2013: Gains, pains of insurance industry

 

Daniel

 

Insurance operators have different tales to talk about year 2013. For some, it was a year of goodies, while others challenging. Chuks Udo Okonta, in this report examines the developments that shaped the industry and the consequences.

 

 

Year 2013 started on a good note for the insurance industry as the National Insurance Commission (NAICOM) began enforcement of the new premium regime tagged No Premium, No Cover, which empowers underwriters to collect premium in advance before issuing out a cover.

 

Though the policy took-off with doubts in some quarters, it gradually gained grounds as operators stood firm, rejecting businesses which premium were not paid. The only reported infraction came from 200 brokers who engaged in deeds that subverted some rules in the policy.

 

Many operators believed the policy has helped repositioned the insurance practise, as it has enhanced the financial base of the industry.

 

Commissioner for Insurance Fola Daniel, said the policy has worked tremendously, adding that the biggest test of the No Premium No cover, was the Nigerian National Petroleum Corporation (NNPC) account, which generated over $70 million (N11.36 billion), and was paid before the renewal date.

He said: “On government accounts, I think there is 100 per cent compliance. The biggest test of the No Premium No cover was the NNPC account, which generated over N70 million dollars, and was paid promptly.

“The effective date for renewal of NNPC’s account was April 1 and the premium was paid on March 30. So I do not know of any government account where somebody will breach the law.”

 

Director-General Nigerian Insurers Association (NIA) Sunday Thomas said the policy has transformed the fortune of the industry, adding that most operators’ financial base has been enlarged.

To ensure compliance, NAICOM warned that any underwriting firm that provides insurance cover without collecting the premium would be liable to a penalty of N500, 000 or lose its license.

The Commission noted that all insurance covers shall only be provided on a strict 'No Premium No Cover' basis. It maintained that only cover for which payment has been received, directly by the insurer or indirectly through a duly licensed insurance broker, shall be recognised as income in the books of the insurer.

NAICOM said any insurer, who grants cover without having premium in advance or premium receipt notification from the relevant insurance broker shall be liable to a penalty of N500, 000 in respect of each cover so granted, and in addition, may be a ground for suspension of the license of the insurer.

It said irrespective of period of insurance, insurers shall ensure that at any point, they have received directly or indirectly, through the insurance broker the full premium in advance for cover being granted.

International Financial Reporting Standard

The year also heralded the full implementation of the International Financial Reporting Standard (IFRS). Having commenced with partial migration to the IFRS with 2011 accounts, underwriters saw the surprise of the lives as their 2012 accounts were subjected to tough scrutiny by NAICOM. Many of them made frequent visits to the commission’s office in Abuja, as they ran around to answer volumes of queries on their accounts.

NAICOM said only 38 firms’ has been approved as December 20, adding that the firms made the last minute approval are Oceanic Insurance Company Limited; Lasaco Assurance Plc; Crystal Life Insurance; Mutual Benefits Life Assurance Limited; Mutual Benefits Assurance Plc; Nem Insurance Plc; Linkage Assurance Plc and Union Assurance Limited.

 

The commission said as at December 20, Industrial & General Insurance Plc; International Energy Insurance Plc and NICON Insurance lead the category of eight that are yet to submit their accounts. Others in that category are the five firms under NAICOM’s management - Alliance & General; Alliance & General Life Assurance Plc; Goldlink Insurance Plc; Spring Life Assurance Plc and Investment & Allied Assurance Company Limited.

 

Those approved are Mansard Insurnace Plc; ADIC Insurance Ltd; WAPIC Insurance Plc; Consolidated Hallmark Insurance; Oasis Insurance Plc; FBN Life Assurance Ltd; Continental Reinsurance Company Plc; AIICO Insurance Plc; Leadway Assurance Company Ltd; Crusader General Insurance Ltd; Crusader Life Insurance Ltd; UBA Metropolitan Life Ins. Company; Zenith Insurance Company Ltd and Unitrust Insurance Company Ltd.

 

 Others are Unity Kapital Assurance Plc; Standard Allied Life Assurance; Custodian & Allied Ins. Plc; Regency Alliance Company; Royal Exchange Assurance Plc; Sovereign Trust Insurance Plc; Zenith Life Insurance Ltd; Royal Prudential Life Assurance Plc; Sterling Assurance Nigeria Ltd; Law Union & Rock Insurance Company Plc; Cornerstone Insurance Plc; Oceanic Life Assurance Plc (Old Mutual); Prestige Assurance Plc; FIN Insurance Ltd; Niger Insurance Plc and Equity Assurance Plc.

 

Those whose accounts are placed under review are PHB Insurance Plc; Great Nigeria Insurance and Wapic Life Assurance Ltd.

 

The accounts of Lasaco Life Assurance; Nigeria Reinsurance Corporation; The Universal Insurance Company Ltd; Capital Express; Staco Insurance Plc; African Alliance Insurance; Anchor Insurance and Standard Alliance Insurance Plc were queried and the commission is awaiting their responses.

 

Those of Nigerian Agricultural Insurance Corporation; Unic Insurance Plc and Guinea Insurance Plc are being reviewed.

 

 

 

  TAKAFUL

NAICOM also in the year released the guidelines on Takaful Insurance which it said is in line with the provisions of the 1997 Insurance Act, and the need to complement the current drive for Financial Inclusion to increase insurance penetration in Nigeria.

The commission noted that with the guidelines, all intending applicants seeking license to transact takaful-insurance business in Nigeria must possess the followings: Certificate of Registration as a full-fledge takaful-insurance company in accordance with International best practice, adding that such a company must have, as part of its name, words or terminologies that connote takaful operations.

It said the company must maintain a minimum deposit in a non-interest financial institution at all times and that the provision for the establishment of an Advisory Council of Experts (ACE) must be made in the articles of the Company and there should be establishment of investment policy for the participants’ Risk Fund.

Takaful means joint guarantee or share responsibility in Arabic, it operates in according to Islamic laws, the products are designed to carter for Muslims and non- Muslims. The products are meant to encourage saving culture and build capital, over a period of time to meet personal or business needs.

Under takaful plan, people can save regularly for a fixed period that is convenient for them. The accumulated targeted amount can be used to fund obligations such as purchase of land, house, marriage or hajj.  It could also be used to meet other long term financial objectives, such as retirement, children education, travelling expenses as well as expected commitment

Few months after the guidelines were released, operators stampeded NAICOM with applications.

It was gathered that applications have been received from many operators, but at the close of the no license has been issued.

 

MICROINSURANCE

 

NAICOM later released the guidelines on microinsurance and pegged the capital at N150 million for life business and N200 million for general business.

The commission in a paper entitled: Registration Requirements for Microinsurance Operatoration in Nigeria, presented at A-2 Day Takaful and Microinsurance Stakeholders said anybody seeking to float a microinsurance firm must obtain application form from it and should be completed and submitted to the Commission along with the following: A non-refundable registration fee which is yet to be decided and a certification fee also to be decided.

 

It said service providers groups can only play a role in insurance market, when they are licensed or authorized by the commission. Stressing that the authorization, provides Service Level Agreement (SLA), to enable an operator distribute or sale Microinsurance products to low income earners.

It noted that insurance companies will obtain the approval of SLA from NAICOM to enable them play their role, adding that approval of service level agreement, also has to be obtained by an insurer where the insurer wants the service provider to provide additional service to him such as premium collection from low income earners, premium remittance to the Insurer, collection of underwriting information from low income earners to Insurer, clients data update, claims notifications and  remittance of claim amount to Insurer and more.

 

             It said insurance broker and agent are exempted from going into SLA agreement with an insurer for transaction of microinsurance, because they are already registered by NAICOM,

 

 

               CONSULTATION COMMITTTE

 

The industry inaugurated the Insurance Industry Consultation Committed (IICC) which is headed by the President, Chartered Insurance Institute of Nigeria (CIIN) Fatai Lawl. The committee was charged with the responsibility to speak for the industry and help resolve all issues among operators from the different arms of the industry.

 

APPOINTMENTS

The Nigerian Council of Registered Insurance Brokers (NCRIB) and CIIN installed new presidents. While Fatai Lawal was installed at the president of the CIIN, Ayodapo Shoderu, was given the mantle to lead the NCRIB.

 

MERGER

 

The industry witnessed only one successful merger which was consummated by Crusader Insurance Plc and Custodian and Allied Insurance Plc.

In the merger Custodian and Allied Insurance Plc, now Custodian Group took over Crusader. Though the merger process had some issues, most of them have been resolved.

Custodian said the merger has resulted to integration of skills, Information Technology (IT) and back office processes that will be to the advantage of the customers of the company.
“Our merger has created invaluable integration of skills, information technology and back office processes. Now customers can take advantage of our increased spread, improved operational efficiencies and expanded product portfolio.

“The merger between Custodian & Allied Insurance Plc and Crusader (Nigeria) Plc leverages on 79 combined years of insurance and financial services experience,” it said.

The firm said it has greatly expanded its scope of services with the merger with Crusader, he added.

 

DEATH

The industry was not able to escape the harmer of death, which took away some prominent personalities.

NAICOM’s Commissioner Technical, Ibrahim Hassan, was stolen by death, the Chairman, LASACO Akin leign was also taken away and some others who were also captured by the cold hands of death.

Conclusion

In spite the challenges faced by the operators, they are hopeful that the year 2014 will come with goodies that would enable them recover their lost grounds.

Jacksonville insurance salesman pleads guilty

A Jacksonville insurance salesman has pleaded guilty to running an investing scheme that defrauded $4 million from school teachers and administrators.

Anderson Scott Hall pleaded guilty Friday to two counts of mail fraud, a single count of wire fraud and a single count of money laundering.

He faces up to 80 years in prison when he is sentenced in federal court.

Federal authorities say Hall defrauded more than 50 investors, and a significant number of those investors were Duval County teachers and administrators.

Authorities say Hall convinced his investors to put their retirement savings into his sham investment operation, promising interest rates of up to 12 per cent.

Authorities also say Hall created fake documents to convince his investors that they were putting their savings in a legitimate investment product.

Source The Associated Press

Farmers Insurance building sells for $19m

The two-story, Class A building is located at 10551 S. Ridgeview Road in the Corporate Ridge Office Park.

By Rob Roberts

Founders Properties LLC has sold a 102,000-square-foot Olathe office building to Griffin Capital Corp. for $19.1 million, or about $187 a square foot.

The building is occupied by 400 employees of Farmers Insurance's national property claims division, which last month announced it had extended its lease of the building through March 2024.

The two-story, Class A building is located at 10551 S. Ridgeview Road in the Corporate Ridge Office Park.

Founders Properties, led by Best Buy founder Richard Schulze and Opus Corp. founder Gerald Rauenhorse, was represented by the CBRE Institutional Group in Minneapolis.

Source Business Journal

Uncertainty with health insurance lurks across the country

Will there be a blitz of new patients? Or will the costs scare them off?


By Lisa Bernard-Kuhn


　

A host of unknowns awaits health systems here and across the country as millions of Americans — some for the first time — join health insurance rolls in the new year.

From gauging whether they have enough manpower to handle a blitz of new patients — should there be one — to dealing with an expected rise in uncollected bills and loss of federal funding, health systems will be closely monitoring the newly insured to see how — and how often —they tap into their new health benefits.

Among the key promises of the Patient Protection and Affordable Care Act is the expansion of health care coverage to nearly all Americans by requiring most to enroll in a health insurance plan or face penalties. And starting Wednesday, hundreds of thousands of low-income residents across Ohio will become eligible for Medicaid benefits.

Over time, that should mean a reduction in the amount of care that health systems provide and aren’t paid for — an oft-cited reason for skyrocketing health care costs.

In Ohio alone, hospitals recorded more than $4.5 billion in uncompensated care in 2011, the most recent year data are available. Nationwide, the figure is closer to $40 billion, according to the Ohio Hospital Association.

Licking Memorial Hospital reported about $16.8 million worth of uncollectible patient services in 2011, according to tax forms.

"On the whole, the changes should be a very big boost in revenues for hospitals that do the most uncompensated care," said Allan Baumgarten, a Minneapolis-based independent health care consultant.

But in the short run, at least, health system officials say the costs of uncompensated care are very much in play.

Part of the problem is the rise in high-deductible health plans, which require consumers to pay a significant amount of their health care costs — at least $1,250 for an individual — before their insurance starts picking up the tab. And health systems are already seeing a rise in unpaid bills even though the patients have insurance, Baumgarten said.

"If someone in one of these plans runs up a $5,000 bill, the health system has to worry about collecting that first $3,000 from the family before any of the insurance reimbursement kicks in," he said.

Executives with the Cleveland Clinic and University Hospital acknowledge the growing problem, as does the American Hospital Association.

"It’s a problem providers can expect to see expanded in the next couple of years," Baumgarten said.

Of all employer-covered workers, 19 percent were enrolled in a high-deductible plan last year, more than double the rate of 2009, according to the Kaiser Family Foundation. And for a growing number of workers, the plans might be the only option they get. Gannett Co. Inc., parent of The Advocate, is among about 10 percent of companies offering the plans exclusively in 2014.

The plans also are expected to be among the most popular sold on the newly launched health insurance marketplaces, where insurance experts are expecting price-sensitive shoppers to be most attracted to the plans’ lower monthly costs.

"I think it is still very much unknown, just how many people will be slow or unable to pay," Baumgarten said.

And whether policy holders will tap into their new benefits quickly or delay treatment to avoid the out-of-pocket costs remains to be seen.

"Some say there is a pent-up demand of people who will come in for care because they haven’t had good or any coverage in the past," Baumgarten said. "The other perspective is that most of these people were getting care somewhere before, but it was expensive care through (emergency rooms) or community health centers. In the next couple of years, we’ll have a much better idea of how this has impacted volume."

Also top of mind for hospital operators is the loss of millions of dollars in federal funding in the New Year.

Just this month, health executives from more than 200 health systems, including several in Ohio, urged the federal government to hold off on cuts to a program that provides additional money to hospitals that serve many low-income patients. For Ohio hospitals, the move will mean about $1 billion less in federal funding during the next two years.

The cuts, mandated by Obamacare, passed with the expectation that hospitals would deliver less uncompensated care because states would expand Medicaid eligibility to millions more low-income adults. But the U.S. Supreme Court last year made Medicaid expansion optional for the states, and about half the states have not expanded their programs. Kentucky did so about midway through 2013, and Ohio made the move in late October. Only this month did the state’s Supreme Court uphold the decision.

Health systems are asking for a three-year freeze on the cuts to allow states additional time to expand health care coverage.

"If these crippling cuts are not stopped, our hospitals will be forced to curtail essential services, ultimately limiting access to care and cutting jobs," according to the letter.

Source The Cincinnati Enquirer

Inspenonline unveils nominees for 2013 insurance, pension award

Inspenonline, Nigeria’s premier insurance and pension online media has released the names of nominees for the 2013 Nigerian Insurance and Pension (Inspen) Award.

A statement by the Editor, Chuks Udo Okonta, said the yearly award which is in seven categories will be contested by underwriting, broking firms and individuals who distinguished themselves in 2013.

He said the nominees for the Insurance Man of the year category are, the Managing Director Mansard Insurance Plc, Mrs Yetunde Ilori; Managing Director Leadway Assurance Limited, Oye Hassan-Odukale; Managing Director Sovereign Trust Insurance Plc, Olawale Onaolapo and former President Chartered Insurance Institute of Nigeria (CIIN)   Dr. Wole Adetimehin.

He noted that firms nominated for Insurance Company of the Year are, Mansard Insurance Plc; AIICO Insurance Plc; Leadway Assurance Limited; Custodian Group and Sovereign Trust Insurance Plc.

He said Yemi Soladoye; Oladipo Bailey; Professor Joe Irukwu and Osaka Ogala, were nominated for the Excellence Award.

For Best Trade Group Award, he said Nigerian Insurers Association; Nigerian Council of Registered Insurance Brokers and Chartered Insurance Institute of Nigeria were nominated.

Sovereign Trust Insurance Plc; Leadway Assurance Limited and Mansard Insurance Plc were nominated for Companies for Corporate Brand Award.

Firms nominated for Corporate Social Responsibility (CSR) Award were, Consolidated Hallmark Insurance Plc; Industrial and General Insurance; Sovereign Trust Insurance Plc; Leadway Assurance Limited and Mansard Insurance Plc.

Okonta noted that firms nominated for the Pension Fund Administrator of the year are, Stanbic IBTC Pension Managers; AIICO Pension Managers; Leadway Pensure PFA Limited and PAL Pensions.

He urged voters to cast their votes for individuals and firms that have contributed immensely to the development of insurance and pension industry and by extension the nation by mail to inspenonline@gmail.com or udochukwuyem@yahoo.com.

He said the award ceremony will come up by February in Lagos.

Firms in rush from defined-benefit pensions - LRC chief

Labour Relations Commission chief executive Kieran Mulvey: rigours demanded of pension funds in the current economic climate and investment environment "have made this area very difficult to address through normal industrial relations channels. Photograph: Eric Luke

Implemention of Haddington Road deal among big industrial relations issues ahead, Labour Relations Commission chief executive says
　

The Labour Relations Commission has been involved in dealing with almost 40 disputes over pensions in the last two years, its chief executive Kieran Mulvey has said.

He said pension arrangements had moved close to the top of collective bargaining agendas as employers and unions sought to respond to declining asset values and strained investment funds.

However, in an interview with The Irish Times, he said too many employers at the moment "are in a rush to abandon defined-benefit pension schemes, as if one has the view, ‘let’s not waste a good crisis’ ".

Several weeks ago Mulvey had called for the establishment of a pensions summit "where we could tie down the principles of pension change, the mechanism by which schemes in difficulties would be addressed and not just through minimum funding standards".


Difficult to address
He said the rigours demanded of pension funds in the current economic climate and investment environment "have made this area very difficult to address through normal industrial relations channels. But addressed it has been and must be".

Mulvey said among the biggest issues in the industrial relations arena in the year ahead would be the implementation of the Haddington Road agreement, the change process involving many of the commercial semi-State companies, and the planned Government move to establish a new Workplace Relations Commission to take over the functions of a number of existing bodies.

He said that for the Labour Relations Commission, the negotiation of the Haddington Road agreement on public service pay and productivity, after unions voted to reject the earlier Croke Park II deal "involved probably the most complex and demanding conciliation process in its history".

As part of this process there were talks involving 28 different groups representing staff across the public service. "Our view largely was negotiating the deal and getting agreement around it was one part of a two-part process."


Implementation
He said the other element was the implementation of the agreement and dealing with practical issues that arose out of it.

In the coming months the Government will publish legislation aimed at changing the industrial relations landscape, Mulvey noted,

This will involve bringing together all the bodies involved in resolving disputes and grievances, as well as those responsible for adjudicating on employments rights, such as the Labour Relations Commission, the Employment Appeals Tribunal, the Equality Tribunal and the National Employment Rights Authority, into a new Workplace Relations Commission, and a single appellate body, the Labour Court.

He said that in time this would "greatly streamline and improve the effectiveness of workplace dispute and grievance resolution in Ireland".

On job creation, Mulvey said while the State’s labour market programmes had been very successful, he was worried these could be offset to a degree by closures of a number well-established companies employing 400-500 people in well-paid employment with good conditions.

He said the recent closure of the Lufthansa Technik plant in Dublin, with the loss of around 400 jobs, was indicative of such a development.


Concern
He also said he was concerned about the German- owned crane-manufacturing plant Liebherr, which employs nearly 700 people in Killarney.

The company said earlier this month it would re-evaluate its dependency on its Killarney facility on foot of a row over a Labour Court recommendation involving 2.5 per cent back pay for employees

Mr Mulvey said he was always of the view that, culturally, where German owners – whom he described as traditionally very straight-talking people – gives an indication of something, "one needs to take cognisance as to what they say and try to alleviate their concerns".

Source: Irish News

SEC pushes US insurers for details on 'captives': WSJ

The U.S. securities regulator has asked life insurers to disclose the potential cost of forcibly winding down in-house insurance units known as 'captives,' whose business model has come under regulatory radar, the Wall Street Journal reported.

State insurance regulators, which approve these captive units, have previously raised concerns that some companies may be covering up their financial health by moving business to such related entities, the daily reported. (http://link.reuters.com/kaz65v)

Insurers that have been in touch with the Securities and Exchange Commission (SEC) on this matter include MetLife Inc, Genworth Financial Inc, Hartford Financial Services group Inc, Protective Life Corp and Reinsurance Group of America, the Journal reported, citing regulatory filings and people familiar with the matter.


The newspaper quoted some insurers responding that discontinuation of captives could hurt their financial condition and force them to raise prices on certain products.

Companies form a captive insurance unit if they are unable to find an outside firm to insure them against a particular business venture, or to get better coverage with lower premiums.

Such captive insurers can be set up with minimal disclosures and lesser amount of assets to back up these policies than the insurers themselves. Some insurers use captives to help consolidate their hedging of the risk in minimum-income and other guarantees sold on variable annuities, the report said.

None of the companies could be immediately reached for comment by Reuters outside of U.S. business hours.

(Reporting by Sampad Patnaik in Bangalore; Editing by Gopakumar Warrier)

(This story was refiled to add source to the headline)


Source: Reuters

　

　

　

National insurance policy in the offing

TANZANIA is determined to have a national insurance policy in place before the end of next year to help the insurance sector grows fast and contribute adequately to the national economy.

Financial experts believe that the envisaged policy would bring the requisite reforms and increase the sector's contribution to the gross domestic product (GDP) to between three and five per cent from the current 0.9 per cent.

The Parliamentary Standing Committee on Economy, Trade and Industry said in its annual report for the year 2013 that formulation of the policy will go a long way in enhancing the industry's contribution to the GDP.

"If the government wants to expand insurance coverage for the majority of the population particularly low income earners it should formulate an insurance policy," committee chairman Mahmoud Mgimwa (Mufindi North-CCM) said in Dodoma recently.

Reached for comments, Acting Finance Minister Saada Mkuya Salum told the 'Daily News' over the weekend that the policy will come into force at the beginning of the next fiscal year.

"The process involves a lot of stakeholders and that is why there were some delays in its formulation," Ms Mkuya said in a telephone interview. A study conducted by the Tanzania Insurance Regulatory Authority (TIRA) shows that only 19 per cent of Tanzanians are covered by insurance.

"Apart from the policy, the government should also take serious efforts to improve the sector by making use of information and communication technology (ICT), as this would increase revenues and check use of fake insurance cards," Mr Mgimwa said. On the other hand, the parliamentary committee said it was high time the government started insuring its fleet of vehicles and property.

"This will help widen the insurance coverage and at the same time save the government from losses it incurs when its vehicles are involved in accidents or when its property is damaged," the parliamentary committee chair said.

In an interview with this paper in July, this year, the Commissioner of Insurance, Mr Israel Kamuzora, said the country's growing insurance sector has been operating without a guiding policy since the market was liberalised 13 years ago.

The commissioner said the envisaged insurance policy will among other things direct whether the government should or should not insure its fleet of motor vehicles. "The issue on whether or not to insure government motor vehicles has been a very contentious matter, but the policy will give the way forward," he said then.

Ms Mkuya hinted during the interview that if the government is to insure its vehicles and property, then it would use the state-owned National Insurance Corporation (NIC) for that purpose.

A consultant hired by the World Bank and Bank of Tanzania (BoT) on the envisaged policy has already finished the work and offered recommendations which are now being considered, according to Mr Kamuzora.

Through the policy, the government would be advised to invest in the insurance sector against disasters as well as universal medical insurance for the population. The agriculture sector will also be considered by the policy.

"India and Philippines are among countries that have utilised insurance to improve lives of their people. The policy will be a catalyst for economic growth," Mr Kamuzora pointed out.

Source: allAfrica

2 million signed up for health insurance through federal, state marketplaces

By NOAM N. LEVEY

More than 1.1 million people have enrolled in health insurance plans through the marketplace operated by the federal government, the Obama administration announced Sunday.

A late-December surge in sign-ups - combined with rising enrollment on similar marketplaces operated by 14 states and the District of Columbia - means that about 2 million people nationwide appear to have signed up for health coverage under the Affordable Care Act since Oct. 1.

Not all states have reported their enrollment numbers through Dec. 24, so an exact tally is not available.

Most people who signed up for coverage have done so since the beginning of December. On the federal site, which is used by residents of 36 states, about 975,000 of the 1.1 million enrolled in December, according to the administration. The federal marketplace was hobbled in October and November by the disastrous rollout of the online enrollment system on the federal HealthCare.gov website.

It is still unclear how many of the roughly 2 million people who have enrolled will actually have health coverage starting Jan. 1. Many consumers probably have not yet paid their first month's premiums. Most insurers have said they will give people until later in January to make the initial payments.

Enrollment in the insurance plans created by the health-care law still lags behind administration goals. Officials had hoped to get 3 million people signed up by now, and 7 million by March 31, the final deadline for signing up.


 Source: News Observer

Bancassurance norms and products to give insurance industry a new direction

By Shilpy Sinha

After two sluggish years, the insurance industry is hoping that 2014 holds out better prospects amid expectations of stronger economic growth in the second half of the current fiscal. New product guidelines and bancassurance norms will also shape how the life insurance industry fares in 2014.

Life insurers will begin the year by launching 500 products aligned to comprehensive new norms aimed at making policies more customer-friendly. For instance, there will be a guaranteed surrender value after five years. There are new rules on the minimum death benefit as well.

This means companies are investing heavily in retraining agents to sell policies under the new framework in a market that's reorienting itself away from savings. The changes are also taking place in a year that will see a national election. "Macroeconomic factors will shape the growth of life insurance industry if there is a new government and new initiatives are taken which will have a rub-off effect on the financial services sector," said P Nandagopal, MD and CEO of IndiaFirst Life Insurance.


Term insurance plans with a purely protective function that are sold online will be a trend in 2014, he said.

The open architecture concept, in which a bank is allowed to sell products from many insurance companies, is expected to be a game changer for the industry. But while the finance ministry has directed banks to move into that direction, the state-run ones may not be ready to take to broking right away. Still, this will eventually widen access to likely customers, opening up more than one lakh bank branches that can be used to sell insurance products, especially in the rural areas.

Less than half of all bank branches are currently involved in selling any kind of insurance policy. A significant number of Indians are uninsured, with premiums as a percentage of GDP amounting to just 3.8%.

Sections of the industry have expressed concerns over the transition to the new norms with agents and other intermediaries worried that their incomes will be hit.

"The industry may see some business disruption in the short term while they are engaged in retraining their distribution force," said Anup Rau, CEO of Reliance Life.

"The changes will result in short-term pains due to lower commissions. But, in the long term, better quality of business and focus on persistency will help the industry in achieving sustainable growth."

Capital will remain a constraint for the industry, which manages assets worth Rs 20 lakh crore, with some of the shine having dulled after regulatory changes in 2010 to curb unit-linked insurance plans, or Ulips.

The limits imposed on charges and commissions have seen Ulip sales drop.

Companies will have to rationalise expenditure, Nandagopal said."There is pressure on the extent of capital being made available... both due to attractiveness of the industry and availability of capital," he said. The life insurance industry reported 6.58% growth in new business income in the first half of the current fiscal year. State-owned Life Insurance Corporation accounted for a bigger proportion of this, 7.25%, while private sector companies saw growth of 4.5%.

Source: Times of India

10 tips for buying insurance in 2014

By Jack Hungelmann

2014 marks the biggest change in health insurance since Medicare. For the first time ever, health insurance is mandatory for most Americans under age 65. The biggest change is that those people with pre-existing medical conditions will now be able to buy quality health insurance without fear of being declined, or facing a surcharge or a waiting period for pre-existing conditions that won't be covered.

The second biggest change is that those who earn less than 400 percent of the federal poverty level -- $45,000 for individuals or $95,000 for families of four -- will now be able to qualify for premium discounts on health insurance costs. The requirement to qualify for the discount is that insurance must be purchased on one of the new health insurance exchanges, aka marketplaces.

Compare health insurance rates to find the best deal.



1. Work with a knowledgeable health insurance agent.
 Eliminate about 80 percent of the difficulties of buying insurance online. A good agent can help you navigate the exchange site, help you determine whether you qualify for a discount and, if you do qualify, help you choose from among the various plan options and even help you enroll. They will be able to answer your questions as they come up. Best of all, having an agent help you doesn't cost a dime extra.



2. Don't buy insurance on an exchange if you don't qualify for a discount.
 Insurance companies that participate in the exchange in most cases offer many more options for qualified health insurance beyond what they make available on the exchange. You can go to individual insurance company websites to see what each company has available. Or, you can have your agent do that for you (see Tip 1).



3. Work with an insurance agent to plan health coverage for your family if dependents aren't covered adequately by your employer plan.
 If you have dependents covered under your group health insurance plan at work, unless the employer is paying for some of the cost, work with an insurance agent who will help you determine if you can get better coverage for less money on your spouse and/or children. Chances are if you have employer paid group insurance on yourself, you won't be eligible for an individual plan. But that doesn't preclude your spouse and children from having one, especially if the employer doesn't contribute anything toward dependent coverage costs.



4. Before choosing a health plan, be sure the doctors are "in network" and you can see specialists without a referral.
 Less costly plans often don't let you see specialists without a referral from your primary care doctor.

When you are considering plans, don't just choose the cheapest. Pay attention to who is and is not in network. About 90 percent of the time, it probably won't make a difference. But, that 10 percent can be a life-and-death situation.

In Minnesota where I'm from, the gold standard of choice is the Mayo Clinic. I won't pick a plan myself or recommend a plan that doesn't include the right to go there without begging for a referral.



5. Hire an expert insurance agent or consultant to audit your insurance program.
 Look for someone to make sure that all the major risks in your life are well-protected for risks such as major lawsuits, major damage to or destruction of your residence, premature death, long-term disability and, of course, major medical expenses.

An expert can help you identify where the gaps are and recommend custom endorsements to plug those gaps. I have done several hundred audits over the years and typically find at least 15 to 20 coverage shortfalls or inconsistencies.



6. Protect your income with long-term disability insurance.
 Some employers provide it. However, benefits that you receive while disabled usually are taxable income. So, if the benefit is 60 percent of your salary, you will be lucky to yield 45 percent after taxes.

Unless you can live on that 45 percent, contact your employer. Request that the company include the premiums it pays you for long-term disability insurance in your taxable income. By doing this, you will have paid income taxes on the relatively small premiums so that if you become disabled, you can collect those benefits tax-free.

If your employer can't or won't do that for you, buy a supplemental individual policy that will cover at least the income taxes that you will have to pay on your group benefits.

If you don't have coverage at work, talk to a knowledgeable agent to help you qualify for and buy a privately owned long-term disability insurance policy. Because you're buying this policy with after-tax dollars, benefits will always be tax-free to you!



7. Buy an umbrella liability policy to cover insurance gaps in your primary policies.
 All umbrella car or homeowners insurance policies cover lawsuits. Typically, these policies will provide a base layer of coverage, usually $300,000 or $500,000 per claim. Then, if you're sued for more than those limits, an umbrella policy will pay excess amounts up to the umbrella limit of $1 million or more.

The real advantage of an umbrella policy is that it will defend and pay some judgments against you from personal lawsuits not covered by your primary auto or homeowners policies.

Never worry about the price of an umbrella policy. Instead, focus on whether it is broad enough to cover those uncovered risks in your life not covered by auto or homeowners insurance.

Here are just a few examples of lawsuits not covered by auto or homeowners insurance that can be covered by the right umbrella policy:
Damage to rental cars in the U.S. or abroad.
Injuries you cause to a water skier while renting a powerboat on vacation.
Liability that you agreed to in a contract such as a wedding reception contract, making you responsible for all injuries and/or property damage caused by wedding guests.
Injuries you cause to a co-worker while driving a company-furnished car.


8. For a townhouse or condo unit, be sure you get the "deductible assessment coverage."
 The rates for condominium master policies have been on the rise. To keep the premiums affordable, many associations have opted for higher deductibles of $5,000, $10,000 or even $25,000. Not only does that keep the premiums affordable, it also minimizes the number of claims made against the master policy, which helps keep the rates low.

Here's the problem: If the loss is caused by you from, say, a kitchen fire or dishwasher overflow, or is confined to your unit, most associations will require you to pay the deductible on the master policy.

"No problem," you say proudly. "I have loss-assessment coverage on my homeowners unit-owner policy." Virtually all laws on assessment coverage limit deductible assessments to $1,000. If that wasn't enough bad news, it also requires that the assessment be against all unit owners.

The bottom line is that you will need to get a relatively new coverage -- separate coverage -- called "deductible assessment" coverage. Find out what your association master policy deductible is and buy deductible assessment coverage for that amount from your insurance agent.



9. If your home is for sale, watch out for vacancy exclusions.
 With the housing market in the dumpster the past few years, this common problem has arisen. A couple buy a new home before their existing home sells. They move into the new house, leaving the old house empty. Three months later, vandals break into the old home, have a wild party and completely trash the place, causing $50,000 in damage, and the owner has no coverage.

Homeowners policies exclude glass breakage and vandalism damage if the house has been vacant, that is without enough furniture to be lived in, for 60 days or more. There are high-risk policies you can buy to cover a vacant house, but the coverage is watered down and the premiums are three to four times greater than what you've been paying for homeowners insurance.

The better way to keep your homeowners policy and still have vandalism coverage is by keeping enough furniture in the house so it can be lived in, such as a kitchen table, a couch and a lamp in the living room, and one bed.



10. For all of your insurance needs, pick an insurance agent with great expertise.
 What most people don't realize is that you can get an insurance expert for the price of an intern. Since all agents work on commission, an agent with a lot of experience costs exactly the same as a less knowledgeable agent.

The biggest mistake that people make when they buy insurance is that they shop based on price and end up with the agent who gave them the best quote, often with very little expertise. In fact, they would be much better off coverage-wise and price-wise if they shopped for the expertise of an agent first, then had the expert design insurance coverage with the right specifications and had the expert shop for that coverage.

Shopping for the best price first leaves you with a good deal but the wrong coverage. Shopping for expertise first leaves you with a competitive price for the right coverage.

When you have a serious claim, which choice would you make?

Source: Finance Yahoo

Mutual Benefit Assurance posts N609 m loss in 2012

By Yakubu Laah

Mutual Benefit Assurance Plc reported a loss of N609 million in its audited report for the period ended December 31, 2012.

From the result released to the Nigerian Stock Exchange (NSE) and made available to InvestAdvocate, the company recorded a negative profit after tax (PAT) of N609.261 million compared to N72.814 million reported in the same period of 2011; showing a 737 percent (737%) change.

Also, the company recorded a negative profit before tax (PBT) of N290.607 million in 2012 end compared to a positive of N238.931 million recorded in the corresponding period of 2011; indicating a loss of 222% in the review period.

However, gross premium written increased by 18.3% as the insurance company recorded N7.944 billion in the review period compared to N6.716 billion declared in the same period of 2011.

On its part, Prestige Assurance Plc, reported a PAT of N344.785 compared to N308.602 million in its third quarter (Q3) report for the period ended September 30, 2013; representing an increase of 11.7%.

Similarly, PBT grew from N460.720 in its Q3 2012 to N514.604 million in the review period of 2013.

Gross premium written declined from N3.363 billion in the Q3 of 2012 compared to N2.687 billion in the review period; indicating a decrease of -20.1%.

Source: InvestAdvocate

After troubled rollout, Obamacare's new test starts on New Year's Day

Obama

By Michele Gershberg and Toni Clarke

New Year's Day will bring a fresh test for President Barack Obama's healthcare overhaul, as hundreds of thousands of Americans will begin to use the program's new medical coverage for the first time.

For the nation's healthcare system as well as its politics, the stakes are huge in Wednesday's launch of the program known as Obamacare.

For anxious Democrats with an eye on the 2014 congressional elections, it is a chance for the Obama administration to rebound from the disastrous rollout of the website that enrolls people in private coverage through the program - and show that the White House's effort to help millions of uninsured and under-insured Americans is finally gaining its footing.

Or, as Republican Congressman Fred Upton and other critics of Obamacare warned in recent days, Wednesday could represent the beginning of another debacle that fuels Republicans' push to make dissatisfaction with Obamacare the chief issue in the November elections.

More immediately, the question is whether the program will work as advertised on January 1, after a chaotic enrollment period in which problems with the HealthCare.gov website led to a series of deadline extensions and undermined public support for Obamacare and the president.

Many of the newly insured under the Patient Protection and Affordable Care Act signed up just ahead of a deadline on December 24 to receive benefits on January 1, giving health insurers a tight framework to create accounts that can be accessed by doctors.

One fear, as expressed by administration officials and insurance industry executives, is that some people who need medical care during the first days of 2014 will head to the doctor, only to find there is no record of their new insurance.

That could mean patients would have to pay upfront and submit a bill to their insurance carriers later.

And even though the Obamacare program is not directly responsible for the private insurance purchased through its online exchanges, White House officials have acknowledged that any early problems with the coverage are likely to reflect on the administration.

Some insurance executives say that even a few stories of coverage problems during the next few weeks - which seems inevitable when dealing with such a massive program - could damage the reputations of the White House and the healthcare overhaul.

"The big moment of trust is 12:01 a.m. on January 1st, when a mother is standing in a pharmacy with a baby in her arms trying to get a script filled," Aetna Inc (NYS:AET)'s chief executive, Mark Bertolini, said this month. "Getting that information right so that we don't have these events which ultimately end up in our lap if we don't do them well, it's very important for us all to get it right."

A senior administration official acknowledged that "there will be bumps in the road."

"We need to plan for them, we need to anticipate and we need to make sure that we are ready to respond," the official said.

Physicians say they are used to dealing with changes to patients' insurance coverage and it is not unusual for there to be lag times between enrolling in a new insurance policy and the time it becomes official.

Some doctors will be willing to delay billing. Others may not be.

"Come the start of the year there will be dueling narratives: the people who have never had insurance before who are actually getting decent care for the first time in their lives, and people who are having issues with the administration's new policies," said Dan Mendelson, chief executive of Avalere Health, which has been tracking the healthcare overhaul.

"They are going to kind of cancel each other out," he said. "Three months from now when we are in the electoral cycle, the policies will be judged on the basis of enrollment (numbers), rather than any technical problems."

Mendelson expects the early 2014 problems to be limited given the light pace of enrollment spread out across the nation, and the fact that hospitals and other providers are experienced in troubleshooting coverage questions for patients.

'WE CONTINUE TO HOLD OUR BREATH'

Stories of patients with Obamacare plans who were turned away or asked to pay higher-than-expected medical fees upfront because of technical or administrative delays within the program would help the case of Republicans and other foes of the law.

During the past week, Republicans signaled that they will be closely watching what happens with Obamacare enrollees who seek medical care during the first several days of the new year.

"We continue to hold our breath with the next shoe to drop," said Upton, a Michigan Republican who is leading a charge in the House of Representatives against Obamacare.

"When folks visit their doctor or take a child to get necessary treatment (this) week, will the services actually be available? The consequences of the administration's incompetence could not be greater," Upton said.

Some Democrats, including House Minority Leader Nancy Pelosi of California, see the beginning of Obamacare coverage on January 1 as a turning point for the program that will work in Democrats' favor and reverse recent polling trends against Obama and his party.

"By the time we get into the spring, I think the Affordable Care Act will either be a (political) wash or a plus for Democrats," Pelosi told reporters last week.

As many as 7 million people had been expected to sign up for Obamacare coverage when the 2014 enrollment period ends on March 31, but that estimate has been thrown into doubt because of the program's error-plagued rollout.

Since October 1, more than 1 million people have signed up for private insurance coverage, according to state and federal estimates that do not yet include the last-minute enrollment surge of Dec 23-24.

The administration said it received 880,000 visits to HealthCare.gov on Christmas Eve. Obama himself has suggested that a "couple million" people have signed up for coverage in all.

GETTING IT RIGHT

The Obama administration - whose federal marketplace offers health plans in 36 states - and several of the 14 state-run exchanges have urged consumers to call up their new insurance plans to make sure they are covered.

The administration and several states have offered their call-center personnel to assist in cases in which there are problems with enrollments.

Late last week, the U.S. government signaled that it was ready to respond to any stories of distressed patients who emerge beginning this week.

The administration has set up contacts at all of the health plans working in the federal marketplace to "have a mechanism to address the issue (and) ... make sure that it can be resolved as quickly as possible."

Doctor groups said they were confident their current systems for handling patients who need help clarifying insurance coverage would make sure people receive needed care.

"Whenever a patient changes an insurance company or plan there is a period of adjustment," said Dr. Richard Schilsky, chief medical officer with the American Society of Clinical Oncology.

While there may be a period of limbo for some people between signing up and the insurance taking effect, unless there is a medical emergency, patients probably will be able to wait a week or so to see a doctor, Schilsky said.

"If someone needs care, they will get it," he said.

Dr. Charles Cutler, chair of the Board of Regents of the American College of Physicians, said many fellow experts in internal medicine who treat people for chronic disease would not be concerned if it took several weeks to get insurance information for a patient.

"In my practice we assume people are honest," said Cutler, whose practice is in suburban Philadelphia. "If they say they have signed up but are not in the system, we will get it straightened out." (Reporting by Toni Clarke in Boston and Michele Gershberg in New York; Additional reporting by Roberta Rampton in Washington; Editing by David Lindsey and Vicki Allen)

Source: Reuters

Insurance symposium coming to Iowa

Insurance company executives from around the country are slated to discuss global trends impacting insurance regulation at an inaugural symposium to be held in Iowa next spring.

Iowa’s Insurance Commissioner Nick Gerhart, along with state and insurance leaders, on Friday announced the creation of the Global Insurance Symposium, an event designed to enhance and further the dialogue on the increasing issues international regulations pose for today’s insurance industry.

The inaugural event will be held May 21-22 in Des Moines and will provide a forum for insurance professionals and regulatory authorities to share insights into challenges facing the global insurance industry, Gerhart said. The symposium will feature renowned industry keynote and panel speakers, as well as numerous opportunities for attendees to participate in roundtable and breakout discussion sessions with global insurance leaders.

"Insurance regulation is a global issue that may impact every company, whether they do business internationally or not," said Gerhart. "We are looking forward to welcoming international insurance leaders to Iowa and having two days of productive dialogue on the issues facing the 213 Iowa-domiciled insurance companies and all U.S. companies in the insurance business."

A planning committee consisting of Iowa’s leading insurance companies, the Greater Des Moines Partnership, the Iowa Economic Development Authority and the Iowa Insurance Division has been convened to shape the content of the Global Insurance Symposium.

　

Source: The Globe Gazette

Federal health market surpasses 1 million signups

By Josh Lederman

Obama admin: Federal health insurance market passes 1.1 million signups after December surge

A December surge propelled health care sign-ups through the government's rehabilitated website past the 1 million mark, the Obama administration said Sunday, reflecting new signs of life for the problem-plagued federal insurance exchange.

Of the more than 1.1 million people now enrolled, nearly 1 million signed up in December, with the majority coming in the week before a pre-Christmas deadline for coverage to start in January. Compare that to a paltry 27,000 in October —the website's first, error-prone month — or 137,000 in November.

The figures tell only part of the story. The administration has yet to provide a December update on the 14 states running their own exchanges. While California, New York, Washington, Kentucky and Connecticut have performed well, others are still struggling.

Still, the end-of-year surge suggests that with HealthCare.Gov now functioning better, the federal market may be starting to pull its weight. The windfall comes at a critical moment for Obama's sweeping health care law, which becomes "real" for many Americans on Jan. 1 when coverage through the exchanges and key patient protections kick in.

"As we continue our open enrollment campaign, we experienced a welcome surge in enrollment as millions of Americans seek access to affordable health care coverage," Marilyn Tavenner, the head of the Center for Medicare and Medicaid Services, said in a blog post.

The fledgling exchanges are still likely to fall short of the government's own targets for 2013. That's a cause for concern, because Obama needs millions of mostly younger, healthy Americans to sign up to keep costs low for everyone. The administration had projected more than 3.3 million overall would be enrolled through federal and state exchanges by the end of the year.

Tavenner said fixes to the website, which underwent a major overhaul to address widespread outages and glitches, contributed to December's figures. But the problems haven't totally disappeared. Thousands of people wound up waiting on hold for telephone help on Christmas Eve for a multitude of reasons, including technical difficulties.

The administration released the figures Sunday while President Barack Obama was vacationing in Hawaii. Although the president has spent most of his time relaxing with friends and family, he stepped into work mode late Friday for an update from aides on his signature domestic policy achievement. The White House said Obama told his team to focus on minimizing disruptions for those switching plans.

For Americans who successfully chose insurance plans by Dec. 24, coverage should start on New Year's Day for those who pay their first month's premium by the due date, which in most cases has been extended until Jan. 10.

But insurers have complained that another set of technical problems, largely hidden from consumers, has resulted in the government passing along inaccurate data on enrollees. The White House says the error rate has been significantly reduced. Yet with a flood of signups that must be processed in just days, it remains unclear whether last-minute enrollees will encounter a seamless experience if they try to use their new benefits come Jan. 1.

The political fallout from the website's calamitous rollout could pale in comparison to the heat that Obama might take if Americans who signed up and paid their premiums arrive at the pharmacy or the emergency room and find there's no record of their coverage. Republican critics, already on the lookout for health-law failures to exploit in the 2014 midterm elections, would be emboldened to argue that shortcomings with the law's implementation have jeopardized Americans' health.

As make-or-break January approaches, officials are also working to prevent gaps in coverage for millions of Americans whose individual policies were canceled this fall because they fell short of the law's requirements. In one of a series of last-minute tweaks, the administration in December said even if those individuals don't sign up for new plans, they won't face the penalty the law imposes on Americans who fail to get insurance by March 31.

A key indicator of whether state-run exchanges are keeping pace with the federal exchange will come next month, when the administration releases full December figures. Overall, the goal is to sign up 7 million Americans before the first-year open enrollment period closes at the end of March.

A few states offering their own updates have posted encouraging totals, including New York, where more than 200,000 have enrolled either through the state exchange or through Medicaid, a government program expanded under Obama's health law to cover more people. In California, a tally released Friday showed nearly 430,000 have enrolled through the exchange so far.

"The basic structure of that law is working despite all the problems —despite the website problems, despite the messaging problems," Obama told reporters before departing for Hawaii.

Another major unknown is whether the recent surge in enrollments skewed toward older Americans whose medical needs are expensive to cover, or whether the administration succeeded in recruiting younger and healthier people whose participation is critical to the law's success. Those details for December are expected to be released in mid-January.

Meanwhile, with the website now able to handle higher volumes without crashing or clogging up, the government plans in January to ramp up outreach to consumers to encourage more people to sign up, the administration said.

Source: Associated Press