FDI in Insurance : increase in the limit

A day after the government announced its intent on allowing foreign direct investment (FDI) in insurance, the industry is upbeat. All companies with a foreign partner, whose shareholding is currently curbed at 26 per cent, have showed interest in increasing it to 49 per cent. "We are contributing capital even today in the insurance companies," a senior AIG (American International Group) official said.

In its home country, AIG is facing financial problems but said it will look at increasing stake in Tata-AIG Life and Tata-AIG General Insurance companies once the FDI norms are relaxed. "AIG will consider increasing its stake subject to the agreement between both the partners. We will review the situation at that stage (when the insurance bill is passed)," he said. "Standard Life will be increasing stake to 49 per cent," said Paresh Parasnis, principal officer and executive director of HDFC Standard Life.

"The first MoU that was signed between the promoters provided for that. Another agreement signed over a year-ago said that the valuation arrived would be at a fair value basis." But he's not jumping the gun. "We will have to wait and see as to what the new provisions provide for. Will the foreign promoter be allowed to increase stake through FDI or through a combination of FDI and foreign institutional investment (FII)," he said.

"It does not depend on whether the foreign promoters are willing to increase their stake but whether they are capable of increasing their stake," said US Roy, CEO and MD, SBI. "The situation will differ from promoter to promoter. BNP Paribas has so far not indicated anything. It will be decided by the shareholders.""There is also a need to augment resources in the banking and insurance sectors in order to permit them to serve the needs of society better," President Prathibha Patil said on Thursday.

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Infrastructure spending to double to 9% of GDP

The government is planning a raft of new measures to pitchfork investment in infrastructure to about 9 per cent of gross domestic product (GDP) over the next five years double the current level of 4.5 per cent. The measures would include steps to make it attractive for banks to lend to long gestation infrastructure projects, develop a deeper bond market powered with tax breaks and incentivise insurance companies park funds in infrastructure firms by investing in debt instruments.
An estimated investment of $500 billion (Rs 23 lakh crore) is required to upgrade roads, highways, ports and airports in the next five years, about 10 times the current level. A senior government official, who did not wish to be identified, told Hindustan Times that the objective was to hit the 9 per cent figure by 2014."The objective is to ensure that banks lend at a stable rate for infrastructure projects," said the official.

"There is an urgent need to ensure a stable lending regime for infrastcuture projects at about 12 per cent. The average effective rate of lending is currently at around 14 per cent," said Vinayak Chatterjee, Chairman, Feedback Ventures, an infrastructure consulting firm. The government is also planning to put in place an effective monitoring mechanism with stringent penal and regulatory powers to ensure timely execution of projects.

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Top 10 cheap car insurance tips

1. Compare car insurance quotes before buying. You can easily do this through an insurance aggregator like policybazaar.com. Typically you can save up to 55% on you insurance premium.
2. Compare both prices and features.
3. Watch-outs: a. IDV : This is the maximum money you can get in case of total loss. To reduce your premium your agent can reduce this amount. b. Voluntary excess : Say in case of an accident, you opt to pay for the first 5 thousand rupees. Then this amount can be reduced from your premium. But there can be a problem, if your agent does this without informing you. Which is what happens quite a bit, so watch-out. c. No claims bonus : Please ensure you get the right no-claims bonus. In case you take more than you are entitled to, your claim if any may not be processed.
4. Your cover note : This is valid for the first 60 days, after that you must get the final policy document. If you do not receive this, you may not be insured. Please ensure your broker / agent provides you this.
5. Cashless : Do not get over excited by this. Most companies have a cashless settlement process with multiple partners in every city. A broker can guide you regarding which companies have a cashless settlement tie-up with which company, and garage.
6. Always buy insurance from an insurance broker. Ask for the broker’s license number and cross check it on the IRDA website. These brokers are paid same amount irrespective of the company’s policy they sell. So they are not biased to any particular insurance company. An Insurance agent on the other hand can sell policy of just one company and hence will always push that company and its benefits.
7. You can get additional personal accident Insurance for passengers and driver. This is a great way to insure people who travel in the vehicle with you.
8. Be truthful in your declarations on the proposal form. This will ensure that your genuine claims will be paid.
9. There is a lot of mis-information in the market. So get everything in writing or cross check it on a reputed website like policybazaar.com.
10. Always drive safely. Never drive under the influence of alcohol. Over time this will reduce your premium while covering the risk.

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Car Insurance Glossary

Like all other industries, insurance industry also use specific terms that is often difficult for a layman to understand the meaning. In the following we have tried to simplify the terms as much as possible.

Representative - An insurance sales person; Independent representative who works for or on behalf of an insurance company ; Broker is an insurance sales person who deals with agents and companies to find the right insurance policy for the customer.

Claim - An insurance owner requests the insurer to pay the loss covered under a policy. Your claims to your company are "first-party claims. When a person claims against the other person's insurance company it is called "third-party claims."

Collision Coverage - Optional insurance covers the damage to your car caused by collision with another car or object. Is frequently required if you have a car loan.

Comprehensive physical damage coverage - Optional insurance covering damage to your car caused by something other than a collision or the car rolling over, such as fire, theft, vandalism, flood or hail. Is frequently required if you have a car loan.

Conditions - These are part of an insurance policy that states the obligations of the insurance owner and those of the insurance company in order for the policy to be in effect.

Insured Declared Value (IDV) - The premium is calculated on the basis of the IDV of the vehicle, which is basically the depreciated value of the vehicle agreed upon by the insurer and the policyholder. The IDV of a vehicle reduces with age.

Liability coverage - Offers you and any other party involved in an accident a significant sum to cover mainly the medical expenses. Normally these figures are divided into three parts, first one represents the maximum your insurance will pay an individual, second represents a cover to all individuals and third one covers damage to another car or property at the time of collision.

No Claim Bonus (NCB) - If you do not make a claim during the policy period, a No Claim Bonus is offered on renewals. Insurers reward policyholders by giving them substantial discounts on the Own Damage Premium. However the NCB is applicable only if the policy is renewed within 90 days of the expiry date of the previous policy.

Own Damage Premium (OD) - Payment of OD premium entitles you to claim compensation in case of theft or damage of your vehicle due to fire, earthquake, etc.

Personal Accident Cover – It covers you not only against Accidental Death and Permanent Total Disablement (PTD), but also against terrorism and acts of terrorism.
Policy Period - It is the period when the policy is in force.
Policy Holder – Owner of the policy.
Premium - The amount a policy holder agrees to pay the insurer for covering the risk.

Proof of loss – Documents you provide to the insurer to support your request for payment of losses. The company uses these documents to determine whether and how much it will pay. For example written repair estimates from auto body shops, police reports, etc.

Uninsured motorist coverage – Uninsured motorist coverage can pay for the injuries caused to you and damage to your property following an accident and the driver at fault does not own a valid insurance.

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Car Insurance

Motor Insurance or vehicle Insurance is all about protecting against financial losses arising out of vehicle usage. With the multifold rise in usage of four wheelers, motor Insurance is also termed as Car Insurance or Auto Insurance. Auto Insurance is one of the most common types of general insurance products. Car Insurance is mandatory by law and protects you and the people riding in your car from any legal claim or penalty made by a third party.

Family members who may drive you car can also be covered through auto insurance.Car insurance rates have been steadily rising in India over the past few years. Therefore it becomes very important that you get best insurance rates for your car. You can compare car insurance quotes online at policybazaar and can get best deal on your vehicle insurance.

Car insurance (also known as auto or motor insurance) is done to protect your vehicle from unforeseen risks. It basically provides protection against the losses incurred as a result of unavoidable instances. It helps cover against theft, financial loss caused by accidents and any subsequent liabilities. The cover level of Car insurance can be the insured party, the insured vehicle and third parties (car and people).

The premium of the insurance is dependent on certain parameters like value of the car, type of coverage, vehicle classification; voluntary excess etc. Car insurance gives confidence to drive peacefully. In emergencies it acts like a boon to the insurance holder.

With so many car insurance companiesvying for customer base in the market, it is quite difficult to make a decision like choosing the right policy and insurer. Figuring out the right insurance policy, fulfilling the requirement and being cost effective can be time consuming. Many a times car insurance may seem complex but having it saves you spending a fortune later. At policybazaar you can compare car insurance quotes online and save up to 40% on your premium.

Types of Motor Insurance:

The word Motor broadly covers a lot of classes of vehicles plying on the roads. These may be two-wheelers like scooters and motorbikes, three-wheelers or four wheelers like private cars, jeeps, buses, trucks, commercial taxis and other vehicles.

Car Insurance

This is the fastest growing segment in the insurance sector as car insurance is mandatory while buying a new car. Major car manufacturers are tying up with leading insurance companies to provide quick insurance to its customers. Car insurance covers loss or damage by accident, fire, lightning, riots, earth quake, hurricane, terrorist attacks, explosion, theft, third party’s claims and damages (like liability for third party injury or death, third party property and liability to paid driver). On payment of appropriate additional premium it covers loss or damage to electrical or electronic accessories and other significant items.

Two Wheelers Insurance

Two wheeler insurance is another type of popular auto insurance in India. It is governed by the Indian Motor Tariff. This insurance provides protection against natural and man made calamities like: fire, rockslide, landslide, storm, hurricane, flood, earthquake, burglary, theft, riots or any damage caused to the vehicle in transit by road, air, inland waterway or rail. Two wheeler insurance provides mandatory personal accident cover of Rs. 1 lakh to the insurer. This accident cover can also be opted for passengers. It also protects against legal liabilities arising due to third party’s injury/death or damage caused to its property.

Commercial Vehicle Insurance

This type of insurance covers all those vehicles which are not used for personal purpose. Trucks, buses, heavy commercial vehicles, light commercial vehicles, multi utility vehicles, agricultural vehicles, ambulances etc are covered under this insurance. The premium is calculated on the basis of the make and model of the commercial vehicle, place of registration, year of manufacture, current showroom price and whether the insurer is individual or corporate.

Insurance Companies in collaboration with the automobile manufacturing companies chalk out different kind of easy and less complicated plans for safe and easy insurance policy. HSBC India, New India Assurance, United India Insurance, Bajaj Allianz, ICICI Lombard etc are some of the prominent companies in India which provide commercial vehicle insurance.

What does Car Insurance Cover?

Car insurance or Motor Insurance is mandatory by law. It is a legal requirement to have a minimal level of insurance before driving a car in India. Coverage would differ by product; however following is a list of possible coverages:

1. Bodily injury liability- It covers bodily injury claims of people who get injured in an accident.

2. Property damage liability- It covers property damages to third partiessuch as another person's car.

3. Medical payments- This payment is done to the policy owner and other passengers in the policy owner’s car.

4. Uninsured and underinsured motorist coverage. This coverage protects you when the negligent driver has no insurance or insufficient insurance. In most states, this covers only bodily injury losses, though some states do include property damage losses.

5. Physical damage covers damage to your car in the following instances:

a. Covers losses to your car involved in a collision.

b. Covers non-collision physical damage if your car is damaged in storm or windshield breaks etc.

Car insurance is packaged into different coverage types and is broadly divided into two as discussed below:

1. Comprehensive car insurance policy protects against any loss or damage caused to the vehicle and its insured accessories as a result of natural and man-made calamities. These calamities can be broadly classified as ‘Natural Calamities’ and ‘Man Made Calamities’. Natural calamities include: fire, explosion, lightning, flood, typhoon, hurricane, storm, tempest, inundation, cyclone, hailstorm, frost, landslide, rockslide, fire and shock damage due to earthquake.

Man-made calamities include: burglary, housebreaking, theft, riot or strike, accident by external means, malicious act, terrorist activity and damage during travel by road, rail, inland-waterway, or air. This policy also includes personal accident cover, which provides accident cover for the driver of the vehicle while driving.

The owner can avail personal accident cover for passengers in the vehicle. Another mandatory feature is the third party legal liability cover. It protects the owner against legal liability arising from an accident causing any permanent injury or death as well as any damage to the property. It also covers for fire and theft provided the vehicles are laid up in a garage and not in active use.

2. Third Party car insurance policy- An insurance policy is between two parties, the insurer and the insured. Therefore, a third party is any person who is neither the insured nor the insurer. Third parties are mainly pedestrians, fare-paying and non fare paying passengers in a vehicle. People in the vehicles like the driver, owner or passengers are also third parties.

Fare paying passengers are the people who travel in public transport such as taxis, auto rickshaws and buses. Non-Fare Paying Passengers are the people who are allowed to travel in a vehicle for free. The Third Party car insurance policy covers your legal liability for any compensation to be paid arising from accident caused by your vehicle. It includes liability for death or injury to third parties like pedestrians, occupant of other vehicles, and outsiders other than passengers.

Passengers of private vehicles and pillion riders are also considered to be covered. As an owner of the vehicle you are insured against death or injury caused to passengers carried in the vehicle for hire. The liability covered is unlimited in case of death or injury. Damage to third party’s property is usually covered by the insurance policy.

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