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Reliance Life Insurance Company has been slapped with a fine of Rs. 10 lakhs by the insurance regulator in India, IRDA.

Reliance life insurance was hauled up for a variety of reasons but was fined only on 2 counts which include paying excessive referral fees and selling policies which have not been approved by IRDA. Reliance Life was fined Rs. 5 lakhs for each of these issues. The amount of referral fees that can be paid to insurance distributors are clearly define by IRDA and life insurance companies need to strictly follow these guidelines. Also every life insurance policy has to get the prior approval of IRDA before it can be sold by any life insurance company.

There were some other issues also for which IRDA has issued a warning to Reliance Life but has stayed away from a fine as they were first time occurrences. These include opening of branches without the approval of IRDA, outsourcing of key jobs which are not permitted and for not issuing licenses in a timely manner.

The President of Reliance Life, Mr Malay Ghosh had appeared in person for sharing its stand to IRDA.

September 2010 was almost like a new era for life insurance business in India. The lucrative commissions which were being paid to life insurance middle men got reduced slightly. Ulips were made much more customer friendly and aligned more towards a life insurance product with increase coverage levels. The lock-in period was ULIP was also increased.

While all this was great for the customer, not all participants have benefited from it. Life insurance companies had to pause and take a hard look at how business was being sourced. The internal cost structures needed to have a close and hard look. Expenses had to be controlled and payouts needed to be reduced. While most life insurance companies would be impacted in the short run, the fact that Ulips have become more customer friendly will result in more sales in the longer run.

It may not be the same for the distributors though. Companies which were relying largely on sale of only Unit Linked Insurance Plans have taken a hit. The drop in commissions means that the distributors would have to almost double their productivity if not more. Now that does not come easy. HTMT has confirmed that they had to shut their insurance sourcing business as it was no more lucrative enough to do the same. Some 300 employees had to be re-settled to other processes because this line of business was no more attractive enough from a business point of view.

There are some pains which the industry would go through. But in the long run, life insurance companies will evolve and move to sustainable sourcing channels.

A customer friendly move is always a good move!

Mr TR Ramachandran, the CEO and Managing Director of Aviva India has announced that a further capital infusion of Rs. 116 crores into its life insurance business in India.

With this additional cash infusion the total paid up capital of the life insurer has gone up to 2004 crores. The move shows that the company is focussed on its long term strategy in India. The additional funds would be used to bolster its current business.

A lot of life insurance companies had to re-look their business strategies after the new regulations on ULIPs came into effect. Most life insurance companies had to change their forecast numbers and even pushback their break-even dates. The revised ULIP norms had drastically cut down on the overall charges that could be levied on Unit Linked Insurance Plans, among a host of other customer friendly changes which were prescribed.

Aviva Life Insurance Company has performed well and has shown a growth in premium collection of Rs. 24 crores in the first 6 months of this year as compared to the last financial year. In September 2010, the company increased its premium collection by 35 crores. This goes to show that even though there is a reduction in charges, the life insurance business can grow as it results in increased customer awareness and satisfaction.

It is heartening to see new initiatives on the customer service side form life insurance companies. SBI Life Insurance Company launched an SMS based customer service initiative.

Any customer who has a problem with SBI Life can just send an SMS with text “SOLVE” to 56161 and they would get an immediate response from the company’s call centre in Mumbai. It is a great way to reach out to aggrieved customers – the greatness lies in the simplicity of the process. Anyone can do the same at any time and would be assured of a response.

The best part is that it will help SBI Life Insurance Company to also measure the amount of queries and issues which customers face. Very often an issue which is being handled by a local branch does not reach the proper channel and hence help does not come by easily. Through this method the company can keep track of issues being faced by their customers.

The initiative is inspired by the success a similar service received in one of its regions in Andhra Pradesh and is now being rolled out pan India.

Great move SBI Life! Also hoping that other insurance companies also launch similar and even better customer services initiatives for their customers.

ICICI Lombard General Insurance Company declared its financial results for the first half of the current financial year. The company showed strong growth in all its business lines except Marine Insurance where the premium collection has dropped and so has the profitability of the vertical.

A summary of the audited financial results of ICICI Lombard for the half year ended 30^th September 2010 are as follows:

Insurance Premium Collected:

(All figures are in Rs. Lakhs)

The company has made substantial gains in its investment income also. The investment income in the 1^st half of the current fiscal stands at 86.48 crores as compared to 82.66 crores in the same period last year.

General Insurance companies divide their businesses into 3 broad categories for the purpose of declaring their financial result – Fire Insurance, Marine Insurance and Miscellaneous. The miscellaneous insurance consists of retail products like health insurance, motor insurance travel insurance which almost everyone buys. So it is strange that general insurance companies should not split this for everyone to understand the performance in these sectors. It is not mandatory so I guess you cannot blame the general insurance companies for not splitting them during the results!

Birla Sun Life Insurance Company has clocked a profit in the first half of the current financial year. This comes with a sharp increase in the premium collections of linked individual pension plans and other linked individual life insurance plans. Birla Sun Life has seen an increase in premium collected across all its business lines which has seen the company report a profit after tax of Rs. 29.26 crores in the first half of this financial year.

A summary of the un-audited financial results of Birla Sun Life Insurance Company for the year ended 30^th September 2010 is as follows:

Birla Sun Life Insurance Company recorded a Profit After Tax of Rs. 29.26 crores in the first half of this fiscal as compared to a loss of 238.36 crores in the same period last year.

The life insurance company seems to be well on their way to strong numbers this year as the  second half of the year is where the real action happens with people increasing the purchase of life insurance plans for tax saving purposes.

ICICI Prudential Life Insurance Company announced its half yearly results for the first half of the current financial year 2010-2011. Overall the life insurance company has seen a decline in its losses from 105.1 crores in H1 2009-2010 to 101.1 crores in the first half of the current year.

ICICI Prudential Life Insurance Company saw an increase in the premium collected in the first half of the year from 6477.2 crores to 7267.2 crores as compared to the same period last year. The maximum increase was observed in the non-linked group insurance segment. The non-linked regular plans also saw an increase while linked life insurance premium collection has seen a dip.

A summary of the life insurance premium collected by ICICI Prudential Life Insurance Company is as follows:

All figures are in Rs. Lakhs

Overall the earnings per equity shares stood at -0.71 compares to -0.74 in the same period last year.

ICICI Life Insurance Company has launched some attractive plans in the last couple of months which include a pure online term insurance plan called iProtect which has very low premiums and could be a potential winner in the market. In addition to that the company has launched ICICI Pru Life Link which is a single premium ULIP plan.

Bharti Axa General Insurance Company is planning to infuse more funds into its operations over the next two years. The company plans to infuse an additional Rs. 200 crores over the next two years. The additional amount would come in the current ratio of shareholding pattern, which is 76% by Bharti Group and the remaining 24% by the Axa Group.

Bharti Axa General Insurance Company would infuse Rs. 60 crore this month. This will take the overall capital infusion into the insurance company to Rs. 460 crores.

The company has some major products lined up for launch and is awaiting regulatory approval for the same. The new products would include health and motor insurance plans.

Bhart Axa General currently enjoys a market share of about 3.45% in the general insurance space. The company intends to increase its focus on the health insurance segment and take the product to more than a quarter of its overall business.