No. 14 – February 2012
COVER NOTES
IN THIS ISSUE
Domestic News
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Auto Insurers to Deduct Depreciation on Painting Claims
L&T finance to buy Pantaloon’s retails stake in insurance joint venture
Infosys settles whistleblower lawsuit in the U.S
PSU General Insurers to Set Up Own TPA
IRDA amends rules to redefine meaning of ‘infrastructure facility'
Getting insurance for disabled is a difficult, costly affair
Your car is stolen? Pray to God the police never finds it!
IBM, Google, Goldman Sachs to launch LGBT resource guide for India Inc
No. 23 - November 2012
November 2012
Domestic News
 Auto Insurers to
Deduct Depreciation
on Painting Claims
 L&T Finance to buy
Pantaloon Retail's
stake in insurance
joint venture
Auto Insurers to Deduct Depreciation on Painting Claims
The Economic Times/ Preeti Kulkarni/ Bangalore/ November 7, 2012
For car owners used to insurers paying for their vehicles’ painting-related repairs, things are set to change.
Your insurer may soon stop footing your entire painting bill. The Insurance Regulatory and Development
Authority (IRDA) have recently proposed to include painting in the group of depreciable parts and fix the
rate of depreciation for it.
 Infosys
settles
whistleblower
lawsuit in the U.S.
At the moment, several companies don’t deduct the depreciation element from the painting charges, and
painting-related claims are fully reimbursed. However, acting on general insurers’ demands, the insurance
regulator has recently proposed to bring painting into the ambit of depreciable parts like rubber, plastic
parts, tyres and tubes, batteries, glass components and so on. IRDA’s contention is that since paint is
manufactured from polymer, it should be included in the group of plastic parts.
 PSU
General
Insurers to Set Up
Own TPA
The regulator has proposed to fix 50% as the rate of depreciation for painting materials. For the purpose of
calculating the amount of depreciation, painting materials will be assumed to be 35% of the total painting
charges.
 IRDA amends rules
to redefine meaning
of
‘infrastructure
facility'
“Effectively, insurers would deduct 17.5% (50% of 35%) from painting charges once IRDA comes out with a
regulation. The proposed regulation will be applicable only for the policies issued after the date of
regulation by IRDA,” says KN Murali, head, motor vertical, Bharti-AXA General. “Currently, as per General
Regulation 9 of Motor Insurance Tariff, the depreciation quantum is not fixed for ‘painting material’ though
there is an element of painting material added at the time of repairs. Painting material has limited life and
ideally insurers should deduct depreciation while settling the claim,” he adds.
“Today, some insures do not deduct any depreciation amount from the material cost, while others do, but
the rate varies as per the insurer and also the location. IRDA’s move will bring in some uniformity in this
space. It will, if implemented, also ensure that customers are not left confused due to the disparities in
insurers’ depreciation policies,” adds KG Krishnamoorthy Rao, MD and CEO, Future Generali India
Insurance.
 Getting
insurance
for disabled is a
difficult, costly affair
 Your car is stolen?
Pray to God the
police never find it!
 IBM,
Google,
Goldman Sachs to
launch
LGBT
resource guide for
India Inc
In simple terms, if you make a painting-related claim of say. 100, the insurer will not be liable to pay more
than. 82.5. “From the policyholders’ perspective, the proposed change will increase their share of expenses
at the time of accidental repairs claim...it definitely means lower claim settlement amount for
policyholders,” says Divya Gandhi, head, general insurance and principal officer, Emkay Insurance Brokers.
However, those who do not make a claim in a year might have something to gain from this draft regulation.
“For such policyholders, the premiums could decline in the long run, as the costs incurred by the insurers
go down,” says Rao of Future Generali. “Since the outgo will come down for the insurers, they might offer
discounts in premium on a case-to-case basis,” says Arvind Laddha, CEO of Vantage Insurance Brokers.
However, even if this benefit is actually passed on to the policyholders, the impact will be seen only over
the long-term.
THE DEPRECIATION FACTOR
2
November 2012
All motor insurance policies come with a depreciation clause, which stipulates that the insurer will deduct a
sum at the specified rate on the components replaced or materials added at the time of repairs after an
accident.
“The depreciation quantum is dependent on the type of parts replaced or materials added, besides the age
of the vehicle. For example, glasses will not have any depreciation deduction, while plastic parts will have
deduction of 50% towards depreciation. Metallic parts will have depreciation based on the age of the
vehicle. Younger the vehicle, lower will be the depreciation deducted for metallic parts replaced or
materials added in the vehicle,” says Murali.
This apart, the clause plays a role at the time of renewing your insurance policy every year. The
depreciation amount is deducted from the current ex-showroom price of your vehicle to arrive at its
insured declared value (IDV) – or the total sum assured – for the year. The reduction is calculated as per
the prescribed standard grid specifying the rate of depreciation as per the vehicle’s age as also for various
parts.
THE WAY OUT
If you wish to avoid the dent in your wallet, you can opt for zero depreciation covers. Such products are
offered as add-ons to comprehensive insurance policies. However, factor in the additional premium for
such covers.
L&T Finance to buy Pantaloon Retail's stake in insurance
joint venture
The Economic Times/ Arijit Barman / Mumbai/ November 7, 2012
L&T Finance Holdings, the financial services arm of L&T, is close to buying out Pantaloon Retail's stake in
the latter's general insurance joint venture Future Generali India Insurance Company. A formal
announcement is expected within the next 2-3 weeks, said three sources directly involved in the ongoing
transaction.
Currently L&T General Insurance Company is a wholly-owned subsidiary of parent L&T, founded two years
ago. It has till now been a part of the parent company and is not part of the group's financial services arm.
But this acquisition, according to the sources quoted earlier, is likely to help the engineering major
synchronize its insurance business under L&T's financial services offering.
Formed in 2007, Future Generali is a JV between Future Group and the Generali Group of Italy. The Future
Group owns 74% stake in the company while the Italian insurer owns 26% - the highest permissible under
Indian laws.
3
November 2012
Of the 74% stake, Biyani's flagship Pantaloon Retail, directly and via special purpose vehicles, holds 50%
while the Biyani family holds 24%. Both companies have a similar joint venture in life insurance, named
Future Generali Life.
ET on October 5 first reported that the two are in advance negotiations.
According to one of the sources quoted above, the discussions between the two were stalled for some
time over valuations after Biyani sought a Rs 600-crore payment for the Pantaloon stake. But now it has
come down to Rs 475-500 crore range thereby reviving the discussions.
Kishore Biyani, the CEO of the Future Group, and the spokesperson of L&T Finance Holdings did not want
to comment on speculation. Mails sent to YM Deosthalee, CMD of L&T Finance Holdings and Director, L&T
Insurance, did generate a response.
Pantaloon is Biyani's listed flagship company and monetising its insurance exposure will further deleverage
its balance sheet. As on June 2012, Pantaloon Retail is estimated to have had Rs 5,000 crore of debt, but
through a series of strategic deals across businesses, Biyani has managed to bring it down by half in the
past six months.
This will be the second value unlocking exercise by Biyani in his financial services portfolio and comes after
he sold a majority stake in his financial services arm, Future Capital, to private equity giant Warburg Pincus.
The Biyani family may still retain their stake initially but if the government hikes the limit in the sector to
49%, it will give them an exit route.
"The plan is to merge Future Generali India with L&T General Insurance in the near future as there is no
logic to keep the different pieces in different entities.
Generali would hold 26% stake in the new merged company and L&T's stake in the L&T General Insurance
will subsequently get transferred to L&T Finance for integration," said an insurance sector consultant
familiar with the plans, on condition of anonymity as the talks are still private.
This acquisition and subsequent realignment will make L&T Finance a one stop entity offering the entire
spectrum of products ranging from mutual funds, NBFC, broking, housing finance, portfolio management,
car finance and even insurance ahead of a possible banking licences getting issued for which L&T Group
has been a key contender.
Future Group's general insurance arm had grown its premium income 53% to Rs 938 crore during 2011-12
from Rs 612 crore collected in the previous financial year. The total share capital of Future Generali India
was Rs 512 crore as on December 31, 2011.
During April-August 2012-13, it has collected premium worth Rs 472 crore against Rs 384 crore a year ago.
Future Generali declared a net loss of Rs 42.5 crore in April-December last year.
4
November 2012
Infosys settles whistleblower lawsuit in the U.S.
Infosys settles the visa harassment lawsuit
The Economic Times/ Bangalore/ December 14, 2012
In August, account manager Satya Dev Tripuraneni sued Infosys in a California court saying the Bangalorebased company retaliated against him for blowing the whistle on what he claimed were fraudulent visa
practices. That same month, a court in another state, Alabama, dismissed a similar claim by Jack Palmer, an
Infosys employee who declined to settle out of court.
"We can confirm that we reached an amicable settlement, without any admission of liability. This
settlement enables us to avoid the costs and distraction associated with protracted litigation," Infosys said
in a statement.
Asked whether the settlement involved a financial pay-out and how much, an Infosys representative said
that "the terms of settlement are between the parties, and remain undisclosed."
Infosys shares closed barely changed at Rs. 2,277 on the Bombay Stock Exchange on Wednesday before the
announcement. "More important are the investigations by the Department of Homeland Security and the
federal grand jury into visa misuse by Infosys. This is not as significant, considering the earlier lawsuit by
Jack Palmer was dismissed," said an IT analyst with an overseas brokerage.
While Infosys has fought off claims of harassment it is still the subject of a criminal investigation by the
government into its use of visas. Palmer and Tripuraneni claim that Infosys used short-term B1 visas to take
employees to the US to work on projects instead of the H1B visas meant for highly-skilled workers. The
company denies any wrongdoing.
PSU General Insurers to Set Up Own TPA
Decision aimed at reducing high claims ratio, boosting profitability
The Economic Times/ Mumbai/ November 7, 2012
State-run general insurance companies are setting up a common third-party administrator to settle
medical insurance claims, a move aimed at trimming their unwieldy claims ratio and boosting profitability.
The claims ratio, or percentage of claims to the premium earned, of these public sector companies in
health insurance is over 120% and they blame third-party administrators (TPAs) for their spiraling losses in
the segment.
5
November 2012
“We have started the process of setting up the TPA (third-party
administrator) along with LIC and GIC,” said G Srinivasan,
chairman of state-run New India Assurance. “Health insurance
claims have been going up every year and it is affecting our
profitability.”
The partners in the in-house TPA are General Insurance Corp
(GIC), Life Insurance Corp of India (LIC) and the four general
insurers —New India Assurance, National India, United India
and Oriental India Insurance. While GIC is a reinsurance
company, LIC is the country’s largest life insurer.
The insurers believe that an inhouse TPA will help lower claims.
According to Srinivasan, though there is a cost involved in
setting up the TPA, it would be recovered over the years as
claims drop.
Experts say policyholders can expect a correction in premium
as the 5% commission paid to TPAs for settling claims would be
passed on to them. The new TPA could also result in market
dominance by state-owned companies, which together
account for over 80% of the TPA business, they said.
Earlier, the state-run insurers were mulling an in-house TPA with a foreign partner, but the plan was
put on hold as they failed to identify a partner.
Private insurance companies such as ICICI Lombard, HDFC Ergo and Bajaj Allianz General Insurance
already have in-house claim settlement processes.
IRDA amends rules to redefine meaning of ‘infrastructure
facility'
Business Standard/ Mumbai/ November 7, 2012
The Insurance Regulatory and Development Authority (IRDA) has expanded the definition of ‘infrastructure
facility’ under its Registration of Indian Insurance Companies Regulations. In a gazette notification, the
insurance regulator made an amendment to the regulation wherein the term ‘infrastructure facility’ will be
replaced by ‘harmonized master list of infrastructure sub-sectors’, as specified by the department of
economic affairs, ministry of finance .
6
November 2012
Insurance companies, both life and non-life, are mandated to invest a certain percentage in infrastructure.
To enable them in this endeavor, IRDA has specified a list of ‘infrastructure facility’ for insurance firms to
invest in.
According to Section 2 (h) of Irda Registration of Indian Insurance Companies Regulations, 2000,
infrastructure facility includes highways, bridges, airports, ports, railways, road transport systems, water
supply projects, irrigation projects, industrial parks, water treatment systems and solid waste management
systems. It also includes sanitation and sewage systems, generation, distribution or transmission of power,
telecommunications and housing projects.
Insurance companies say this has expanded their investment horizon and will enable them to invest in new
categories of infrastructure.
Getting insurance for disabled is a difficult, costly affair
Business Standard/ Neha Pandey Deoras/ Mumbai/ November 7, 2012
Earlier this year, The Blind Graduates Forum of India (TBGFI) wrote to the Insurance Regulatory and
Development Authority (IRDA) to not discriminate between the disabled, especially those who are blind or
have low vision, from others, say reports. The regulator's reply, "We are working on an exposure draft for
the coverage of the disabled."
Senior IRDA officials say this has been on the agenda for long; the pricing is difficult to decide. "The
challenges are similar to those in the case of insurance for HIV-positive patients," the official says.
When asked, companies say they don't deny policies to any disabled persons. This is true. In 2010, Bajaj
Allianz General Insurance had launched a product 'Ability Insurance'. There were a host of covers available
under this scheme for the specially-abled. Like Assured Protection (unit-linked plan), Max Advantage
(highest NAV product), Invest Gain (traditional plan), and Child Gain from their life insurance stable. Motor
and health insurance plans were also available for such individuals.
The company's release said there would be no extra loading charges in the life and health insurance
products but any cost associated with treatment of the disability will be excluded. However, the product is
not available on the company's website today.
This apart, insurers mostly don't have a dedicated product for the disabled, except LIC's products - Jeevan
Aadhar and Jeevan Vishwas. The former is for those who have disabled dependant(s). The plan provides
life cover throughout the lifetime of the policy buyer. After him, the handicapped dependant will get the
money partly as lump sum and partly as annuity. Jeevan Vishwas is an endowment plan for the
handicapped.
7
November 2012
However, Deepak Yohannan of MyInsuranceclub.com feels there isn't too much merit in these products, as
the premiums are very high compared to a pure term and hospitalisation product. According to LIC's
website, both the products provide a minimum cover of Rs 50,000. So, if a 50-year old wants to buy a Rs 5
lakh cover for a 30-year old disabled dependent he will have to pay an annual premium of Rs 32,800
(Jeevan Aadhar). For a similar cover, with Jeevan Vishwas, a 30-year old disabled will have to shell out Rs
25,000 a year.
Life insurers say it is not difficult for a disabled person to buy a product until he/she is in a vegetable-like
state. They also discourage those who don't have dependants/income to buy life insurance. But, online
plans cannot be bought by such individuals as medical test is a must for them.
On the health insurance side, Segar Sampathkumar, deputy general manager of New India Assurance, says,
"We don't say no to anyone who is disabled. But, the disability and any treatment related to it is
considered pre-existing."
Experts say private health insurers are cagey about covering the disabled. In comparison, public sector
companies are more open to the idea. "It is difficult to offer a personal accident cover to such individuals. A
hospitalisation cover can be given easily until the person is permanently disabled," says Sanjay Datta, chief,
underwriting and claims, ICICI Lombard General Insurance. Here also, it begins with a medical test. And,
the cover and premium are decided based on that. There is no clear mandate.
For instance, partial disabilities like arms bent or fingers cut are offered health insurance without loading
the premium. But, if an appendage was cut due to gangrene or polio, it could result in premium loading.
Movement Disability
If this is due to a musculoskeletal or nervous system problem, getting a cover is difficult, says Akshay
Mehrotra of policybazaar.com. So, if one cannot move (fully or partially) due to cerebral palsy or autism or
any spine/head injury, it will be called brain/neuro problems and rejected.
Polio cases may be covered, sometimes also on co-pay basis. Amputation cases are largely covered.
Visual Disability
Blindness is not covered, as the person is prone to accidents. One with low or poor vision will be covered
for hospitalisation due to any other health problems than eye and related issues. These individuals are also
high risks and are charged higher premiums.
Mental Disability
This is not covered.
Speech and Hearing Disability
8
November 2012
Speech problems are considered without much loading on the premium. Those using the hearing machine
are considered over those who don't. The premium for those not using a hearing machine is more.
Learning Disability
If due to brain injury, brain dysfunction or developmental aphasia (presumed to be due to brain injury) are
not covered. But, dyslexia is covered.
Multiple Disabilities
These could be difficult to cover at times. A combination of low vision and hearing impairment may be
risky.
Your car is stolen? Pray to God the police never finds it!
The Tribune/ Harsh Roongta/ Chandigarh, October 29, 2012
A friend bought the case of Ravi Kant to my notice. Ravi's car was stolen from his house and he filed an FIR
with the police and then made a claim with the insurance company for the loss. Only then he realized he
would have to produce a "non-traceable" certificate to the insurer.
A non-traceable certificate is a certified note issued by the police department when a complainant files an
FIR in a case of theft and the police is not able to trace the lost product or vehicle even after three months'
time. The insurance claim is payable only after the "non- traceable" certificate is submitted.
In Ravi's case the vehicle was unfortunately traced. It had been used for a crime and then abandoned in a
faraway city. He had to take a few days leave and visit the police station where the recovered vehicle was
kept to give evidence. Ravi had to make a couple of rounds to the police station and then told that his car
was "evidence" in the case against the miscreants. He informed the insurance company to send a surveyor
to inspect the vehicle but he found that the vehicle was in a proper condition. The vehicle has been
gathering dust in the police station compound for quite a few months even as I am writing this article.
Of course, the insurance company is not paying him any claim and he has had to take a car loan to buy a
new car. Now, Ravi is cursing his "luck" that the police actually found his stolen car. If they had not found it,
he would have received the claim by the insurance company and would not have to go through so many
hassles. Now, he will get back the car after it has depreciated substantially.
Clearly, a criminal judicial system that requires stolen items to be kept as "evidence'" till the case reaches a
certain level must change or we will continue to have law abiding citizens wishing that the police are not
able to trace their stolen car!
IBM, Google, Goldman Sachs to launch LGBT resource
9
November 2012
guide for India Inc
The Economic Times/ Kevis Burns/ October 9, 2012
Three multinationals, IBM, Goldman Sachs and Google and Community Business, a non-profit organisation,
have embarked on a mission to convince India Inc of the business case for addressing the needs of lesbian,
gay, bisexual and transgender (LGBT) employees, coming together to launch an LGBT resource guide for
India Inc.
Titled 'Creating Inclusive Workplaces for LGBT Employees in India', the guide highlights the business case
for addressing the needs of lesbian, gay, bisexual and transgender (LGBT) employees, and provides the
cultural and legal context for LGBT issues in India. It was about a year ago that the stakeholders set out to
work on the first such guide in India. This report is specifically designed for companies looking to address
the needs of their LGBT employees for the first time.
Says Kevin Burns, co-author of the report and project manager at Community Business: "Diversity and
inclusion is a newer concept in India. Companies are looking at this for the first time. LGBT issues seem a
more difficult subject because companies are first looking to address common issues like gender diversity."
Among the recommendations of the resource guide for the employers are: develop policy and procedure
for handling LGBT-related bullying and harassment or workplace grievances and complaints; provide
diversity training to all employees with specific reference to LGBT issues; ensure there is a person, team or
working group with responsibility for addressing LGBT issues; offer LGBT-specific benefits or support, such
as counselling or mentoring to employees; communicate to all employees about how the company
supports and values its LGBT workforce; and track recruitment and career development metrics for LGBT
employees who choose to self-identify among others.
For the content of the report, Community Business set up an advisory group, including the Indian LGBT
advocacy group Mingle and local LGBT experts. It also engaged with local stakeholders in India to gain
insight into some of the key issues for LGBT employees in India, particularly with regard to workplace
challenges and what action can be taken by employers to create more inclusive workplaces.
A lot of content guidance in terms of issues faced and best practices has been shared by IBM. The Eagle
chapter in IBM (Eagle is the global team that works on promoting LGBT as a part of workforce diversity at
IBM) held discussions with the team at Community Business on what topics should be a part of the
handbook.
A statement from the four stakeholders of the report quoted Vanitha Narayanan, executive sponsor for
LGBT (India/South Asia) and managing partner of IBM Global Business Services: "By working together to
produce this LGBT Resource Guide for Employers we hope to encourage more companies to review their
workplace policies and practices and drive positive change for the LGBT community in India."
Lisa Donnelly, co-head of the operations division at Goldman Sachs in Bangalore and MD sponsor of the GS
India LGBT Network, said in a statement: "It is crucial for India as an emerging economy to fully explore the
potential of its LGBT population and for companies to have inclusive policies that enable their employees
to be able to bring their whole selves to work."
10
November 2012
International
The European Gender Directive, which bans insurance companies from using gender as a basis for price
differentiation, will become effective from 21 December 2012. Rates for both general and life insurance
products, including pension annutities, will be affected.
Car insurance: why women face £300 rise in premiums
An EU ruling means insurance companies must end gender discrimination, and female drivers under 40 will
be hit hardest
Patrick Collinson, The Guardian, 5 October 2012
Testosterone-fuelled young males are, all the statistics suggest, a danger on the road. Thrill-seeking young
men are prone to drive too fast, late at night, and cause horrific fatalities. Young males are 10 times more
likely to be killed or injured than a driver aged over 35. The typical insurance claim by a young male adds
up to around £4,500, compared with £1,200 when the driver is middle-aged, whether male or female.
It's the main reason men pay around 40% more than women for car insurance until the age of 40, when
accident rates and claims tend to equalise between the sexes. Yet from 21 December, insurers will be
banned from taking gender into consideration when setting premiums – and women will pick up the tab.
According to the AA, the typical insurance premium for a male aged 17-22 is now above £3,000, while for a
female it is £2,125. Men aged 23-29 pay an average of £1,840, compared with £1,200 for women. Only
once men reach the age of 40 do their premiums come down to the same level as women (at around £700£750).
What will happen when the directive comes into force? According to Gocompare.com, Britain's women are
in for a shock. Most are unaware of the ruling and the huge impact it is likely to have. Gocompare's head of
motor insurance, Scott Kelly, says: "We expect to see premiums equalised at the higher male rate rather
than the lower rate for females. If that is the case, women drivers will see their premiums rise by just over
£300 on average, but for younger age groups the increase could be as much as £2,000."
The scale of the premium increase – on top of the inflation-busting rises of recent years – means some
young women who do not have to renew their insurance until January may save money by terminating
their policy before the year end and starting a new one before 21 December.
But for older women, as Michael Winner might say, it's a case of "calm down, dear..." Unisex insurance
rates will have virtually no impact on men and women above 40-45 as they are already treated as near
identical risks at that age. Indeed, there may even be a very small bonus: the AA's figures suggest that
women over 50 pay about £10 a year more in car insurance than men, so they may be in line for a small
reduction. Young men will also benefit, with estimates that they will see 10% or more clipped off their
premiums.
11
November 2012
For now, the major insurers are silent about how they will price their policies for the unisex era. Money
asked Direct Line and Aviva for quotes, but they refused to give specific figures, citing competition reasons.
Aviva would only go so far as saying: "Young males are likely to see their premiums fall, and young female
drivers are likely to see their motor premiums rise." At Direct Line, Gus Park, director of motor insurance,
said: "We were disappointed with the ruling, but now it is going to become law we're focused on
minimising the impact of the gender directive. It's hard to be sure what is going to happen to prices within
the market. Many customers will not be adversely affected. However, people shouldn't panic; they should
wait for their renewal quote from their insurer and contact them if they have any concerns."
Many people will be justified in asking why the insurers don't just split the difference, with male and
female insurance rates equalising halfway between the current rates. But Kelly explains: "If a 20-year-old
male is being correctly priced for the risk he presents, then the insurer won't want to charge less than that.
Instead, women will have to be charged more."
However that would suggest a huge surge in revenue for car insurance companies from their female
customers. In reality, the Association of British Insurers doesn't believe all premiums will rise to the higher
male rate, though it does think they will head that way. Overall, it reckons premiums for males will fall by
up to 10%, but rise for females by around 25%.
A research paper for the ABI last year argued that the ban on the use of gender will result in an overall loss
for consumers, as insurers will have less risk-based information to go on and will thus charge more overall.
It also said the ban will not mean all women and men pay the same. "For example, a 27-year-old male
driver from Swindon who drives a 2-litre BMW, and travels 15,000 miles each year, would need to be
offered the same premium as a 27-year-old female driver from Swindon who drives a 2-litre BMW and
travels 15,000 miles each year. This does not mean that, on average, male drivers in the insurer's book
would be charged the same premiums as females."
But one thing insurers can't do is ignore the ruling. The ABI fought a long battle to maintain insurers'
exemption from EU gender equality rules, but were finally defeated in a European Court of Justice ruling in
March last year. The court gave insurers until 21 December to bring in unisex rates, with the biggest impact
expected in Britain, Spain and Ireland, where gender-based pricing is most commonly used.
Ian Crowder, a spokesman for AA insurance says: "The ruling abandoned fairness in favour of equality. We
were one of the voices saying it shouldn't happen, but it has, the ECJ has ruled, and that's now the end of
the debate."
Supporters of the ruling argue it was never fair that gender should have come into premium calculations –
plenty of young males are safe, cautious drivers, and plenty of young females are tearaways. Why should
either be judged on gender? Instead, what the ruling is likely to spark is a switch to "telematics", where
your premium is based on the data transmitted from a mini-computer in your car, which will record when
you drive, where, and at what speed, as well as how hard you brake, or even corner. That may mean young
males will still be charged a lot more than young females, but it will be because of driving profile, not
gender.
Telematics, also known as "pay as you drive", is still in its infancy in the UK, making up only 3% of motor
policies sold so far, and an early experiment by Aviva was less than successful. But as young females in
particular face much steeper premiums, more will be tempted to opt for insurance based on telematics. A
telematics deal usually starts off as relatively expensive, but as data builds up about the driver's habits and
style, safe driving is rewarded by lower costs, with potential premium refunds. As Coverbox, a telematics
12
November 2012
insurer, says: "The box also allows us to check your miles, the times driven, where you keep the car
overnight, and if it is different then we can decrease or increase the premium accordingly during the year."
Aviva is trialling a telematics "app" called RateMyDrive on smartphones, which can monitor acceleration,
braking and cornering as well as the number of miles driven and the car's location. Safer drivers will be
offered discounts of up to 20% off their insurance, although currently the trial is limited to 5,000 motorists.
Meanwhile, the EU gender directive affects all insurance products, not just car insurance. So from 21
December it will be illegal to use gender as a basis for discriminating in the pricing of pension annuities and
life insurance. Women will again lose on life insurance; historically they pay lower premiums as they enjoy
longer life expectancy. But there is a small payback when they hit pensionable age. Currently women
receive lower annuities than men because they live longer, but the ruling will mean women may have to be
given higher pension incomes.
http://www.guardian.co.uk/money/2012/oct/05/car-insurance-women-rise-premiums-eu-ruling
13
Mumbai:
November 2012
217, Prabhadevi Estate
V.S. Marg
Mumbai 400 025
Tel: + (91) 22 3306 6000
Fax: + (91) 22 3306 6088
Gurgaon:
Plot No. 462
Udyog Vihar Phase V
Gurgaon 122 016
Tel: + (91) 124 399 9000
Fax: + (91) 124 399 9010
Pune:
49, A/5 “Smruti”
Gulmohar Path
Off Law College Rd.
Pune 411 004
Tel: + (91) 20 6560 2744
Fax: + (91) 20 2546 3338
Bangalore:
rd
3 floor, “Sai Shakti”
2207 Hal Stage III, 80 Feet Rd.
Kodihalli, Bangalore 560 008
Tel: + (91) 80 3024 2000
Fax: + (91) 80 3024 2060
Chennai:
Flat 1, V Floor, Gokul Towers
Plot # 7, C.P. Ramaswamy Rd.
Alwarpet, Chennai 600 018
Tel: + (91) 44 3021 8722
Fax: + (91) 44 4265 8281
Please feel free to contact [email protected]
Disclaimer
This Newsletter from Prudent Insurance Brokers Pvt. Ltd. carries edited extracts from news stories. PIBPL has not
verified these stories and does not vouch for their authenticity.
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