Sachin buys Rs 100 cr insurance cover for dream house

DEAR VIEWERS,

Having moved into his "dream house", Sachin Tendulkar has now secured his five-storey Bandra residence with a Rs 100 crore insurance cover, one of the biggest insurance deals by an individual.

The cricket icon has bought the insurance from a consortium of general insurers, according to industry sources.

"A consortium of general insurance companies has given an insurance cover for the cricketer's home in Bandra for a value consideration of Rs 100 crore," an official of a public sector general insurance company, who wished not to be named, said. As per the official, all the four state-run GIs along with a private insurer have provided the cover.

"Oriental Insurance Company, United India Insurance, New India Assurance and National Insurance Company are the four government-owned general insurers providing the cover along with a private insurer," the official said, adding the annual premium would be around Rs 40 lakh.

According to another insurance official, the cover has been taken in two parts. While a fire insurance policy has been obtained for Rs 75 crore, an additional cover of Rs 25 crore has been bought for household items like furniture, electronic gadgets and cricket accessories among others. The fire insurance covers losses from blaze, terror attacks, natural disasters like earthquakes, and burglary among others. The insurance covers the cost of the land, compound walls, besides electrical equipment.

The Tendulkars had moved into the sprawling 6,000 square feet villa in Bandra (West) in September from a flat that had been allotted to the maestro under sports quota.

"Everyone has a dream of owning a house. I, too, had this dream. I am happy that I was able to fulfill it," Tendulkar had said while moving into his new abode. The cricketer's residence stands on a plot that earlier housed a dilapidated bungalow, which he had bought for Rs 39 crore in 2007. It has been secured with high-walled fencing to avoid curious onlookers. CCTV cameras and sensors have also been installed. With this deal, Tendulkar has joined a select league of industrialists and filmstars who have taken such high insurance in the recent past.

---EDITOR

Mistake in filling details by an errant insurance employee causes trouble

DEAR VIEWERS,

Worli-resident, Ria Alamchandani had taken a health insurance policy from New India Assurance Company. According to standard procedures, the customer submitted her photograph along with the policy form, listing her sex as female. The medical insurance policy was issued for Rs 2 lakhs.
In May, 2009, Ria was admitted to a hospital in Marine Lines and with Acute Appendicitis and had to undergo an emergency appendix operation. The hospital authorities sent a request to the third party administrator (TPA) with the estimated cost of the operation and hospitalisation, requesting authorization for about Rs 65,000.

To the surprise of the policyholder and her family, the TPA reverted saying that the expenses could not be sanctioned as the policy listed the sex of the policyholder as male.

Ria’s father Rajan, contacted the insurance company who in turn told the TPA that it was an error and sent a fresh endorsement. Following this, the TPA contacted the hospital authorities to tell them that Rs 40,000 had been sanctioned.

The policyholder’s father moved the South Mumbai District Consumer Disputes Redressal Forum stating that the word Ms before name of the policyholder clearly suggests that she is a female. In addition to this Ria had also submitted her photograph along with the policy form.
Ria will be paid compensation of Rs 10,000 plus litigation costs of Rs 5,000. The Forum has directed the insurer New India Assurance to conduct an inquiry to find the employee whose error caused the policyholder mental agony.

.....EDITOR

Two Insurance Companies ordered to settle Motor Insurance Claims Rejected earlier

DEAR VIEWERS,

The Mumbai suburban district consumer disputes redressal forum passed a judgement ordering two insurance companies – New India Assurance and Chola MS to settle motor insurance claims of two vehicle owners, which were earlier rejected by them.

The first case involves Gunapal Shetty, who had taken a car insurance policy for his Tavera from New India Assurance Company. On June 26, 2009, the vehicle owner found his car missing from the spot where he had parked it in Chembur at night. He contacted the police authorities and filed a complaint. In February 2010, he contacted his insurance company to raise a claim. The insurer rejected his claims on the grounds that there was a breach in the conditions laid down in the policy as Shetty had given the car on hire.

Shetty approached the forum which observed that the purpose for which the vehicle was used cannot be a ground for repudiation of claims. The forum ordered New India to pay Rs 4.5 lakh plus 9% interest from the date the claim was filed which comes to Rs 80,000. In addition to this, it asked New India to pay Rs 5,000 as compensation to the policyholder.

In a separate case involving Cholamandalam MS and bike owner Kamal Bhisaniya, the insurance company had rejected the claim on grounds that there was a delay from policyholder’s end in filing the claim.

On March 5, 2006, Andheri-based Bhisaniya found his bike missing and reported it as stolen to the police department. After a week of no success in finding the bike, he contacted the insurer and filed a claim. Chola MS rejected the claim ass there was a delay in filing the claim.

The forum observed that delay in filing claim cannot be grounds for repudiation and held the company guilty of deficiency in service. It ordered Chola MS to pay Rs 35,000 plus 9% interest plus a compensation of Rs 2,000.

....EDITOR 

Employers cut down health insurance benefits due to increasing costs

DEAR VIEWERS,

The cost of health insurance coverhas gone up and employers are changing the benefits offered to employees in a bid to adapt to the situation. According to employee benefit survey conducted by Marsh India, a 20% increase in cost of health insurance is forcing employers to ask their employees to make a co-payment on policies. Co-payment means that the employee has to pay a part of the costs incurred when making a claim and the remaining part is paid by the insurance company. Around 33% organisations have applied co-pay on claims as compared to 13% last year.
The survey covered 1,800 employees in 188 organisations as well as 5 insurance companies, 5 third party administrators (TPAs) and 5 health and wellness solution providers.
The average policy premiumcost per employee has increased from Rs 6,800 in 2008-2009 to Rs 9,300 in 2011.  Over the last two years, under the group medical cover offered by companies, the average Sum Assured has come down to Rs 300,000 from Rs 500,000.
The survey reveals that over the next 3 years, more than 52% employers are likely to make changes in the benefits offered by them. Close to 90% of the employers have adopted some form of cost containment measures in their benefit plan as compared to 81% last year.

Sanjay Kedia, CEO of Marsh India said, "Companies will have to look at engaging with the employees to have a more preventive strategy and for early detection of illness to bring down cost."
"Understanding the underlying cost drivers and adopting appropriate measures such as employee engagement and wellness initiatives will result in greater long-term suitability. Some of the changes such as co-pay are aimed at having some kind of reasonable behaviour among those covered. Or else, there is a tendency to go for the most expensive room at the costliest hospital," he added. 

The survey shows that the parental coverage sponsored by organizations under group health insurance has reduced from 51% to 40%.

.....EDITOR

INSURANCE COMPANY ORDERED TO PAY ""DIABETIC POLICY HOLDER""

DEAR VIEWERS,

It is a widely known fact that hiding pre-existing ailments from the insurance company can result in rejection of claim. However, in a recent judgement passed by the South Mumbai District Consumer Disputes Redressal Forum, the insurance company was ordered to pay Rs 5.5 lakhs plus 9% interest to a diabetic policyholder.
 

The policyholder, Kanhaiyalal Ruia, had taken a mediclaim policy from United India Insurance in 1994. After the insurance company rejected his claims, he filed a complaint before the forum in October 2005. Ruia told the forum that he enjoyed good health in 2001, however his wife underwent some health complications in August 2001. His wife had to undergo hospitalisation and during this period, Ruia noticed an injury on his left toe.
 

At the time, he thought it was because of a shoe bite and because he was more concerned about the health of his wife, he took the injury lightly. The injury did not heal fully, after which he consulted a physician who found that his blood sugar levels were high. The physician attributed the high blood sugar levels to extreme mental stress and trauma and prescribed medication. Despite this, the wound did not heal and 3 months later the wound had become infected.
 

In December 2001, he was admitted to a hospital and the doctors amputated his left toe. In February 2002, he had to undergo another operation where the doctor’s had to amputate his left foot.
 

At the time of filing the medical insurance form, the doctor made an error stating that the patient suffering from diabetes since 15 years instead of 15 days.
 

To rectify this error, the doctor said, "As the complainant's foot was amputated, he thought that he was suffering from diabetes since last 15 years and accordingly he made the noting. Later on he realized that he had totally misunderstood the situation, and immediately issued a corrigendum and corrected his mistake." 

The forum observed, "There is no evidence prior to 2001, that the complainant had taken medical treatment for his diabetes."  It also said that the company's refusal to meet the claim amount "was without any basis and illegal". The insurer was ordered to pay the claim plus 9% interest plus Rs 8,000 for mental agony and harassment.

........EDITOR

HOW INDIA IS GRADUALLY BECOMING THE ""INNOVATION HUB FOR THE WEST""

DEAR VIEWERS,

Nirmalya Kumar and Phanish Puranam are Professors at the London Business School (LBS). They are also co-directors for the Aditya V. Birla India Centre at the B-school. Working together they have just written India Inside - The Emerging Challenge to The West which has been published by the Harvard Business School Press. In this interview, they speak to CD on how India is gradually becoming the innovation hub for the West. Excerpts:

What made you write this book?

Phanish: Thomas Friedman's The World is Flat made a number of good points about how India has become a destination for providing services to the rest of the world. But there is something in it that we did not agree with, which was the presumption that this was a steady state. India is good for services but the innovative work will continue to stay in the West and that's what will keep the West competitive globally. So the question we are really trying to answer in this book is, 'Can India be in innovation what it already is in services for the rest of the world?' And the answer is yes.

So where are the Indian Googles, iPads and Viagras?

Phanish: That is a wrong question to ask. The question is heavily biased towards thinking about innovation as products which are made for end consumers around the world. As I just said, that is not the only kind of innovation. So yes, I don't think there are any Googles, iPads or Viagras on the table today, but that has nothing to do with whether Indians are doing innovation that impacts the world.

Nirmalya: India can be the innovation hub for the world without doing any Googles, iPads and Viagras for the rest of their lives.

Can you elaborate on that?

Nirmalya: When multinational companies innovated earlier, the whole process was in R&D labs in the home country. Today what they do is that the break up that project into three or four sub-projects and do them in parallel. One may be done in Japan, one in Germany and one in the US. But one of the parts always comes to India. And that's why 700-750 MNCs have set up R&D labs in India.

Which companies have done this?

Phanish: GE's Jack Welch lab in Bangalore. What they are doing is a part of a very large set of projects, all of which are geared towards making, say, a new turbine jet engine. The Bangalore lab does some of the design, testing and simulation work. And the other labs around the world do other parts. All of this is integrated to make the final jet engine. That's what gets sold to a company like Boeing. Boeing as a customer will see GE's brand on it, but nowhere will it be said that it is made in India or there is an Indian component in there. But that doesn't make the Indian innovation less critical.

In fact, it makes irrelevant the question of where it was designed, because it wasn't designed in any place. The same is true for Intel. If you look at the chip development and process development teams of Intel, they are distributed around the US, Israel and increasingly, in India. In fact, the Indian centre has now overtaken the Israeli one. Again, we have the Intel Inside brand, but there is no way to tell how much of it came from Israel versus India. What we are trying to argue is that there are significant Indian contributions here which clearly are innovative and create value, but they are not seen by the end consumer.

Which are the innovations in India that you are most excited about?

Nirmalya: The GSD ( Global Software Development) model is perhaps India's biggest innovation in recent times. All the innovation that is taking place in India would not be possible if we did not have the GSD model. Indian companies have become excellent at being able to take a geographical co-located task, separate it and then put it together again.

........EDITOR

General insurance companies not to be paid ceding commission

Dear All,

Insurers have to pay back commissions they have received this fiscal year.

Indian general insurance companies will no longer be paid a commission on the portion of business they are required by the law to re-insure with the state-owned re-insurer.
The decision, on a directive from the finance ministry, risks increasing the already hefty underwriting losses of non-life insurance firms, which have to mandatorily re-insure 10% of their business with the General Insurance Corp. of India (GIC Re). In a letter to GIC Re last month, the ministry argued that general insurers didn’t need to be paid a commission, given that re-insuring a portion of their business with the state-owned firm was mandatory, said three people familiar with the development.

Following the communication, GIC Re informed the insurance firms that they wouldn’t be paid the so-called “ceding commission” any longer, said the three people, who didn’t want to be named. The decision is effective 1 April, which means the insurers have to pay back any commissions they have already received this fiscal year.
GIC Re pays the ceding commission to the primary insurer as compensation for placing the business with it. The commission covers the insurance companies’ cost of underwriting and administering the business.
“Insurance companies used to get ceding commissions of around 20% of the total business ceded, depending on their underwriting track record. But with this, we will have to even refund the commissions that we have received so far this fiscal,” said the reinsurance head with a private general insurance company who did not want to be identified. “This will increase our underwriting losses.”
India has 24 non-life insurance companies, including four in the public sector, with combined gross underwritten premiums of Rs44,126 crore in fiscal 2010-11. According to industry estimates, the domestic general insurance industry incurred underwriting losses of around Rs10,000 crore in the fiscal year ended 31 March.
Insurance firms further insure their business with reinsurance companies to spread their risk. Re-insurers, in return for being paid a premium, accept a portion of the liability assumed by the insurance firms while selling a cover. “The whole idea behind setting up of GIC Re was the creation of domestic reinsurance capacity,” said Rahul Aggarwal, CEO, Optima Insurance Brokers. “But it is not fair to deprive insurance companies of the commissions for the obligatory cession. On a macro level, since GIC Re and the four largest general insurance companies (combined market share of 60%) are government-owned, it will only mean a transfer of funds from one state-owned entity to the other.” Most Indian insurance companies cede more than the compulsory 10% to GIC Re.
“Insurance companies incur underwriting costs such as agent commissions, policy formulation and paperwork and other administrative expenses,” the general insurance company official cited above said. “Commissions are paid to compensate the insurers for this.” A GIC Re official confirmed the development. “It will benefit us. Since it is applicable from this fiscal, the commissions that have been already paid out will be refunded back to us by the companies.”
The official, who spoke on condition that he not be named, didn’t divulge a figure for the refunds it expects to receive.
Non-life insurers have taken up the issue with the General Insurance Council, the industry lobby group, said Amarnath Ananthanarayanan, chief executive officer of Bharti Axa General Insurance Company.
“The General Insurance Council will approach Irda (Insurance Regulatory and Development Authority) and seek recourse,” he said. “In absolute terms, companies with a larger book size will be hit more.”
 ......EDITOR

PROMOTIONAL RESULTS - CLASS-III TO CLASS-I - PARA 13.1. n 13.2 FOR AP STATE

DEAR ALL,

 Today evening our H.O. has declared the long awaited promotional results from Class-III cadre toClass-I cadre. The following employees' have been declared as successful candidates for the 2011 promotional exercise.

PARA-13.1

HYDERABAD REGION:

1. Mr.P. Ramesh

2. Mr. M.S.V.Ramani

3. Ms.Nivedita Reddy

4. Mr. Y.V. Ramachandra

5. Mr. K.Bhaskar

6. Mr. D. Swamy

7. Ms. T. Bhavani

8. Mr. K. Rohit Kumar

VIZAG REGION: NIL

UNDER PARA 13.2

HYDERABAD REGION: NIL

VIZAG REGION:

1. Mr. M.N. Sagar

2. Mr. N.S.S.Sudheer Babu

3. Mr. M.R.J.Nanda

4. Mr. Deva Charan

GICEU-AP EXPRESSES ITS HEARTIEST CONGRATULATIONS TO ALL THE ABOVE EMPLOYYE'S. More details are awaited.

With Warm Greetings,

M. HANUMANTHA RAO         T. GOPALA KRISHNA

                            PRESIDENT                    GENERAL SECRETARY .