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This Blog provides you UpToDate information on life & General insurance dealing mostly with LIC's New Plan Circulars, MillionDollarRoundTable tips on marketing,Financial analysis and INCOME TAX.
letter to chairman: Implementation- Gazette of India-NO-48 dated 18-02-2013.
LIAFI-SG/CO-031/14 22
February 2014
Shri. S.K.
Roy,
Chairman,
L.I.C. of India, Central Office,
“Yogakshema”,
Jeevan Bima Marg,
P.B.
NO-19953,
MUMBAI-400
021
Dear Sir,
Sub: Implementation- Gazette of India-NO-48 dated 18-02-2013.
Payment of Commission
to Agents:
We waited for the introduction of New Plans with an ardent hope that the
new concept of payment of commission will be incorporated. Unfortunately the
actuarial department followed the cited Gazette in all other aspects except payment of commission. We fail
to understand why the Mgt. always neglects the Agents.
The Plans New Endowment (814), New Moneyback Plans (820 & 821),
Anmol Jeevan II (822) and Amulya Jeevan II (823) which were introduced did not contain
the commission rates as per annexure-.1 We request you not to deprive the new
concept of commissions. We also request you to incorporate the commission
clause while preparing new plans. We
lost about 40% commission in New Money back Plans. The loss is not
compensated in any form. We are unhappy at this development.
Policies on Minor
Lives:
It is clearly stated in the Gazette that “for policies issued on Minor
life, the date of commencement of policy and date of commencement of risk shall
be same”. We enclosed at annexure-2. This condition is not implemented in
single premium Endowment Plan (817). We request you to get this Rule
implemented in Plan No 817 as well as new children plans in the offing.
We brought these points to the notice of ED (Mktg) in the meeting held
with us on 17-02-14. We passionately wait for your favourable action.
Thanking you,
Sincerely yours,
For Life Insurance Agents
Federation of India
NGajapathiRao
Secretary General
New Plans- Hurdles in Marketing-Reg. letter to chairman
LIAFI-SG/CO-032/14 22
February 2014
Shri. S.K.
Roy,
Chairman,
L.I.C. of India, Central Office,
“Yogakshema”,
Jeevan Bima Marg,
P.B.
NO-19953,MUMBAI-400 021
Dear Sir,
Sub: New Plans- Hurdles in Marketing-Reg.
The Managing Director Sri. Sushobhan Sarker expressed his concern at the
new business figures from 1st January 2014 to 15th
February 2014. He said in our meeting on 17-02-2014 that he expected some
decline in new business but not to the present level. We agree with him and we are also concerned
about it. The following may be the reasons for this situation.
· The New Plans are not policyholder-friendly because the premium rates
are on higher side contrary to the expectations. We fail to understand whether
the Actuarial and Product development Dept. considered the present mortality rate or of Tretayugam.
We are herewith enclosing a news paper clipping for information. We are
certain that the present mortality rate is not taken in to account while
developing New Plans.
· By restricting the maximum age at entry and term we assume considerable
insurance field is lost and also the recycle chances.
· As per Central Govt., more than 50% of population is below poverty line.
New policies cannot cater to their needs. Unless Rs. 50,000/- SA policies are
introduced, the rural business will be affected.
· A good number of Children Plans with PWB should be introduced otherwise policies
from this section cannot be procured. PWB should be included for Plan No: 814.
· Though the Agents try to surmount above problems they are unable to
market because of the Benefit Illustration Procedure. Unless this hurdle is
removed we are not hopeful of reaching targets.
· The term of revival of policies shall be restored to five years.
All the above points were brought to the notice of ED (Mktg) in the
meeting held on 17-02-14. We request you to initiate remedial measures forthwith
so that Agent will be happy for marketing new plans.
Thanking you,
Sincerely yours,
For Life Insurance Agents
Federation of India
Secretary General
from the financial year 2014-15, the persistency rate for each agent shall be at least 75%
Life insurance companies will now have varied reward-and-recognition mechanisms for distributors, since the Insurance Regulatory and Development Authority (IRDA) has now allowed them to decide on persistency norms.
The IRDA has said that all life insurers are required to have their own company-specific criterion for renewal of individual and corporate agencies from July 1, 2014. At present, agents are required to have a 50% average persistency rate in number of policies.
Persistency refers to the ability to keep renewing a customer’s insurance policy, till it reaches maturity. The higher the persistency rate, the higher are renewal premiums for the company.
The IRDA said that the renewal of individual agency license and corporate agency license will not be subject to meeting the persistency rates earlier stated by IRDA. Insurers say that this is a welcome move since each insurer will now be able to take their own decisions on persistency. They also say that they are already focusing on quality advisors and agent productivity.
In 2011, private life insurers had started the practice of clawback of commission to improve the persistency ratio of agents and arrest lapses in insurance policies. The clawback clause helped insurers recover a part or all of the commission paid to agents if the policy was cancelled within a given period.
In its earlier persistency guidelines issued (and subsequently revised) in 2011, IRDA had said that for all renewals prior to the financial year 2014-15, the average persistency rate for each agent for the year’s 2011-12, 2012-13 and 2013-14 shall be at least 50% in terms of number of policies procured by such agent.
It has said that from the financial year 2014-15, the persistency rate for each agent shall be at least 75% in terms of both policies and premium procured by such agent. Further, this stipulated persistency rate requirements was to be effective for all corporate agency renewals due from July 1, 2014.
Insurers say that instead of revoking the license of agents for poor persistency, now companies will be able to motivate them in the right manner. They also say that IRDA’s relaxation for each life insurer to decide their own persistency norms will be beneficial since each insurer has a different model.
There could be some reductions in commissions for agents with lower persistency. Also, the right rewards would be given to those who have performed better than others, say insurers. They also say that with IRDA’s latest go ahead to insurers to fix own persistency formulas, it will be easier to retain agents and improve renewals through better training and development.
vinay mohantyclaiming the office allowance last date 28.2.14
Kindly inform the eligible Agents to submit Application for Claiming the Office Allowance for the membership Year 2012-13 before 28.02.2014, any applications received after 28.02.2014 will not be entertained.
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vinay mohanty
Introduce common demat account for financial investments: P Chidambaram
NEW DELHI: Finance Minister P Chidambaram today asked regulators to expeditiously introduce a common demat account for financial assets, a move that is expected to benefit investors.
Chairing the Financial Stability and Development Council meeting, attended by all financial regulators, Chidambaram also said that inter-regulatory issues should be resolved in a time bound manner by the FSDC Sub-Committee.
"Priority should be accorded to the steps like common demat account for financial assets which will add considerable benefits to the consumers," he said.
Although the deceleration in growth has been arrested in the second quarter of 2013-14, inflationary pressures and structural bottlenecks are some of the factors weighing down the growth process, Chidambaram said.
The Finance Minister "stressed upon the need for the government and the financial sector regulators to ensure robust growth and manage vulnerabilities", according to an official statement.
Last month, the government lowered the 2012-13 economic growth estimate to decade low of 4.5 per cent from 5 per cent. The growth in the first half of the current fiscal is estimated at 4.6 per cent.
FSDC has taken up many initiatives to further develop the Indian financial sector, like the development of the Corporate Debt market, launch of infrastructure debt funds (IDFs) and issue of new FPI regulations.
It has also pursued the implementation of the report of the FSLRC with the intention that the financial sector stands on sound legal foundations and remains well-regulated, efficient and internationally competitive.
The Council, as per the Finance Ministry statement, made an assessment of the emerging issues relating to financial stability, including preparedness for the impact of US tapering, liquidity crunch and re-pricing of risk.
It said the Council noted the deterioration in the asset quality of banks and its impact on capital adequacy ratios.
It reviewed the steps taken by the government and the Reserve Bank to revitalise the distressed assets and assessed the additional capital requirements of banks under the Basel III norms. The Council apprised of certain management and governance related issues of banks and discussed further remedial measures.
The 9th FSDC was attended by RBI Governor Raghuram Rajan; Sebi Chairman U K Sinha; Irda Chairman T S Vijayan; FMC Chairman Ramesh Abhishek and PFRDA Chairman Anup Wadhawan, besides other senior officials.
vinay mohanty
Chairing the Financial Stability and Development Council meeting, attended by all financial regulators, Chidambaram also said that inter-regulatory issues should be resolved in a time bound manner by the FSDC Sub-Committee.
"Priority should be accorded to the steps like common demat account for financial assets which will add considerable benefits to the consumers," he said.
Although the deceleration in growth has been arrested in the second quarter of 2013-14, inflationary pressures and structural bottlenecks are some of the factors weighing down the growth process, Chidambaram said.
The Finance Minister "stressed upon the need for the government and the financial sector regulators to ensure robust growth and manage vulnerabilities", according to an official statement.
Last month, the government lowered the 2012-13 economic growth estimate to decade low of 4.5 per cent from 5 per cent. The growth in the first half of the current fiscal is estimated at 4.6 per cent.
FSDC has taken up many initiatives to further develop the Indian financial sector, like the development of the Corporate Debt market, launch of infrastructure debt funds (IDFs) and issue of new FPI regulations.
It has also pursued the implementation of the report of the FSLRC with the intention that the financial sector stands on sound legal foundations and remains well-regulated, efficient and internationally competitive.
The Council, as per the Finance Ministry statement, made an assessment of the emerging issues relating to financial stability, including preparedness for the impact of US tapering, liquidity crunch and re-pricing of risk.
It said the Council noted the deterioration in the asset quality of banks and its impact on capital adequacy ratios.
It reviewed the steps taken by the government and the Reserve Bank to revitalise the distressed assets and assessed the additional capital requirements of banks under the Basel III norms. The Council apprised of certain management and governance related issues of banks and discussed further remedial measures.
The 9th FSDC was attended by RBI Governor Raghuram Rajan; Sebi Chairman U K Sinha; Irda Chairman T S Vijayan; FMC Chairman Ramesh Abhishek and PFRDA Chairman Anup Wadhawan, besides other senior officials.
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