Page 246 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Unit 14: Trends in Insurance Sector

investment in power sector, manufacturing and other industries, roads and buildings. Insurers Notes
with right technical support and adequate capacity would be able to benefit from this segment.
Brokers and agents—who upgrade their technical competence—are expected to play an increased
role. Hence, it would be wise for insurance companies to support competent brokers and agents.
These much needed intermediaries with help from insurers and re-insurers would have to take
up a major challenge of educating the under informed customers in risk-management and risk
improvement; accept more reasonable policy deductibles and seek better policy coverage.

Caselet Insurance for NRI Workers

orkers going abroad for jobs will get an insurance cover of a minimum of ` 2
lakh from December 25 under the Pravasi Bhartiya Bima Yojna by paying a
W“fair and reasonable” premium.

The scheme was announced by Prime Minister Vajpayee on the occasion of Pravasi Bhartiya
Diwas in January this year and was prepared in consultation with the external affairs
ministry.
New Indian Assurance Co. Ltd., Bajaj Allianz General Insurance Co. Ltd. and ICICI Lombard
General Insurance Co. Ltd. came forward for the purpose.

Source: http://articles.timesofindia.indiatimes.com/2003-11-17/india-business/27200545_1_death-or-
permanent-disability-insurance-scheme
According to labour ministry sources, in the event of death or permanent disability, the scheme
involves payment of the amount to the nominee or legal heir of Indians, who go abroad for
employment after obtaining clearance from the Protector of Emigrants (POE).

Newer pricing methods need to be developed for commercial lines. Underwriters should give
up the old tariff-based approach and develop experience-based and actuarial-supported models
for pricing. Most of the large risks have already well developed risk-management departments
and deploy ERM (enterprise risk management) techniques; with the right pricing, and capacity,
this segment still offers good pickings. The SME (small and medium enterprise) sector (property)
needs careful cherry-picking and the right marketing approach would yield dividends.
Catastrophe risk management system has to become robust as the insurance spreads in the
semi-urban and rural areas. With increased penetration, rapid economic development in rural
areas, insurance companies will face losses from events like floods and catastrophes in the
interiors which hitherto have not produced significant insurance losses. It is vital for insurers to
monitor their aggregate exposures closely and buy adequate catastrophe protection. Choices of
India-specific cat-modelling software tools are now available and most of the insurers are using
these tools. With increased awareness in this area, insurers are buying more and more catastrophic
cover; notably the cover being purchased has increased from 100 years to 250 years return
period cover.
Health insurance is a lucrative segment; it is poised to record a massive growth in India in the
coming years. Half of the country’s population is expected to come under the health insurance
umbrella in the next seven years, according to an Ernst & Young study. A mere 12% of the
population is currently covered by healthcare. According to an Economic Times report, the
government’s proposal to scale up the foreign direct investment (FDI) in the insurance sector
from 26% to 49% will boost the healthcare business. In the coming years India might witness
more standalone healthcare companies too as they will have an edge in the future market
scenario, says an industry expert.

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