin and why did you chosetodoso?, We have opted for Stable Fund wherein the exposure to Equity is0-35% andexposure in various Debtinstrumentis between 65%- 1008 Having ‘a moderate risk appetite, we preferred this fund against other fund options. Returns, generally, have been better than the average retum, {generated in this category. The NAV of Stable Fund has appreciated from 11.5800 (ason 15th Feb2007) t0.21.5744(as on 26thFeb 2013), Do you think investing in unit linked funds could be more beneficial foran organizationas comparedtotraditional fund? Itdepends upon the risk reward appetite of the Company. tis alsoa question oftiming in a protonged subdued market a taditonalfundis generallypreferred. However, rom alongterm perspective, it mayalso bean opportunity to moveinto NAV based funcs. “Company managements, neither had the time nor the expertise to satisfactorily manage the increasing Corpus of employee benefit funds. Therefore, it became imperative to outsource funds to third parties who have the required expertise and focus to effectively manage the funds.”Bt ‘Are you managing employees’ group gratuity/superannuation funds or have outsourced it? Why did you consider to outsource thesefunds and since when they havebeen outsourced? ‘The employees group aratuity has been outsourced since Tst April 2009, The major reason for outsourcing ofthese funds isto earn better interest rates, reduce lability through the interest earned as well as avai 35%taxexemptionunder corporate tanlans, ‘What was the approach that the orga ‘time of outsourcingthese funds? ‘Weinvited different insurersand comparisons were madeon different parameters ite pastperformance. company sttilty, solvency margins, with (ROA, company profitability, etc. It is important that the ‘organization folows the right appreach in order to obtain better benefits. ization followed at the Whatcriterionwas adapted forchoosinganinsurancepartner? |nsurence partner playsakeyrclein the unctioningotan organization. Hence its very important 10 consider various paremetersfriteria's before choosing an insurance partner They inclide the company stably, transparency, past performance, fund options and their performance, selvency margins with RDA and most importantly the company probity. Do you think investing in unit linked funds could be more ‘beneficial foran organization as comparedtotracitionalfund? In the present scenario, unitlinked funds heve given good returnsand ‘ourexperience hasbeen much better as compared totraditional funds. Under traditional funds there sno vansparency, and thats where we ate able to gauge the performance month ever month. Forthe grawth ‘of the organization, we strongly recommend unic linked funds is-2-vs, traditional furdsovera period ofmore than 3 years. Newsrade isu “Outsourcing helps in better management of funds” says Shri. Ravi, DGM Finance, Karnataka Soaps & Detergents Ltd (KSDL). In his interaction with Newstrack he also provides some interesting insightson managing employee benefit funds. Interview Please racethe journey of your association with BajajAlianzand how would you rtetheir fund performance? ‘Gur joumey with Bajaj Alianz hes been pleasant over the years. We started ourassociationin theyear 2008 witha portfalioof3 croresand atone point of time Bajaj Aianz was managing a pertilio of around 12 crores Today they are managing araund® 7 crotessince we have taken Scroresiowards payouts. Bajaj Allanzhas been agreat asset for ‘ourorganization. The yield generated by the company hasreduced our labiity towards employee gratuity. The performance and service doliveryisfoundtobe very good and satisfactory. Weare satisfied with the rewuis of more than 12% for the past 3 years on an average and havebeen able to maintain astableandheathy relationship. ‘Whatwill you recommend organizations who are managing the fundsthemselves? Outsourcing the funds will always help in better management of ‘employee benefit funds. Our experience with Bajaj Alianz has been ‘excellent over the period of years; bet on returns as well as service delivery. Has Bajaj Allianz lived up to your expectationsin terms oftimely aim settlement and meeting you service requirements on time? Bajo Alianz hasnot only lived up to our expactationsin terms oftimely aim settlement; they have abo helped in meeting the sevice requirements from time to time, Regular folow-ups from the team, Uvansparencyon funds and returs, friendly behavior of the executives and consistency on returrs were some ofthe major factors that led us towards choosing Bajaj lianz as ourpiefertedinsurance partner 31“Investing in both unit linked & traditional funds has diversified the risk on investments” Rajasthan Rajya Vidyut Prasaran Nigam Limited (RVPNL) an undertaking of Government of India provides pathway for power within whole of Rajasthan. Newstrack spoke to N D Mishra, Dy. Controller of Accounts (P&F), RVPNL on their decision to outsource benefit funds and why Bajaj Allianz Life Insurance is their preferred service provider, Interview What are the various terminal benefit schemes that you are runningfor your employees? RVPNL has been at the forefront in running varous terminal benefit schemes for its employees. We are currently running Gratuity/Superannuation & Pensioner’s Medical Concession Fund for cour employees. The employees see tremendous value in these terminalbenefittunds. Are you self managing Employee's Croup Gratuity / Superannuation funds or have outsourced it? Why did you consider outsourcing these funds and sincewhenhavethey been outsourced? RYPNL for many years has been self-menaging such funds, The thought processfor outsourcing these funds originated frem the ease ff administration and it’s management by professional fund ‘managers. This in turn helps us generate better return on such funds. Higher returns would help reduce the future service liability & settle ‘more liatilies,WeatVPNL have proactively outsourced partof uch funds since last 25 years after critcal evaluation on the insurance companiesand have been satisfied withthe decison. ‘What was the approach that the organization followed at the time of outsourcing these funds? We had looked atthe financial credentalsoftheinsurersalongwiththe Consistency returns generated over a period of time forshortlisting them. Later we had invited proposals from them to understand their company background, investment philosophy & capability and past fund performance. A balance wes maintained while evaluating the companies by considering ther financial credentials & past fund 32 performence ‘What are some of the critical parameters which you think the organization should consider while selecting the insurance company? Gitical parameters that one should keep in mind while selection should be assets under management (AUM), profitabilty & solvency margin of the company & also the rsk adjusted returns generated Under various fund options being provided by the insurer. One could opt for Traditional or ULIP funds depending on the risk appetite & risk reward function of theinvestment. ‘Which fund have you invested in and why did you chese todoso? We have partly invested in Unit Linked (part equity exposure) & parly with Tractional Funds of insrersin order towell diversity the portolo “We have partly invested in Unit Linked (part equity exposure) & partly with Traditional Funds of insurers. Having both the asset classes of debt & equity has helped the organization enjoy the cycle of both the asset classes.”across various asset classes. This strategy has worked well as it has vets fied the rskoninvestment. Having both the asset classesof debt £& equity has helped the organization enjoy the cycleof both the asset asses. Do you think investing in unit linked funds could be more beneficialforan organization as comparedtotraditionalfund? Unitlinked funds have generated better retums over last 2-3 years period. Since over a 3yearphase thermartet wil aaysexperience one fullcycleofdebt@& equity, oversuch period unit-Linked fundswillhave a tendency to generate better returns. While traditional fund gives a stable return ona year on year basis, 2 unit inked fund wth an equity component of say 10-12% can give an upside of about 200basis points coves traditional fur. Please trace the journey of your association with Bajaj Allianz & how do you measure / rate the performance of the fund by Bajaj Allianz? ‘Our association with Bajaj Alan Life started in the year 2010. Back then RVPNL was experimenting with the idea of outsourcing Gratuity/Superennuation Funds to insurance comparies.tamhappyto share that we are pleased with the fund performance as well as the senices offered by the organization, We havea strict review processof ‘ur investments every year. Minimum performance standards are expected to be met by all the insurence companies on boerd, We regularly monitor and compare the fund performance of various insurance players we are associated with and feel happy to see that, returns generated byBajajAlinztal in top quartle Has Bajaj Allianz lived up to your expectations in terms oftimely claim settlement and meeting you service requirements on time? ‘aja liz has been prompt in providing us with portfolio updates & fund statements a regular intervals. We have been regularly serviced by an account manager which helps us meintain regular contactwith the company, Till date we have not withdrawn any funds from Bajaj Allianz for the fact that superior returns are being generated in the Portflio. We look forward to growing our association with the company. Newsrade isu v “Offering value propositions to the employee” Yatin Gandhi, Head Treasury, Rajkot Nagrik Sahakari Bank Employee benefit funds are generally set up by employers, ‘trusts or any other organization to provide for empioyees retirement benelits. Employee benelit funds ensure that an investor (employee) can set aside savings during his working life to build corpus which can full various goal ater retirement. ‘Advantages ofinvestingin LIP ‘A simple answer to the question may be ‘not to protect individias from dying too young but to protect individuals ‘when living too ora’. These market linked empioyee beneit oducts are offered byife insurance companies. Theseplans ate for those corporates who are looking tinvestng in these funds such as gratuity and leave encashment from a long: ‘term perspective Unit-inkedplansinvestin equity markets(in desired proportion) and can give higher retums as against ¢ traditional product Since the employee benelit products are Mar 13] 3istMar'13 40058 anger 3173 or 16,867 19,210 53,253 Heat 3268 131085 127250 ans Property Engineering 1908 500 5410 1988 MéctloneousAndotmes 2007 1496 15085 1518 Over Al 72885 sas 579916 ns ES STE EN Bs Life Claims Settlement IJan- Mar 2013 Health care 4 3 7 0 ° ‘oalnumber 2380 0783 msi 182 1120 ‘oialAmount 516773467 1412,72658R 1073183636 737538636 318,787,760 ‘Turn around time (TAT) Jan-Mar 2013 ermine ass, Cases referred to Consumer Forum & Ombudsman Jan - Mar 2013 Ec Cues Newsrade isu v 6 For the nancial year 2012 -13 the settlement ratio for Motor Own Damage

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