General Insurance

Insurers will have to deal with more taxes in GST Regime: Report

Posted on 23 Aug 2016 by Easypolicy

MUMBAI: Insurance companies will potentially have to deal with more taxes once the GST is implemented with the emergence of the Centre and states as dual stakeholders, a report said. 

The number of taxes will increase as calculation of input-output tax credits will be done separately for each individual state in which they are earned, it added.

Insurance, being a service industry, deals with one single tax (service tax) with one administering authority (the Central government), the EY and CII 'Insurer of the Future' report said.

"One of the significant impacts on insurance industry under the dual GST structure would be the emergence of dual stakeholders in every taxable supply of service, the state government, where the supply is made and the Centre," it said.

From dealing with a central service tax for pan-India operations, insurers now will potentially start dealing with 38 taxes, including 35 state GSTs (SGSTs), including Union Territories, one Central GST (CGST) and IGST on inter-state supplies, it pointed out.

The report added that the reinsurance industry is undergoing a major change, with foreign insurers being permitted to set up branch offices in India.

The new rules are expected to create an even greater focus on services by foreign insurers as they compete for a share of the market, it added. 

The market for emerging risks such as cyber insurance, customised liability insurance and specific disease insurance is expected to grow, driven by the willingness of customers to pay a premium for specialised and innovative solutions.

Reinsurers have a key role to play in helping the insurance industry innovate and cover new frontiers, as the industry looks to them when it comes to exploring the unknown.

The report also stated that technology will form the backbone for this transformation, acting as both an enabler and disruptor.

Its role is expected to rapidly change from its current ancillary function to becoming a core competency for insurance businesses.
Solutions such as data analytics, robotics process automation, block chain and cloud, which is already being implemented, however, is only the tip of the iceberg in terms of their potential applications and overall ability to transform businesses.

The digital bar for insurers is rising continuously and the companies that can meet this challenge will build greater customer loyalty, improve cost efficiency and increase profitability, it added.

Source: Economic Times

Dated: 12th August, 2016

HDFC, Max Group Merge Life Insurance Businesses to Create Company Worth Rs 67,000 Crore

Posted on 10 Aug 2016 by Easypolicy

HDFC Chairman Deepak Parekh and Max Group Chairman Analjit Singh announced a deal merging their life insurance businesses to create what will eventually be India's largest listed life insurance company with an estimated market value of Rs 67,000 crore once the all-share transaction is completed in about 12-15 months.

The Max promoter group will be paid a non-compete fee of Rs 850 crore over four years. The boards of HDFC Life, Max Life and Max Financial Services approved the scheme of arrangement for merging the insurance businesses on Monday.

Arpwood Capital was the lead financial adviser to the deal. "As per the agreed valuation and exchange ratio, the relative valuation of HDFC Life and Max Life would be 69 per cent and 31 per cent, respectively," HDFC Life said in a release on Monday.
The merged entity will retain the HDFC Life name. Once regulatory and other approvals come through, the companies will engage in a series of transactions before the deal is completed: Max Life will be absorbed by listed parent Max Financial Services.
Source: Economic Times
Dated: 9th August

IRDAI Directs Insurers Not to Delay Claim Payments

Posted on 28 Jul 2016 by Easypolicy

Irdai has asked life insurers not to withhold or delay settlement of claims of policyholders if there is any objection from claimants to fill the discharge voucher. 

Discharge voucher is required to be furnished by claimants before raising a claim.

It is a standard practice by life insurers to inform about maturity date and amount of a claim to policyholders through a blank discharge voucher about 2-3 months in advance.

Policyholders have to furnish the information in discharge voucher and submit it back to the insurance company to raise a claim.

"Where the policyholder/claimant expresses unwillingness or reluctance or objection for any reason to execute the advance discharge voucher or to accept the amount, the Life Insurer should not insist on the discharge voucher or make it conditional for releasing the policy payment", Irdai said in a circular issued today.

In such an event the life insurer shall not withhold or delay the payment for this reason but make the policy payment to discharge its contractual obligations, it said further, adding the life insurer may preserve the proof of making the payment.

The discharge voucher sent to policyholder/claimant should necessarily contain policy number and the nature of payment and amount of claim under different heads including deductions, if any, and other relevant details, Irdai said. 

Insurance Regulatory and Development Authority (Irdai) said the provision was being made to protect the interests of policyholders as well as keeping in view the legal principles.

Contractual obligations are discharged by life insurers when making policy payments in cases of maturity or death claims or surrender of policy.

Source: Economic Times

Dated: 14th July, 2016

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