M&A Guidelines Coming for Insurance Companies

Recently, IRDA (Insurance Regulatory and Development Authority announced that within two months M&A (Merger and Acquisitions) guidelines will be available for insurance companies.

J Hari Narayan who is the chairman of IRDA said to the reports of ET in a function which was organized by FICCI,

“It (guidelines) would be out soon. It is most likely to be finalized in the next couple of months. We have not taken any view we are examining it. We are examining the possibility.”

Currently, there is no any specific guideline for M&A in insurance sector over the country. Now, here are 22 life insurance firms and 21 non-life insurance companies in the country.

According to the Narayan, today non-life insurance products are taking large share. A data represents that more than 300 health insurance products have been offered by over 30 insurance companies which are both – general and life insurance.

Related to the insurance products there is big news which state that now car insurance will be comprehensive. Recently, the news came in light that if you want a motor insurance then you needn’t to go motor insurance companies because it will be now through any insurance companies.

The Economic Times published the news,

An official at the Insurance Regulatory and Development Authority (IRDA), while asking consumers to be more aware, says, “Dealers are neither agents, nor brokers’ insurers. What they quote is what they get from insurers. They can’t quote more or less than that.’’ Consumers should cross-check the price offered by various insurers, says the official. “Nobody should get carried away. No dealer can force you to get insurance.’’

Now, it is clear that in insurance sector a big change is going on. How much is effective the guidelines and car insurance feature, we will see in future. Still we are also looking some drastic changes in insurance products which may be useful for customers.

Life Insurance Industry Falling in Competition of General Insurance

According to the recent news, life insurance premium collection has fallen about 11.6% in the fourth quarter. In the financial year 2009 (April – March) has brought down about 6% according to the Insurance Regulatory and Development Authority (IRDA).

North-zonal Manager, Sanjay Kumar Jha from Bajaj Allianz said to the Economic Times, “The stock market crash in the previous fiscal led to a drop in the demand for unit-linked insurance plans, pulling down sale of new policies.” About the new premium collection ET says, “New premium collection clocked Rs 34,814.55 crore in Q4 against Rs 39,413.16 crore in the corresponding period of the previous fiscal. For the full fiscal, it stood at Rs 87,107.62 crore compared to Rs 92,988.71 crore in the previous fiscal.”

About the down it is said that the market leader LIC (Life Insurance Corporation) has gone more down about 10% whose market share was 60% to 63%. The collection has declined during the year which had been sold this year.

It is being said that LIC’s policy Jeevan Aastha premium collection would have been worse also.

Another news according to IRDA data shows that general insurance sector is in growth from 9% to 12.6%. Among the 16th non-life insurance companies only Reliance has posted negative growth in the sector.

In the other hand Birla Sun Life Insurance Rs 10,000 crore marks in Assets under Management (AUM). According to the Vikram Kotak who is the Chief Investment Officer said to the ET, “it gives us great pleasure to cross the landmark of Rs 10,000 crore of AUM and in the process registering a strong growth of 41 per cent year-on-year.”

On the analysis of Insurance sector we can say that the sector differ company to company not from policy to policy because in the one hand LIC is going down in life insurance where on the other hand BSLI is going up. Like it, in the general insurance policy all the insurance companies going up where Reliance is going down.

Insurance policy not only for oneself but for the significant and tangible things of life

In this fast paced world where the element of uncertainty dominates the scene, it is quite a sensible thing to get an insurance policy not only for oneself but for the significant and tangible things of life. With easy premium rates and convenient policy availing procedure, one can certainly get a policy of his choice within a space of very short time.

Ramnath Kashyap is a trader who deals in the wooden decorative items. His office is located in the beautiful valleys of Kashmir from where he transports all the manufactured material to the different parts of the country, but as every body knows, Kashmir has been an active zone of terrorist activities for the past many years. Due to it many times, Mr. Kashyap’s business has suffered a lot. Twice, his office was blazed off, by these sadistic social elements, due to which he suffered a big loss worth in crores. Not only the monetary loss but his inability to supply the orders also robbed him of his goodwill in the market resulting in leaving an indelible stain on his business profile. But not any more, as of now Mr. Kashyap has a general insurance policy by his side. This policy guards him from the loss occurred due to such incidents. General insurance policy in today’s time holds a lot of significance for the people of society, which chiefly includes business class people.

Speaking more elaborately on the topic of ‘general insurance’. It is a concept in the insurance domain that covers all the intangible aspects of life except the life itself which is covered under the title ‘life insurance’ policies. Under a general insurance policy, a person gets a cover against all kinds of uncouth jolts orchestrated by man (whether intentionally or unintentionally) or by the nature. Thus, a general insurance policy offers guard to the subscriber against all kinds of perils such as burglary, fire accidents etc. As said earlier, it even shields the person from the atrocities of nature in the form of floods, Tsunami and even earthquake. Earthquake which is one of the widespread phenomenons around the earth has been an event that has propelled the popularity of this policy. Not only the damage caused by earthquake but incidents like the recent Orissa floods and not to forget the destructive Tsunami tide which hit the Indian shores in 2006, has been the chief contributors in spurring the demand levels for general insurance domain. Normally, a general insurance policy is for a maximum tenure of one year. An ideal proposition for the likes of traders and for the families, it is one aspect of insurance where people can get their personal assets and other accessories insured. For people who are into business profession, it can work wonders by providing insurance for stock of raw material, insurance of office and other business related commodities.

However, after the recent Mumbai attacks, there has been a steep hike in the demand levels of the general insurance policy. The reason, well it is because, these incidents have been an eye-opener for people living in metropolitan who until now were thinking that terrorism is restricted to the border-aligned areas. But the 26/11 attacks certainly proved that the nemesis of terrorism is finally sprouting in the urban areas too, which accounts for the steep hike. With the introduction of terror based general insurance policy, majority of the people both from the middle class section as well as from the business class are not shying away from the idea of buying the policy.