India membership at MDRT soars 80%

Financial advisors (or agents) in the domestic life insurance business promise to strike it big at Indianapolis, where the annual meet of the Million Dollar Round Table (MDRT) is to be held from June 7 to 11, 2009. The MDRT is a gathering of almost 40,000 members from 87 countries and 497 life insurance companies across the globe. The growth in membership of MDRT professionals from India has been phenomenal, with a 80% growth logged over the last couple of years. SBI Life, HDFC Standard, LIC, Max New York Life have grown their MDRT numbers substantially. A MDRT membership is recognised internationally as the standard of sales excellence in life insurance business. For starters, to be an MDRT qualifier in 2009, he or she should have earned a first year commission of Rs 7,59,100 or a first year premium income of Rs 30,36,400 in the calendar January to December 2008. Anand A Jathan, member of Whole Person Task Force, MDRT, and former country chair for MDRT, told DNA Money, "India today holds the fourth position in terms of membership worldwide and the first position in terms of membership growth. Its membership has grown from just 229 members in 2003, 618 members in 2005 to 1999 members in 2007 and 3991 members in 2009. The number of qualifiers is much higher. In LIC, for example, number of qualifiers are 1196 but members are only 335." A qualifier has to pay $625 to become a MDRT member. "It is important to showcase yourself in the international space. These days many life insurance companies give incentives to agents to become a member. However, number of members who attend the meeting are less as this involves Visa issues and other registration charges," Jathan said. What's more, LIC's Rajesh Satoskar and R K Shetty will be the first two Indian life insurance agents in the history of MDRT to deliver speeches in the focus session at Indianapolis. How difficult was it to sell policies over the last few months? Satoskar said, "Obviously there was an impact of the recession on selling of big policies. Many people had blocked their funds and, due to the liquidity crunch, many big sales were in difficulty. Most high networth individuals were regular investors in stocks and properties and hence fund flow was restricted for life insurance. But a strong set up and a new product Jeevan Aastha geared sales". Rajender Sud, director and head, agency distribution, MaxNYL, said, "MDRT is one of highest pinnacles of success achieved by an agent advisor. At Max NYL, we provide and encourage our agents to look at insurance sales from a more holistic frame of mind." While their core responsibility is sales, our systems also encourage them to look at it as a viable career option. We have set in place certain processes that encourage our advisors to follow certain 'must do' items. Source: DNA / Kolkata: Wednesday, June 3, 2009 2:58 IST

Birla sunlife Insurance business has grown by 305% in 2008-2009

* Achieved first year weighted annualized premium of Rs. 2,959 crore, as against Rs. 2,205 crore in the previous year o a growth of over 34% o improved market share to 4.3%, from 2.9% in FY08 and grew market share to 8.5% from 6.6% amongst private sector players o ranked number 5 amongst private sector players o among the fastest growing life insurance companies in 2008-09 * Total premium revenue growth of 37% to Rs. 4,414 crore from Rs. 3,223 crore last year * Launched 5 new products in individual life segment to widen the customer offering o penetrated new segments such as Pension, Health and Traditional * A substantial growth in customer contact points o number of branches have grown to 600 from 339 last year o number of advisors grew to over 1,65,000 from 1,15,000 in March 2008. * All the funds have beaten benchmarks * The AUM reached an all time high, close to Rs 10,000 crores * The company has an enviable zero outstanding claims ratio · Emerged as only one of two life insurance companies in the top 10 to have shown YOY growth in each month of 2008-09

Satyam back to track with Rs 1,000 cr on salaries

Scam-hit Satyam Computer today said it has spent over Rs 1,000 crore onpaying salaries to its employees in the first three months of this year. According to the cash outlays information of the company for the first threemonths of this year, Satyam spent a total of Rs 1,026 crore on paying salariesand another Rs 342.72 crore in other employee-related segments. The company made a cash outlay of Rs 91.17 crore on medical insurance foremployees and Rs 251.55 crore on statutory compliance, the company said in thefiling to the stock exchanges. Overall, the company's total operating cash outlays stood at Rs 1,836 crore atthe end of March this year.The other expenditures of the company include — subcontractors, rent and utilities, travel and forex and other operating expenses. At the end of March this year, the company's total headcount stood at 41,622,while its key subsidiaries, including Satyam BPO, had an employee strength of3,828 associates. Further, the non-operating cash outlays by the company in the three monthsperiod include — capital expenditures (Rs 52.54 crore), marked to market losseson account of foreign exchange contracts (Rs 147.81 crore) and repayment ofloans (Rs 103.86 crore). It also includes — deposits and margin money for bank guarantees and other nonoperative expenses, it added. For the quarter ended December 2008, Satyamreported a consolidated net profit of Rs 160.50 crore and the total incomestood at Rs 2,327.21 crore.

Promise of big leap in Ulip returns

Come October, unit-linked insurance plans (Ulips) will give more returns to policyholders. The Insurance Regulatory and Development Authority (IRDA) today issued a circular capping overall charges that life insurers can levy on Ulip subscribers. The cap will come into effect on October 1. The insurance regulator has also decided to approve only those new Ulip filings that conform to the provisions of the circular. “All existing products that do not meet the requirements of this circular should be withdrawn or modified by December 31, 2009,” the regulator said. “Insurance companies have a number of Ulips and under each product there are various charges which are recovered from the contribution or from the fund value. It is decided that the IRDA will prescribe one cap on all charges put together,” the regulator said. The charges include a mortality levy, fund management fees, policy or administration fees and a surrender charge. The regulator has said the cap on charges will be based on the difference between the gross return showed in benefit illustrations and the actual return that policyholders get after adjusting for all charges. Benefit illustrations give policyholders an idea about how much they will get taking into account all charges. For unit-linked plans having a policy term of less than or equal to 10 years, the differences between gross and net returns shall not exceed 300 basis points (100 basis points is equal to one percentage point) and of this, fund management charges shall not exceed 150 basis points. For policies above 10 years, the differences between gross and net returns shall not exceed 225 basis points, of which fund management charges shall not exceed 125 basis points. At present, while selling Ulips, life insurers are required to show prospective policy-holders benefit illustrations assuming two gross returns — one at 6 per cent and the other at 10 per cent. Let us understand this with the aid of a benefit illustration of a unit-linked plan of a leading private insurer. A 40-year-old male paying an annual premium of Rs 1 lakh, with a sum assured of Rs 5 lakh for 15 years, will get Rs 26,88,132 at the end of the 15th year provided his investment grows at a gross rate of 10 per cent. Under the new rule, he should get at least Rs 28,69,336 on maturity, which is a gain of Rs 1,81,204. Post-October, insurers will also have to give on maturity a certificate to policyholders showing year-wise premiums, charges deducted, fund values, partial withdrawals by policyholders and the final payment. The new rule will certainly put private insurers on the back foot because over 90 per cent of their total business come from Ulip sales. The initial expenses on Ulips are very high, varying between 20 per cent and 60 per cent of the premium. A large part of this initial charge is spent by insurers on agency commissions. The new directive of the IRDA is expected to result in reduced commissions for insurance agents. Justifying lower caps on charges for longer term Ulips, the IRDA said, “Insurance products are long-term saving vehicles and the policy prescriptions should help the customers to move towards long-term-savings-cum-protection rather than short-term one.”

Prop for new pension plan

Subscribers to the New Pension Scheme (NPS) won’t have to pay any tax on maturity provided the sum is used to purchase an annuity plan in the year of exit. To make this possible, the finance bill of this year’s Union budget has proposed to amend section 80CCD of the income tax act and insert a new sub-section (5) . Under the proposed amendment, the assessee (who is a subscriber to the NPS) shall be deemed not to have received any amount (from the NPS) in the previous year if the amount is used to purchase an annuity plan. The New Pension Scheme allows for the receipt of 60 per cent of the corpus on maturity, while the contributor will have to buy an annuity plan with the remaining 40 per cent and get a monthly pension. If contributors invest the 60 per cent in an annuity plan of a life insurance company they won’t have to pay any tax under the proposed sub-section (5). The monthly pension income from the annuity plan will, however, be considered as income and suitably taxed. Contributions to the NPS and fund accumulation therein are already tax free. The New Pension Scheme, which was rolled out for all other individuals besides government employees from May 1 this year, didn’t find much favour with investors. Only 650 people joined the scheme since its launch, accounting for a total fund size of Rs 80 lakh. Though the NPS is a relatively cheap retirement product — only the Employees Provident Fund and the Public Provident Fund are better in terms of cost as they don’t have any charges — it failed to attract investors because the withdrawals on maturity were taxable. Even pension plans offered by life insurance companies allow for the receipt of one-third as lump sum on maturity without any tax liability. Thus, despite having the highest cost compared with all other products, premium income from pension plans accounts for 20 per cent of a life insurers’ total business. “The new provision on tax treatment will make the NPS more attractive to investors,” said Anil Chopra, group CEO, Bajaj Capital. “However, people should consider investment in the NPS in conjunction with the PPF or the EPF where withdrawals are tax-exempt,” he said. Chopra said that the exemption of the NPS Trust from paying the securities transaction tax and any tax on income would increase the return on investment for beneficiaries. Source: The Telegraph,Kolkata.Friday,10/07/2009