Weekly Insurance Round-up Tuesday, September 14, 2021
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We're back with this week's edition of Beshak's Weekly News Round-up - an analysis of all Insurance News & Updates straight from our research team.
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- The Demand for Unit linked insurance plans (ULIPs) soars post Covid-19
- Rewarding better health, with better insurance
- Unclaimed insurance amounts to be moved to Senior Citizen Welfare funds
- Amicus insurance brokers to merge with First Policy insurance brokers
- ICICI Lombard- Bharti AXA demerger gets a final nod from IRDAI
- Insurtech Startup Nova Benefits raises $10 Mn In Series A Round
- The pandemic has been an eye-opener for all of us in many ways. As people started thinking about the long-term, two types of financial products started becoming more relevant. One - insurance, two investments.
- As a combination product that brings together both life insurance and investments for customers - ULIPs or Unit-linked Insurance plans have been gaining traction in the last few months. In ULIPs, a part of the premium is used to provide life insurance coverage and the rest is invested in the stock market.
- A recent survey conducted by Bajaj Allianz Life Insurance Company with 499 respondents (ages 21-50 years) found that 2 out of every 3 respondents (67%) intend to invest in ULIPs in the coming year.
- Certain reasons why ULIP is becoming popular now can be noted as follows:
- Ease of Tracking Investments
- Having a life insurance component
- A relatively low-cost structure over time
- The convenience of adding a rider or top-up
- It was also noted that ULIPs were in demand amongst the middle-income group mostly because of its partial withdrawal facility. While a majority of the young investors in India preferred investing in Systematic Investment Plans (SIPs), the older generation (people >40 years of age) preferred lump sum investments.
- With SIPs, investors can invest a fixed amount of money in the selected investment product at predefined intervals.
As individuals and families recognize how unpredictable life can be - they are seeking flexible and dependable modes of investing their money. While ULIPs turned off people in the past because of their low returns and low transparency (compared to products such as Mutual funds) - this survey shows that this is changing - and ULIPs are gaining better traction as an investment tool that is flexible and customizable.
Source: Cafe Mutual
- GOQii, a preventive healthcare startup has been testing insurance products under IRDAI’s Regulatory Sandbox (Live testing of new products or services in a controlled/test regulatory environment) co-created with partners Star Health Insurance, Bajaj Allianz General Insurance, and Kotak Mahindra General Insurance.
- GOQii currently manufactures fitness wearables that can track the physical and dietary health of users. Depending on the selected plans users get access to coaches and doctors on the platform.
- Based on the data they gathered, they’re now moving to make an insurance product available to their 5 lakh+ users through the same application.
- The plans are customized on the basis of health details and habits tracked through their app - which are constantly monitored for health improvements and changes.
- “We will be able to start our outcome-based insurances, where once you have a health outcome, depending on the result, dynamically we will be able to change your pricing, coverage, and benefits completely,” said the GOQii spokesperson. However, from this quote, there is no clarity on whether they would also be restricting benefits (or increasing premiums) in cases where the user’s health deteriorates after a while.
There are a lot of experiments that are happening in the health insurance space currently. Mainstream insurers are also playing with the idea of rewarding good health and healthy habits through renewal premium discounts. When one’s health status becomes a factor that increases or decreases the premium, people will be more inclined to keep track of their health and stay fit. However, there might be some pitfalls, when people have conditions that are not specifically lifestyle-driven.
Source: The Hindu Businessline
- On the 8th of September 2021, Karnataka High Court asked IRDAI to make sure that the unclaimed amount with the insurance companies is transferred to the government’s senior citizen welfare fund, which supports BPL (below poverty line) senior citizens.
- This decision was taken after a Bangalore-based Law firm named Mars and Legal Attorneys and Barristers filed public interest litigation(PIL) stating that unclaimed policies amounting to ₹15,167/- Cr. is lying with various insurance companies including LIC and this amount should either be used for social welfare or be given to policyholders or legal heirs post tracing them.
- IRDAI also informed the court that they would keep a watch on insurers for the transfer of this unclaimed amount and in 2018 a total amount of ₹81.65 Cr. and in 2019 ₹398.66 Cr. was transferred to the Senior Citizen Welfare Fund
As per the latest report of IRDAI an amount of ₹347.32 Cr. remained unclaimed in 2019-20 alone. Unclaimed amounts happen when one of the following happens -
- the beneficiary is not reachable for payments auto-triggered by the policy (e.g. maturity, survival benefits, annuity payments, etc.) (or)
- the beneficiary submits documents initially and then does not submit further documents. (The beneficiary could be the policyholder or the nominee)
This can be reduced when insurance users work with credible financial advisors, who help them keep track of their policies, as well as act as the point of contact between the insurer and the user.
Source: The Times of India
Mergers & Acquisitions News
- On 5th August 2021, IRDAI granted approval for the merger of Amicus Insurance (an insurance broking and risk management company) with First Policy insurance that has a composite broking license, meaning they can provide both insurance and reinsurance services.
- The company officials expect that this merger creates opportunities for growth as well as leads to a 40% increase in their overall revenues.
- On 3rd September 2021, IRDAI gave its final approval for the demerger of the general insurance business of Bharti AXA General Insurance to ICICI Lombard by way of a scheme of agreement (a court-approved arrangement between a company and its shareholders/creditors).
- Post this demerger, Bharti AXA General Insurance will cease and both Bharti Enterprises and AXA will exit the non-life business.
- Bharti AXA General Insurance will then be merged into the ICICI Lombard non-life insurance business, in line with an announcement the companies made in August 2021.
- At the moment, there will be no changes in the policies and customers will be serviced as usual for their new policies, renewal, and claims. However, once the merger is completed, all Bharti AXA policies will be migrated to ICICI Lombard after removing any products that are similar to the ones they already have. This information will be shared with policyholders directly.
Investments in Insurtech
- Insurtech Startup Nova Benefits raised USD 10Mn. in Series A funding which was led by Susquehanna International Group (SIG) and Bessemer Venture Partners. Investors who also participated in this round include Multiply Ventures, Better Capital, and Titan Capital.
- Nova Benefits had previously raised $1 Mn as seed funding in the month of April in a round led by Multiple Ventures, Better Capital, and Bhavin Turakhia-led Titan Capital. With this amount of funding in hand currently, the company aims to expand its engineering, product management, sales, and customer success teams - that can help build several wellness offerings on their platform.
- Nova Benefits focuses on corporate health insurance which with its tech platform helps companies to improve their employee wellbeing by offering health insurance, daily fitness, and mental health counseling and wellness programs. Employees can access their wellness benefits on a single platform and increase their insurance coverage as required.
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