Page 279 - DCOM304_INDIAN_FINANCIAL_SYSTEM

Indian Financial System

Notes "Lot of insurance companies are waiting for norms on outsourcing to come through…now
it is good for them to know what they can outsource and what they can't. I expect the new
guidelines to open up the market in the medium term," said Mr Sanjay Venkataraman -
Executive Vice-President and Head-Asia Business Unit, Firstsource Solutions.
End-to-end Responsibility

Firstsource Solutions works with one of the largest private insurance players in India. Mr
Aparup Sengupta, Managing Director and CEO of Essar Group-promoted Aegis BPO,
believes the new norms are designed to formally place end-to-end responsibility of the
outsourcing arrangement on the insurer. "Insurance companies can no longer pass on the
contingent risks to the outsourcing agents alone since their skin will also be in the game,"
said Mr Sengupta.
As mentioned earlier, many of the non-core functions are already getting outsourced to
third party players.
On the flip side, core activities such as claims processing, IT support and policy servicing
are generally outsourced to back office companies by firms in the US and UK. In India, a
small sub-section within claims processing - namely, data entry work related to procurement
and lodging of insurance claims - is outsourced. Settlement of insurance claims is still very
much done in-house by the insurer. "Majority of the functions prescribed by the IRDA as
core are generally outsourced in the Western World. Since these cannot be outsourced by
Indian insurers, it is a dampener in terms of the future revenue outlook for back office
firms," a senior industry watcher said.
Forming Joint Venture
Some companies, like the Mumbai-based Datamatics, feel that clients who still want to
outsource some of the core functions could do so by forming a joint venture with a back
office company. "This ensures that the core functions are still dealt with by the insurer...We
are having some conversations on similar lines with prospective customers," said Mr
Rahul Kanodia, Vice-Chairman and Chief Executive, Datamatics.

Source: http://www.thehindubusinessline.in
13.7 Life Insurance

Basic Terminology of Life Insurance

 Life insurance: Insurance plan providing for payment of a specified amount on the insured's
death, either to his or her estate or to a designated beneficiary or to the policy holder (if
survives) at a specified date.

 Assured: The person or party protected by a policy of the insurance. It is another word for
insured.

 Attained age: An age which a person or insured has attained in relation to a given date.
For life insurance purposes, the age is based either on the nearest birthday or the last
birthday, depending on the practices of the insurance company involved.

 Actuary: A social mathematician who uses mathematical skills to define, analyze and
solve complex business and social problems involving insurance and employee benefit
programmes.
 Age limits: Every life insurance company stipulates minimum and maximum ages below
and above which the company will not accept applications or will not renew policies.

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