expanding health cover across the entire population. No less in importance is the PA cover, which is of equal necessity for over 1.1 billion numbers of Indian population. As many

insurers are willing to do so, and in as many ways as they possibly could spread the insurance

net wider, must be encouraged to bring e

safety net, as a social security measure. That is real development in insurance.

premiums of Rs.30,000 crore, as at 2008/09. The private sector players are seen as showing a

always, big corporate accounts fetching them big ticket premiums. If BSNL, a Govt.

organization offering phone services could do it, what of other organizations, such as banks

for their accountholders and the listed companies for their current list of investors and the

numerous employers for their employees? Every product sold by a manufacturer to a

customer through a dealer, could be sold with a PA cover, either at a concessional premium

rate or could be offered free, if the seller absorbs the cost of it. Marketing techniques of

products and services of other enterprises must be dovetailed by insurers to involve the sale of

an insurance cover to the individual of such product or service sold. That is what BSNL

example demonstrates. How does an insurer carry that conviction to others? That is the

challenge to him in devising his marketing plan.

Perception of risk in insurance has always been complicated and an enigma. Personal

Accident insurance is no exception. It is the perceived risk that decides the drawing up of the

terms and conditions it is the perceived risk that decides whom to sell the insurance to, it is the

perceived risk that determines the premium rates and last but not the least it is the perceived

risk that plays a significant role in the handling of claims. Risk grouping for rating is one

thing —it makes underwriting easier for standard risks but when risks are not standard,

subjective risk perception becomes extremely important from the underwriting point of view.

The PA premium is relatively smaller in volume; and insurers, therefore, tend to bundle it

with similar other covers, which a householder, a motor car owner, or a shop-keeper buys.

The present motor comprehensive policy offers PA cover to an insured as an additional cover,

but restricted to his traveling in the insured vehicle. Why don’t insurers offer this cover on 24-

hour basis, as a rider to a motor policy, now that it is no longer subject to tariff restrictions?

An Air France plane carrying 228 passengers and crew on an international flight has vanished

over the Atlantic Ocean after hitting heavy turbulence, according to airline officials. Reports

said the aircraft was carrying 216 passengers and twelve crewmembers, including three pilots.

The Airbus 330-200, operated by Air France, was flying direct from Rio de Janeiro in Brazil

to Paris in France when it went missing whilst flying through “a thunderous zone with strong

turbulence”. Flight AF 447 left Rio de Janeiro at 19:00 local time (22:00 UTC) on 31 May

and reports said the Airbus sent an automatic message at 02:14 UTC on 1 June reporting a

fault in an electrical circuit, some four hours into its 11 hour flight.

French officials believe the aircraft

may have been disabled by the storm before it

subsequently crashed. Up to a dozen reports of electrical failures were sent from the plane in

total before it vanished over the ocean. The jet also sent a warning that it had lost pressure.

The Airbus A330 was off radar and probably closer to Brazil than to Africa when it went

down and there was no contact with the crew during this time. The plane had been expected to

arrive in Paris at 11:10 local time (09:10 UTC) on 1 June. French President Nicolas Sarkozy

has warned there is very little hope of finding survivors.

Air France officials told reporters the plane may have suffered an electrics failure after being

struck by lightening whilst traveling through the stormy area with strong turbulence.

However, officials said all possibilities are being examined, although they added there was no

indication to suggest the incident was caused by an act of terrorism. An Air France official

said several of the plane’s mechanisms had malfunctioned. The last known contact with the

plane was at 01:33 UTC on 1 June when it was located around 565 kilometers (360 miles) off

Brazil’s northeast coast, near the island of Fernando de Noronha, according to the Brazilian

air force. As it left Brazilian radar range, the plane was flying normally at an altitude of

10,670 meters (35,000 feet) and a speed of 840 kmph (520 mph), the air force said. The last

major incident involving an Air France plane was in July 2000 when one of its Concorde

airliners crashed just after taking off from Paris. All 109 people on board were killed along

with at least four on the ground. In August 2005, an Air France Airbus burst into flames after

overshooting the runway at Toronto Airport following a storm. No one died in the incident.

Fraud remains one of the greatest threats to the existence of any

business and the insurance sector is most susceptible to this threat. In

the 2007 PWC Biennial Global Economic Crime Survey, it was

reported that the insurance sector r]eported the greatest direct losses

from fraud. In South Africa, it is estimated that insurers lose billions of

Rands each year through fraud.

Santam’s Forensic Services have adopted a          multidimensional model to

fight fraud and other related offences. This      model comprises of fraud

deterrence, fraud prevention, fraud awareness, searching for fraud and fraud investigation. An

important concept relating to fraud deterrence is the implementation of control measures and

the primary responsibility for establishing and maintaining these controls rests with

management. Santam subscribes to a zero tolerance approach which acts as a strong deterrent.

In all cases where the conduct amounts to a criminal offence, Forensic Services will report

such conduct to the relevant law enforcement agency. The fraud policy, code of ethics and the

disciplinary code are all policies that also acts as strong deterrents.

Fraud prevention is a component of risk management and includes creating an environment

which inhibits fraud. This is achieved by proper background and vetting processes. Searching

for fraud - there is no single method that can be implemented which will detect fraud the

moment it is committed. How-ever, it is possible to implement measures that will increase the

chances of detecting fraud before it reaches significant levels. Effective use is made of

technology in detecting frau

d trends and patterns offences. This event is held twice a year.

Fraud investigation is a structured process which is focused on the gathering of sufficient

reliable information to enable an investigator to either prove or disprove allegations received.

The results of such an investigation will dictate further actions. Where the conduct which is

the subject of investigation, amounts to a criminal offence, San-tam’s Forensic Services will

lodge a complaint with the relevant law enforcement agency, and shall render to such agency

such assistance as may be r

equired to investigate, charge and prosecute the offending party.

Despite constant reassurance to staff about protecting their identity when they report fraud or

other irregularities, they still seem to be reluctant to do so. This reluctance can be attributed to

their fear of retribution for making such reports. In order to address this dilemma and

encourage reporting, it is essential to adopt a policy that can offer protection to these reporters

and such protection is offered by the Protected Disclosures Act or commonly known as the

Whistle Blower’s policy. This policy

has been implemented and it is hoped that this policy

will encourage staff to report all their suspicions of fraud or other irregularities without any

fear of retribution. I guess if fraud is a disease, you would need a doctor to treat it. This rebranding

has really helped and we receive a lot more direct reports from staff.

(COURTSY: SAICB-May, 2009)

When NASA began the launch of astronauts into space, they found out that the pens wouldn't

work at zero gravity (ink won't flow down to the writing surface).

To solve this problem, it took them one decade and $12 million. They developed a pen that

worked at zero gravity, upside down, underwater, in practically any surface including crystal

and in a temperature range from below freezing to over 300 degrees C.

And what did the Russians do...?? They used a pencil.

One of the most memorable case studies on Japanese management was the case of the empty

soapbox, which happened in one of Japan's biggest cosmetics companies.

The company received a complaint that a consumer had bought a soapbox that was empty.

Immediately the authorities isolated the problem to the assembly line, which transported all

the packaged boxes of soap to the delivery department. For some reason, one soapbox went

through the assembly line empty. Management asked its engineers to solve the problem. Posthaste,

the engineers worked hard to devise an X-ray machine with high-resolution monitors

manned by two people to watch all the soap boxes that passed through the line to make sure

they were not empty.

No doubt, they worked hard and they worked fast but they spent a whoopee amount to do so.

But when a rank-and-file employee in a small company was posed with the same problem, he

did not get into complications of X-rays, etc., but instead came out with another solution. He

bought a strong industrial electric fan and pointed it at the assembly line. He switched the fan

on, and as each soapbox passed the fan, it simply blew the empty boxes out of the line.

Always look for simple solutions. Devise the simplest possible solution that solves the

problems. Always focus on solutions and not just on problems.

In fact vision without action is merely a dream. Action without vision just passes the time.

Vision with action can change the world! Do not seek to follow in the footsteps of the men

of old; seek what they sought. Life is "trying things to see if they work". We have to

understand that the world can only be grasped by action, not by contemplation. The hand is

more important than the eye... The hand is the cutting edge of the mind. The good ideas are all

hammered out in agony by individuals, not spewed out by groups. If you really want

something you can figure out how to make it happen. When the way comes to an end, then

change - having changed, you pass through. Perfect solutions of our difficulties are not to be

looked for in an imperfect world. Creative thinking is not a talent; it is a skill that can be

learnt. It empowers people by adding strength to their natural abilities which improves

teamwork, productivity and where appropriate profits. To live is to have problems and to

solve problems is to grow intellectually. The ultimate solutions to problems are rational; the

process of finding them is not.

Pool, also known as association or syndicate are common in insurance. Pool is an

organization of Insurers or Reinsurers through which pool members underwrite particular

types of risks with premium. Losses and expenses shared in agreed amounts. Pools in Indian

market are being administered by GIC Re. The Pools for various classes so far formed in

Indian market are:

FIRE POOL: THE Pool was operational between erstwhile subsidiaries of GIC and was in

existence till 2001. The sharing was on the basis of premium contribution to the pool..

HULL POOL: The Pool is operational even today between four Public Sector Undertakings

i.e. erstwhile subsidiaries of GIC. The sharing of experience of the pool is in equal proportion

for all the members irrespective of fact who contributes to the pool.

TERRORISM RISK INSURANCE POOL: After the Sept. 11, 2001, terrorist attacks in the

United States, the regulator set up a terrorism risk pool with the aim to provide capacity in the

domestic market to underwrite terrorism risks. The Pool was operational since 2001 wherein

all insurance companies including GIC are members. The sharing of experience is on the

basis of the loss bearing capacity extended by each of the members to the Pool. IRDA has

announced that the terrorism pool for non-life insurance will go up from current level of 7.5

billion rupees (118.3 million euros) because non-life insurers are facing more claims in India.

MOTOR THIRD PARTY POOL: The Pool is formed for coverage of Commercial Motor

Vehicles Third Party Liability exposure only and is operational since April 2007. The sharing

of experience is on the basis of the market share of the each of the company in “Gross Direct

Premium” for the year under consideration. GIC, the Pool manager, is also a member of the

Pool to the extent of Obligatory share. From April 1, 2009 IRDA has reduced the

administration fee to be paid to GIC from 2.5 per cent to 1.25 per cent of the total premium on

motor third party insurance business.

NUCLEAR POOL: Nuclear power generation is a high risk prone business. In India, to cover

the risk relating to new nuclear activities has been established by four local general insurance

companies. This Nuclear Pool is operated as the lead insurer by New India Assurance Co.

Ltd, and supported through co-insurance by remaining three non-life insurance companies and

further supported by the GIC and International Reinsurers for reinsurance.

The Authority had, vide its order no. 035/IRDA/ORD/TPA/FEB-09 dt. 06.02.2009,

terminated the TPA licence no.001held by M/s Dawn Services Pvt. Ltd. A copy of the order

was posted on our website for the information of all concerned. The notice sent by registered

post at the registered office of the company was returned back undelivered. The general

public is hereby cautioned against dealing with the company or any person claiming to be its

representative, in the capacity of a TPA. Anybody dealing with them will be doing so entirely

at his own risk and responsibility.

IRDA has constituted a committee to have a re-look at the existing regulatory architecture on

Bancassurance intermediary model vide its Order dated 04 th May, 2009 which is already

available on our website. The committee would like to invite views/suggestions from the

stakeholders. The views/suggestions may be submitted to the committee in writing at the

following address:

The views/suggestions can also be forwarded to the undersigned at the following e-mail :

WHEREAS, M/S. Protect Insurance Services (India) Pvt. Ltd ., (hereinafter referred to as the

‘Broker’) having its Registered Office at Kachwala Building, 3 rd Floor, Opp: old Passport

Office, 266, Dr. Annie Besant Road, Prabhadevi, Mumbai 400 025 has been granted license

by the Authority to act as a Direct Broker in the field of general insurance vide License No.

138 on 1 st April, 2003 and renewed till 31 st March, 2009 pursuant to the provisions of the

IRDA (Insurance Brokers) Regulations, 2002.

WHEREAS, the Broker vide letter dated 4 th November, 2008 communicated to the Authority

that it would like to discontinue as Direct Insurance Broker with immediate effect.

NOW THEREFORE, pursuant to the request made by the Broker for surrender of Broker

License, the Authority hereby cancels the Direct Broker License No. 138 granted to M/S.

Protect Insurance Services ( India ) Pvt. Ltd with immediate effect.

Insurance Industry in India has gone through many changes in last few years especially after

January 2007, when de tariff started. De tariff has influenced the automobile business in several

ways with significant changes in OD premium. Tariff’ is defined as fixed rate on which a product

or service is offered to customer. In tariff or regulated market condition either price or features of

an offering or both are fixed and monitored by some regulator in market. The regulator decided to

make the norms flexible as market had started entering into maturity phase. Insurance players had

also become financially established and gone through major changes in economic conditions of

the country and deregulation was required to let the market grow further.

1st, 2007. Complete price de tariff was not allowed in order to observe the changes and reactions

in market situation.

^TP premium was also increased and kept regulated.

^Concept of TP pool came in existence, where all TP premium collection goes to a common pool

and can be utilized according to market share of the insurance players in case of third party

liability. It was introduced to avoid sudden bankruptcy of any new or small turnover company.

^Complete de tariff was allowed for OD premium w.e.f January 1st, 2008

^TP premium was still kept regulated

^Terms and conditions and product features of motor insurance remained un changed

^The General Insurance Council (advisory body of insurers) was assigned to monitor the

activities in market to ensure market discipline

^IRDA issued a circular to ensure the minimum coverage and basic guidelines

^ 2009 was expected to bring next level of de tariff regime, when product feature will also be deregulated

along with the existing total de regulated pricing norms.

^Standard product guidelines remain unchanged to provide minimum essential protection.

However Insurers can file a wide range of add on covers to fulfill their all insurance needs in one

package. Some of such additional features are loaner car, cover against depreciation,

hospitalization cover, etc.

^All these covers will come at some loading on OD, but to keep the over all pricing reasonable

enough for customers several things would be introduced like voluntary excess, NCB protection,

etc.

Past one year has certainly raised the issue of increasing claim cost of insurance companies.

Insurers have also learnt from their experience that maintaining service standards is quite difficult

with this pricing. They have also tried to find certain cost controlling measures and focusing on

losses other than OD like theft. After seeing all these changes and consequences market is all set

to see the situation where all car manufacturers and insurance players need to work closely to

bring down the sky rocketing costs without affecting the degraded pricing and services to larger

extent.

device. Kareena Kapoor wants Saif Ali Khan to stream her favourite song on her mobile.

phone. In a more subtle brand promotion, a pug does everything from searching for the missing

socks to fetching homework copy ofr his ‘master,’ The common link in all these-and many more

such-mobile phone advertisements from Idea, Airtel, LG and Vodafone is that none emphasises

what most customers think to be the core value of the product: making and receiving calls.

Instead, they are advertising Net access, music downloads, text messages, navigation and so on.

In the world of mobile telephony, all this is known as “services” and is distinct from “voice.”

While insurance is a price competitive arena, trust and customer service play huge roles in

attracting and retaining customers. Insurance companies are facing increased competition and are

also expanding their range of offerings to include innovative products, discounted rates, and other

financial services, making cross-selling crucial to growth. In this new, more competitive and

complex market high-level customer service is increasingly important to customers, who can

obtain much of the basic information they need. The insurers who prosper in this newly

competitive environment will be those that strategically invest in customer care technologies and

meet customer expectations for superior service.

Doing business in the recession and competitive environment is most difficult task. Insurers are

developing sales methodologies to increase the business. So that they can help new customers to

get product information, register a request for interest in the offer by punching in their contact

>> Jack: "I want you to marry a girl of my choice" > >Son: "I will choose my own bride!"

> >Jack: "But the girl is Bill Gates's daughter." > >Son: "Well, in that case..."

> >Next Jack  approaches  Bill Gates.

> >Jack: "I have   a   husband   for y our  daughter."

> >Bill Gates: "But my daughter is too young to marry!"

> >Jack: "But this young man is a vice-president of the World Bank.."

> >Bill Gates: "Ah, in   that case..."

> >Finally Jack goes to see t he president of the World Bank.

> >Jack: "I have a young man to be recommended as a vice-president."

> >President: "But I alr  eady have more vice- presidents than I need!"

> >Jack: "But t  his young man is Bill Gates's son-in-law."

> >President: "Ah,          in that case..."………………… and the business is done.

Money Laundering is moving illegally acquired cash through financial systems so that it       

appears to be legally acquired. In simple terms, it is the process of creating an appearance that

large amounts of money obtained from serious crimes, such as drug trafficking or terrorist

activity, originated from a legitimate source. The stages of Money Laundering are:

a. Placement-wherein cash proceeds from illegal activity is disposed physically.

b. Layering- Wherein illicit proceeds are separated from their source by creating complex

layers of financial transactions.

c. Integration- wherein an impression is created of apparent legitimacy to criminally

derived wealth.

1. The Branch Managers/Agents/Corporate Agents are required to maintain the records of

types of transactions mentioned under Rule 3 of PMLA Rules 2005 as well as those relating to

the verification of identity of clients for a period of 10 years.

2. The AML program promotes   submission of Suspicious Transaction Reports (STR)/Cash

Transactions Reports (CTR) to the Finance Intelligence Unit (FIU)- India.

A. Integrally related transactions, premium amount greater than Rs. 50,000 in a month

should be examined more closely.   This limit will apply at an aggregate level

considering all the roles of   a single person-as a proposer or assured or assignee.

B. Integrally connected cash transactions above Rs. 10 lac p/m to be reported to FIU.

C. Ensure that premiums are paid out of clearly identifiable sources of funds, and

remittances of premium by cash should not exceed Rs. 50,000/-.

D. Premium/Proposal deposits beyond Rs. 50,000 should be remitted only through

cheques, demand drafts, credit card or any other banking channels.

1. A claim was notified. It involved loss of high-value goods in transit. The assured admitted

to investigators that he was fronting for individuals who wanted to invest dirt money for a

profit. It was believed that either the goods did not exist, or were removed by the purchasers.

2. A racket was operating in two countries. Luxury cars would be insured in Country A and,

after stealing, would be taken to Country B. The proceeds were invested in real estate &

public works. Country A was chosen as its laws required quick settlement of claims.

3. An individual purchases an expensive new car, with a loan. Enters into a Mediclaim

policy, which would repay the loan, in the event of he suffering a disability. Stages an

accident and co-opting a doctor, arranges for claim payment. A criminal organization was

running this as a racket, involving many such claims.

1. Policy holders

2. Financial and Non-financial Institutions

3. Public and Economy at large.

1. The prime Minister of China called President

"I'm sorry to hear about the attack. It is a very

big tragedy. But in case you are missing any

documents from the Pentagon, we have copies of

everything."

Musharraf: Mr President, I would like to express

Bush: What buildings? What people??

Bush: It's eight in the morning.

Musharraf: Oops...Will call back in an hour!

guy walks in and asks the barman,

"Isn't that Bush and Vajpayee?"

The barman says "Yep, that's them." So the guy

walks over and says, "Hello, what are you guys

doing?"

Bush says, "We're planning world war 3"

And Vajpayee says, "Well, we're going to kill 14

million Pakistanis and one bicycle repairman."

Vajpayee turns to Bush and says, "See, I told

you no-one would worry about the 14 million

Pakistanis!"

Interested officials of SHRIRAM GENERAL INSURANCE COMPANY LIMITED may send their original

and unpublished contributions at: jagendra.kumar@shriramgi.com

This tabloid is for private circulation to SGI employees.

The Editor’s latest write- ups published in the month of May 2009 are as follow:

Hyderabad

Delhi