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Japan’s Nippon buys 26% of Reliance Life for $680 mln

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Mar 15, 2011

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Japan’s Nippon Life Insurance said Monday it had bought a 26 percent stake in billionaire Anil Ambani’s Reliance Life Insurance for $680 million, the largest foreign investment in India’s insurance sector.

The transaction values Reliance Life Insurance — part of Reliance Capital, which in turn is part of Reliance ADA group — at $2.6 billion, a statement by Ambani’s firm said.

The deal, which awaits regulatory clearance, marks the latest move by Japan’s largest private insurer to expand overseas as its own traditional life insurance market shrinks with an ageing population.

Shares of Reliance Capital ended up 9.72 percent, or 49.75 rupees, to 561.8 at the Bombay Stock Exchange after the deal.

India is seen as an under-insured and attractive market for foreign firms, analysts say, where booming economic growth could mean expansion of financial services and products into smaller townships and rural parts of India.

Under Indian law, foreign firms can buy only up to 26 percent of the local insurer.

“India has a huge untapped potential which provides a large opportunity to foreign insurers,” said Sachin Sondhi, senior director with Deloitte India, as only one-fifth of India’s population are estimated to have an insurance policy.

Reliance Life, India’s largest private insurer in terms of individual policies, has sold seven million policies in the country. The firm manages assets in excess of $3.7 billion.

“Nippon Life will bring vast experience and expertise” in the areas of product development, underwriting, investment and risk management, said Sam Ghosh, chief executive of Reliance Capital, in a statement.

Nippon Life Insurance has sold over 14 million policies in Japan.

It had revenues of $72 billion for the fiscal year ended March 2010. India, which opened up the insurance sector to private and foreign players in the year 2000, has 47 insurance companies, where 23 offer life insurance and the rest general (non-life) insurance.

Earlier this month, US billionaire Warren Buffett’s Berkshire Hathaway announced starting operations in India through a local subsidiary.

India’s parliament is still to approve a long-pending government proposal to hike foreign investment in local insurance firms to 49 percent, facing stiff opposition from other political parties.

Mumbai, March 14, 2011 (AFP)

AIR Worldwide preliminary estimate on Japan earthquake

Mar 14, 2011

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Based on currently available information, catastrophe modeling firm AIR Worldwide estimates that insured property losses from the Mw9.1 earthquake that struck Japan on Friday will range between 1.2 trillion JPY to 2.8 trillion JPY. Using today’s exchange rate of 81.85 JPY to the dollar, this translates to a range of between 15 billion USD and 35 billion USD. To obtain this preliminary range, AIR simulated dozens of scenarios with varying magnitude (8.9 to 9.1), focal depth (15 km to 30 km) and rupture width (100 km to 150 km). The losses are most sensitive to rupture dimensions, and become extremely large if the modeled rupture is extended southward towards the Tokyo and Chiba prefectures, which contain a higher concentration of insured properties.

“Given the enormity of the Mw9.1 earthquake that struck Japan two days ago, it is still in the very early aftermath of the event,” said Dr. Jayanta Guin, senior vice president of research and modeling at AIR Worldwide. “Search and rescue efforts are still underway and damage assessment has only just begun, while considerable uncertainty still remains in the seismic parameters that define the event.”

Of significance, the website of Japan’s national seismic network remains offline, so ground motion observations are still unavailable. Since considerable uncertainty still exists with respect to the parameters of this earthquake, AIR considers this a preliminary loss estimate and plans to refine it when additional information such as ground motion recordings becomes available. Additionally, the AIR Earthquake Model for Japan does not account for the effects of tsunami. As more detailed information becomes available, AIR plans to independently estimate the loss due to tsunami and provide a combined loss estimate that avoids double-counting in the affected areas.

The event is the largest in Japan’s lengthy earthquake history, with the rupture extending across four segments of the subduction zone that parallels the Japan coast to the east. Seismologists both inside and outside Japan have said that such a scenario had not been contemplated and it was therefore not included in the official national seismic hazard maps of Japan.

Strong shaking was felt over most of northern Honshu. Roads across the region buckled and several landslides have been reported. While the effects of the tsunami are significant, shake damage was considerable, with many reports of collapsed buildings and streets strewn with rubble. High-rise office and apartment buildings in Tokyo—some 370 km from the epicenter—shook visibly, sending people into the streets. Shaking was felt as far south as Kyoto and Osaka.

According to AIR, earthquake insurance penetration in Japan is relatively low (ranging between 14 to 17 percent nationwide). About 70% of all residential construction is estimated to be of wood and about 25% of concrete. Commercial construction consists of more than 50% concrete, about one-third light metal or steel, and less than 10% wood. Residential structures in the region of Japan impacted by today’s quake are generally resistant to earthquake shaking. Some vulnerable structures do exist; they are comprised of non-ductile reinforced concrete frame and heavy wood-frame construction.

There have been relatively few reports of major structural damage in Tokyo and Chiba prefectures, though several serious fires broke out. However, in light of Japan Meteorological Agency (JMA) intensities of 5- to 5+ throughout the Tokyo area, there are likely to be many instances of non-structural damage and damage to contents. Given the high concentration of insured properties in these regions, even relatively small individual claims will likely add up to significant numbers.

A major concern now is the crippled Fukushima Daiichi Nuclear Power Station. An explosion in one of the buildings prompted officials to expand the evacuation area around the plant to a 12-mile radius, affecting as many as 170,000 people. Reports had indicated that leaks of radioactive materials, which had begun immediately after the explosion, had diminished. Most recently officials have now flooded the reactor with seawater in an effort to avoid a nuclear meltdown. The seawater is likely to permanently disable the reactor. On Sunday morning, local time, a second reactor at the same plant was also experiencing critical failures of its cooling system.

The tsunami remains the main story of this event as it will be responsible for most of the fatalities. The JMA has reported maximum tsunami heights of three meters or more for the northeast coast of Japan, with the prefectures of Fukushima, Ibaraki, Iwate and Miyagi being the most severely affected. In Miyagi prefecture, some waves reached 10 km inland. AIR plans to use this and other information as it becomes available to estimate the loss resulting from the tsunami and to issue a combined shake, fire-following and tsunami loss estimate.

Source : AIR Worldwide Press Release

Mactavish / PwC : British businesses exposed to costly failings in insurance protection

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Mar 14, 2011

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– Commercial insurance ‘not fit for purpose’ for post-crisis era, with claims disputes set to rise

– Serious flaws in the way corporate insurance policies are arranged are leaving businesses exposed

– Insurance needs to become a more prominent feature of companies’ risk and capital-management process

UK companies are exposing themselves to significant and unnecessary losses due to serious flaws in the way their corporate insurance policies are arranged. This is according to a new study of commercial risk carried out by the specialist research firm Mactavish, in association with PwC, which reveals serious deficiencies in how corporate insurance is arranged and the role of boards in governing those arrangements. This is leaving companies vulnerable in the event of a large loss and subsequent dispute with their insurer.
The report, based on consultations with over 600 UK companies, more than 100 insurers and brokers and detailed case analysis, paints an alarming picture of inadequate disclosure, widespread ignorance of a very challenging insurance law framework, managerial failure to gather relevant information, deeply uncertain policies and a lack of understanding of how large claims are processed.
Bruce Hepburn, chief executive officer of Mactavish, said:

“The deficiencies the report reveals in how insurance is arranged are disturbing. What we see today is a system that has prioritised low transaction costs above reliable insurance policies. This approach is not fit for purpose for the environment we are now moving into. UK businesses, especially medium-sized companies, are putting themselves unnecessarily at risk and in today’s economy are far more exposed if a major insurance policy fails to pay out. Customers, brokers and insurers must all start to invest adequate time into securing appropriate insurance.”

The Mactavish findings come at a time when the role of insurance as a financial backstop is especially vital. The recession has left many companies taking on more risk to protect returns and boards are under increasing pressure to demonstrate effective corporate governance. High-profile risk incidents, such as the widespread volcanic ash disruption, arguably happen at all stages in the cycle, but newly constrained balance sheets, tight credit and the vastly altered risk exposures brought about by globalisation and recession represent new and poorly understood threats.
At the same time, the report shows that insurers are taking a much tougher line on claims. It suggests that reform is not only urgent but highly achievable, if insurance buyers, brokers and insurers work together to improve disclosure and the practices used to arrange insurance.
PwC is co-publishing the research, which it views as a vital component of the wider debate on corporate governance and compliance – where insurance is too often ignored.
Richard Sykes, governance, risk & compliance lead at PwC, said:

“Many UK companies are unaware they are facing costly and damaging gaps in their insurance coverage. The risk that an insurance policy won’t pay out is not being recognised by boards. The lack of quality and in-depth information around risk exposure provided by companies to their insurers is currently inadequate and has left many businesses with unreliable and inappropriate cover. Companies need to make more informed decisions about how much risk they should retain or transfer, rather than simply seeking to minimise insurance expenditure. Insurance needs to move up UK companies’ agendas and become a more important part of their wider risk and capital-management plans.”

Achim Bauer, insurance strategy partner at PwC, said:

“While the quality of risk disclosure provided by the corporate sector is inadequate, the insurers are also playing a material role in an ineffective risk transfer process. Many insurers are failing to systematically develop the necessary understanding of their clients’ risk profile to enter into a truly useful relationship, which is based on more tailored and effective risk management. This is leading to a no-win situation for both insurers and companies, creating a misalignment between risks and premiums, higher claims and more disputes. This report represents both a significant challenge and positive for insurers and brokers. At a time of low growth, many insurers are unable to grasp the opportunities that could come from a closer relationship with their customers and deeper understanding of their risks.”

The report sets out seven protocols (see appendix I) intended as a blueprint for change that have now been formally endorsed by a range of leading industry players (see appendix II).
Key highlights of the research show that:

– 87% of insurance buyers do not understand the extent to which the duty of insurance disclosure is their responsibility or the consequences of failing to meet this duty

– Two thirds of buyers (65%) at large companies do not review the materials used to arrange their insurance, and almost all have inadequate discussions with insurers and brokers regarding coverage

– Claims professionals across all parts of the commercial insurance market are starting to report an increase in questioning of claims by insurers, on top of an expected surge in losses from operational changes made by firms during the recession. The total number of Royal Courts of Justice commercial disputes (excluding bankruptcy proceedings less likely to relate to insurance) jumped by 45% between 2008 and 2009, with some related categories such as professional negligence disputes up over 100%

– The quality of disclosure underpinning insurance is at best poor, sometimes shocking (see case studies on p. 25 -26 of full report). Almost every document used to explain companies’ risks to insurers, out of the hundreds reviewed in the study, contained errors or omissions that could directly lead to a large claim being questioned. For example, one high-tech manufacturer failed to provide its insurer with details about high-risk product end-uses, delicate testing work undertaken for third parties or the use of highly sensitive manufacturing techniques

– Widespread evidence of poor communication between the commercial insurance function and operational managers, reliance on undocumented risk information and insufficient contact between buyers and insurers.

Source : PwC Press Release

Options : nuclear contamination

Mar 13, 2011

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Evacuation, temporary shelter and iodine pills are the chief weapons for protecting civilians against nuclear fallout, experts say.

A blast on Saturday that wrecked the concrete shell surrounding the No. 1 reactor at Japan’s Fukushima nuclear plant released radioactive vapour but not at levels dangerous for human health, according to Japanese officials.

Specialists say the authorities have a several-pronged strategy for shielding civilians if there is an explosive breach of the reactor, as in the April 26 1986 Chernobyl disaster.

In that event, a cloud of radioactive dust spread over parts of Ukraine and Belarus, triggering a surge in cancer and birth defects. The death toll ranges from a UN 2005 estimate of 4,000 to tens or even hundreds of thousands, proposed by non-governmental groups.

“There are three weapons against contamination — evacuation, confinement and iodine,” said Patrick Gourmelon, director of radioprotection at a French nuclear watchdog, the Institute for Radioprotection and Nuclear Safety (IRSN).

About 200,000 people have already been evacuated from residential areas around Fukushima, located 250 kilometres (120 miles) north of Tokyo.

Confinement is a highly effective tool pending evacuation to a safer area.

It consists of taking shelter in an enclosed space, preferably a basement room, whose doors and windows are then sealed tight with plastic sheets and adhesive tape. “The point is to prevent radioactive dust from entering the lungs and the digestive tract,” said Gourmelon.

“You take a good shower to remove any contact between the fallout and the skin, but you shouldn’t scrub, because this helps particles to penetrate,” he said. Nail-biting, smoking and sucking or licking one’s fingers are also out. In a nuclear alert, the authorities also hand out iodine pills to prevent cancers of the thyroid, which is a particular risk for babies, young children, teenagers and expectant or breast-feeding mothers. The goal is to saturate the thyroid with “healthy iodine,” shielding it from radioactive iodine, said Gourmelon.

Timing, though, is essential. Preferably, the iodine is taken an hour before a known fallout incident. Japanese guidelines say the pills should be distributed when the likely absorbed dose of radioactivity is 100 milligray, a unit named after a British physicist.

“You can also take it in the following 24 hours after the incident,” he said. “It does work but the protection is reduced to 25 percent.” One of the many unknowns at Fukushima is the fate of plant personnel and emergency workers, who may have been exposed to a higher radiation risk.

Paris, March 13, 2011 (AFP)

Fitch Maintains Insurance Group MSK on RWN

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Mar 11, 2011

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Fitch Ratings is maintaining Insurance Group MSK’s (IG MSK) Insurer Financial Strength (IFS) rating of ‘BB’ and National IFS rating of ‘AA-(rus)’ on Rating Watch Negative (RWN).

The rating action follows the sale of 25% plus one share of Metropolitan Insurance Group (MIG), a vehicle holding 94.5% of IG MSK, to JSC Bank VTB (VTB; ‘BBB’/Stable) by the City of Moscow (‘BBB’/Positive). This transaction formed part of a larger deal when VTB acquired a 46.48% stake in Bank of Moscow (‘BBB-‘/RWN) from the City of Moscow at the end of February.

The RWN takes into account the uncertainty relating to IG MSK’s strategic importance to the new shareholder, VTB. Although VTB’s share is currently a minority one, it may grow organically if VTB obtains its targeted control over Bank of Moscow, indirect shareholder of IG MSK. The RWN also continues to reflect Fitch’s view that the scheduled merger of IG MSK and CJSC Spasskie Vorota may increase IG MSK’s dependence on its shareholders capital support due to the weaker financial profile of Spasskie Vorota.

If VTB gains control over IG MSK, as a supplement to the targeted control over Bank of Moscow, resolution of the RWN on IG MSK will depend on VTB’s strategic decision on the further management of IG MSK. If VTB remains a minority shareholder of IG MSK, resolution of the RWN will continue to depend on Fitch’s assessment of the relative weakening of IG MSK’s financial profile upon merger and on any rating actions on Bank of Moscow.

Fitch notes that VTB already has a 100%-owned insurance subsidiary, LLC IC VTB Insurance (‘BB’/Positive), a medium-sized non-life company with a focus on the parent bancassurance channel. IG MSK is a large non-life insurer. It also writes part of the premiums through parent Bank of Moscow, but its strategy is different from that of VTB Insurance and has been increasingly focused on the independent growth in the retail segment through non-affiliated distribution channels. Realisation of this strategy was supported by the mergers of IG MSK with MSK-Standard in Q110 and Spasskie Vorota, scheduled for Q111.

Fitch also notes that IG MSK’s underwriting performance was weaker than VTB Insurance’s in 2009-2010 due to the differences in the business mix, level of exposure to the challenges of the local operating environment during the crisis and the idiosyncratic risks of IG MSK, realised at the merger with MSK-Standard. As there are both strengths and weaknesses in IG MSK’s operational profile compared with VTB Insurance, there is rationale for various strategic decisions, which could be made by VTB in relation to IG MSK.

IG MSK had gross assets of RUB31bn at end-9M10 and gross written premiums (GWP) of RUB8bn in 9M10. Spasskie Vorota had gross assets of RUB12.4bn at end-9M10 and GWP of RUB6.5bn in 9M10. VTB Insurance had gross assets of RUB4.2bn at end-9M10 and GWP of RUB4.1bn in 9M10.

Source : Fitch Ratings Press Release

AA Insurance response to Transport Committee report: Cost of Motor Insurance

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Mar 11, 2011

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AA Insurance supports the findings of the Transport Committee inquiry into the Cost of Motor Insurance.

The inquiry was prompted by the AA’s British Insurance Premium Index which has shown that premiums have been rising steeply over the past two years. Over the whole of 2010, the average Shoparound premium increased by 33 per cent: the biggest increase in a year since the Index started in 1994. Young drivers have seen the biggest increases: those aged 17-22 have seen their premiums rise by over 58 per cent in just one year.

Simon Douglas, director of AA Insurance, says: “We are glad that the Transport Committee has undertaken this Inquiry with such thoroughness. It has brought many of the factors that influence car insurance premiums, particularly personal injury costs and fraud, into the public area.

“At a time when the cost of motoring is soaring, with the cost of unleaded petrol passing the £6 per gallon mark, drivers are looking to the insurance industry to work with the Government to control spiralling claims costs that ultimately fuel premium inflation. For many, especially the young, the cost of insurance is simply becoming unsustainable.

“If the main recommendations of the Committee are implemented I would expect premium increases to come under better control – however, there remains an enormous amount of work to do, particularly in helping young people to start driving safely and responsibly.”

On fraud and personal injury claims, AA Insurance welcomes the concept of a special police unit, funded by insurers. Mr Douglas says: “With insurer control, such a unit could very quickly pay for itself. Fraud, particularly false personal injury claims, is in my view the biggest driver of premium increases.

“At present, it is difficult for the police to commit time and effort to investigating fraudulent claims. A dedicated police unit will also make the work of the Insurance Fraud Bureau much more effective.”

In addition, the AA welcomes the Government’s aim to allow insurers to access DVLA database information which, according to Mr Douglas, “can’t come soon enough.

“Customers being economical with the truth when buying cover has led to an unacceptable number of claims being declined, which is usually when false information comes to light,” he points out.

“Yet insurers are still obliged by law to meet third-party costs even if the policy was fraudulently obtained. This is another major contributor to premium inflation.”

On legal costs: AA Insurance agrees that the Jackson reforms should be implemented, particularly to control the proliferation of accident management firms and personal injury lawyers whose costs often double the ultimate compensation award. It also welcomes the Committee’s recommendation that research should be undertaken to find ways of restraining personal injury claims.

“Stopping cold-call and text message advertising and managing legal costs will help to control premium costs while a more transparent regime will help people understand the relationship between these costs and rising insurance premiums,” says Simon Douglas.

On uninsured drivers: Mr Douglas points out that the growing success of Police enforcement has already reduced the number of uninsured drivers from around one in every 20 to one in 25 motorists – but it remains a significant cost borne by the insurance industry.

“The introduction of CIE (Continuous Insurance Enforcement) is welcome. However, rising costs, especially amongst young drivers, could encourage many more to consider driving without cover particularly after the European Court of Justice Gender Directive becomes effective. So it’s vital to demonstrate that the new legislation is effective and that driving without cover is not worth the risk,” Mr Douglas suggests.

On young drivers, Mr Douglas says he is delighted that the AA’s call for driving to become part of the National Curriculum appears to be recognised, particularly ‘pre-driving tests’ for 14-16 year olds and replacement of the discredited Pass Plus initiative.

The AA, which also operates a driving school, is sponsoring a new BTEC qualification and insurers are already recognising that this is better preparing young drivers for their driving test. It helps to emphasise the responsibility that goes with driving a car.

However, Mr Douglas cautions that making the driving test too difficult, without adequate training, could lead some young drivers not to bother and try to drive without a licence.

Mr Douglas added: “I also agree with the Committee that there is a place for technology-based insurance solutions that track driving standards. With the removal of gender as a rating factor, such systems could well come into their own and help to manage aggressive driving, especially amongst young male drivers.”

The AA is developing an insurance package that uses smart technology that rewards responsible driving and highlight opportunities to help more aggressive drivers change their driving behaviour.

The Transport Committee Report: cost of Motor Insurance is published today, 11^th March.

Source : The AA Press Release

BIBA Welcomes Transport Select Committee Report

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Mar 11, 2011

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The British Insurance Brokers’ Association (BIBA) has welcomed the Transport Select Committee’s report into the cost of motor insurance. BIBA is pleased that the committee’s recommendations include many of the points that BIBA set out in its eight point plan to Government for tackling the spiraling cost of motor insurance back in November 2010.

The recommendations from the Committee’s report tackle issues with fraud, personal injury claims, uninsured driving and young drivers.

The report recommends that insurers, brokers and comparison websites should work together more proactively to combat fraud. BIBA is committed to this and will work to achieve access for the industry to driving licence information held by the DVLA in order to reduce fraud when applying for insurance.

BIBA also supports the call to investigate means of deploying and publicising new technology which can assess how cars are driven by young drivers and help reduce the cost of motor cover.

Graeme Trudgill, BIBA Head of Corporate Affairs, said: “There are already several new insurance broker ‘black box’ telematics products that have been recently launched and BIBA welcomes further discussion and wider debate on this technology.”

BIBA welcomes the Transport Select Committee’s conclusion to make the driving test more rigorous and to make an advanced driving course available which can effectively signal to insurers that drivers who have completed it are safer. It is now time to review the Pass Plus test and BIBA looks forward to the proposed consultation.

The report calls for the Government to sponsor a research project on the international experience of restraining the number of personal injury claims with the aim of publishing a discussion paper.

The report referred to one of BIBA’s key reasons for the higher cost of motor insurance as the increase in the propensity to claim, the increase in the amount awarded, the impact of claims management companies and the increases in the number of whiplash claims.

Trudgill added: “The propensity to claim for a non-fault injury following a motor accident has tripled in the last seven years and this has led to more claims and higher premiums.”

In order to tackle this issue of uninsured drivers, the Committee welcomed the new scheme of Continuous Insurance Enforcement (CIE) and recommended a promotional campaign aimed at young drivers. BIBA is working closely with the Motor Insurers’ Bureau (MIB) and DVLA and is fully supportive of the forthcoming TV campaign from the MIB, endorsed by DVLA, to raise awareness about changes in motor insurance law. DVLA is already distributing leaflets with V11 tax reminders.

Trudgill concluded: “BIBA also agrees that penalties for CIE offences should be reviewed one year after CIE has been implemented.”

Although BIBA was disappointed that the report’s conclusion did not include a recommendation for signposting, BIBA is pleased that the Government Equalities Office (GEO) consultation paper Equality Act 2010: Ending age discrimination in services, public functions and associations issued on 3 March 2011 does recommend signposting for motor insurance in relation to age.

BIBA submitted its written evidence to the Transport Select Committee on the 3 November 2010 and gave oral evidence to the inquiry on 9 November.

Source : BIBA Press Release

Aviva’s new online services for financial advisors

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Mar 10, 2011

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Aviva is making it easier for financial advisers to manage their customers’ finances by launching two online services.

A new fund switch facility added to the Aviva for Advisers e-commerce platform enables advisers to monitor and switch funds online on more than 1.6 million investment bonds, individual, stakeholder and group personal pensions. The second new feature – E-Documents – gives financial advisers access to electronic versions of client correspondence, improving service, lowering costs and reducing waste paper.

The services mean advisers can spend less time on administration and more time
advising clients.

Key features of the fund switch facility include:

– No need for customers’ signatures – online service captures customers’ information and removes the need for customers’ signatures each time a switch is requested

– Policy fund research tool shows advisers which funds are available to switch

– Online compliance record for each request is available for each fund switch

– Client confirmation letter issued to the client for every fund switch

Each year financial advisers request millions of copies of client correspondence for their compliance files. E-Documents will initially give advisers access to copy policy
documents and benefit statements across Aviva’s range of group and individual pension contracts. More products and document types will be added throughout 2011 taking the total number of existing customers’ documentation available online to over three million.

Billy Burnside, head of e-commerce at Aviva, said: “Introducing fund switch and E-Documents demonstrates our commitment to making it easier for advisers to manage their customers in the run-up to RDR and beyond. Aviva for Advisers is one of the largest platforms available, with access to millions of Aviva customers’ policy records. These changes mean advisers can spend less time on administration and more time advising clients.

“The fund switch facility enables advisers to request a switch between 6am and midnight seven days a week and provides a clear compliance audit trail. Paperwork is much reduced and the research tool makes it simple to compare available funds. This can only help advisers build a more efficient business.”

The Aviva for Advisers website has 40,000 users and was launched in June 2009 to
provide advisers with a market-leading platform. It provides clear information in a simple format and offers advisers a new fund centre service, and access to product, tax and technical support information. Last year several features were added including:

– Pensions Apply – a feature that allows personal and stakeholder pensions business to be submitted online, including multiple transfers.

– More than 600,000 annuity and over one million existing policies were added to platform.

– Advisers have online access to more than six million Aviva policies.

Source : Aviva Press Release

Americans suffer more chronic disease than British

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Mar 9, 2011

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The United States spends twice as much per capita each year on health care as Britain but sees higher rates of nearly every chronic disease, even among children, said a study out Wednesday.

Despite the cash outflow, Americans over 50 are in worse health than Britons and have shorter life expectancies. The trend also does not appear to be related to the fact that people in the United States tend to be fatter than the British. “Our findings suggest that body weight is not the driving force behind the observed health differentials between the United States and England and that, if weight plays a role, it is a complicated one,” said the study in the American Journal of Epidemiology.

In fact, previous studies have not found any clear evidence for the difference when looking at health insurance, behaviors, obesity, socioeconomic status or race and ethnicity, leaving researchers puzzled as to why such variations could exist among otherwise similar populations.

A possibility for further investigation could be how residents of the two countries use health care resources differently.

“Despite the greater use of health care technology in the United States, Americans receive less preventive health care than their English counterparts.

They have fewer physician consultations per year,” it said.

The study compared data for people aged 0 to 80 from nationally representative health surveys in Britain (Health Survey for England 2003-2006) and the United States (National Health and Nutrition Examination Survey from 1999 to 2006).

“Overall, the United States has higher rates of chronic conditions and markers of disease than England. Differences between the two countries are statistically significant for every condition except hypertension,” it said.

Chronic conditions included diabetes, asthma, heart attack, stroke, high cholesterol and high C-reactive protein, which can be a general indicator of inflammation and disease.

The US survey reported fewer cigarette smokers and heavy alcohol drinkers than in Britain, but the study cautioned that “respondents tend to underreport substance use in surveys… (so) the rates of smoking and heavy drinking should be interpreted with caution.”

Washington, March 9, 2011 (AFP)

Cigarettes to vanish from shelves in England

Mar 9, 2011

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Cigarettes will disappear under the tobacconist’s counter from next year in England under new measures announced Wednesday.

Only temporary displays in “certain limited circumstances” will be allowed under the plans unveiled by the Department of Health. The regulations will come into force for large stores in April next year and three years later for all other shops.

A consultation on whether cigarettes should be sold in plain packaging, in a bid to make them less appealing to young people, will be launched by the end of the year, the ministry added.

“Smoking is undeniably one of the biggest and most stubborn challenges in public health,” said Health Secretary Andrew Lansley.

“Over eight million people in England still smoke, and it causes more than 80,000 deaths each year.

“We want to do everything we can to help people to choose to stop smoking and encourage young people not to start smoking in the first place,” Lansley said.

Retailers reacted angrily to the announcement, saying there was “simply no evidence” that keeping tobacco out of sight in shops will discourage young people from smoking.

“We are disappointed that the government is pressing ahead with a tobacco display ban imposing £40 million ($65 million, 46 million euros) of costs on small retailers,” said James Lowman, chief executive of the Association of Convenience Stores.

But anti-smoking groups voiced their delight and urged the government to push ahead with the plain packaging proposals. Blank packaging and a ban on public display have both been under discussion for several years.

England will join several countries, including Canada, Ireland and Finland, in removing cigarettes from tobacconists’ shelves.

Scotland, Wales and Northern Ireland individually set their own smoking laws.

But England would be the first country in Europe to insist on plain packaging if the proposal goes ahead. Australia is due to introduce the measure in 2012.

Just over a fifth of British adults are smokers, according to the Department of Health.

The government estimates that treating smoking-related illnesses cost the state-run National Health Service £2.7 billion in 2006-07.

London, March 9, 2011 (AFP)

Taiwan brothers to pay $1.8 mln for rail crash scam

Legal

Mar 9, 2011

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Taiwan’s high court on Wednesday ordered two brothers — one of whom is dead — to pay $1.8 million over a train derailment they staged in an unsuccessful bid to kill the older man’s wife and claim an insurance payout.

Prosecutors claimed Lee Shuang-chuang so wanted his Vietnamese spouse dead that when she survived the crash he injected her with snake venom as she lay in a hospital bed.

Lee then committed suicide a week later, leaving his brother Lee Tai-an to face the music alone.

Lee Tai-an, meanwhile, is currently appealing against 13-year jail term for his part in the murder of the woman, whose death in a railway accident had reportedly been insured for $2.3 million.

The high court in Taipei on Wednesday ordered Lee Tai-an and the beneficiaries of Lee Shuang-chuang — his two sons — to pay around $1.8 million dollars compensation to rail authorities for the 2006 track sabotage that bounced three carriages down a slope and injured two people, as well as the elder Lee’s wife.

Taipei, March 9, 2011 (AFP)

Insurer Prudential doubles profits in 2010

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Mar 9, 2011

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British insurance giant Prudential insisted Wednesday that growth in Asia was the group’s priority as it announced a doubling of net profits for last year to £1.4 billion.

Prudential, which in 2010 failed with a massive takeover bid for the Asian arm of US insurer AIG, reported profit after tax of £1.43 billion (1.67 billion euros, $2.31 billion), compared with net earnings of £676 million in 2009. The group unsuccessfully bid $35.5 billion for AIA. “With or without AIA, Prudential has continued to power ahead in the Asian region,” said Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers.

Prudential chief executive Tidjane Thiam welcomed the group’s “very strong performance” in 2010 and said expansion in Asia would remain its priority. “At the centre of our strategy is the acceleration of our profitable growth in Asia, which offers many of the highest growth and return opportunities. “The emerging markets of South-East Asia — such as Indonesia, Malaysia, Vietnam, the Philippines and Thailand, together with Hong Kong and Singapore — are particularly attractive.

“They remain the priority destination for our new capital investment. With our compelling platform of distribution, brand and product development capabilities in the high growth markets of Asia, we believe we are particularly well positioned to take advantage of the considerable opportunity that the region offers,” Thiam said in the earnings statement. Prudential posted a 24 percent rise in 2010 operating profit to £1.94 billion, on strong sales of its policies in Asia. That beat analyst forecasts for a rise to £1.73 billion, according to Dow Jones Newswires. The group’s shares shot to the top of London’s FTSE 100 index, showing a gain of 4.15 percent to 743.6 pence in midday trade, after the group also hiked its latest dividend by a fifth. The FTSE was down 0.40 percent at 5,950.94 points.

Britain’s biggest insurer by market value said its failed AIA takeover bid, which collapsed last June, would cost the group a pre-tax sum of £377 million, an estimate that was unchanged from six months ago. Thiam, born in the Ivory Coast but with French nationality, had come under heavy fire over the failed takeover from some shareholders, who accused him of taking a huge gamble by making the bid just eight months into his tenure. Thiam defended the bid as a potentially transformational deal that would have made Prudential the world’s top non-Chinese insurer by market capitalisation, ahead of competitors Allianz and AXA.

It would also have transformed Prudential into an international insurance powerhouse — but the high price asked by AIG caused a shareholder revolt and Thiam was unable to persuade AIG to lower its demands. Analyst Hunter said Wednesday that Prudential’s “future confidence in prospects should help to mollify shareholders upset by the distraction of the failed AIA approach last year.”

London, March 9, 2011 (AFP)

Aon Benfield : Ideal time for Turkey to embrace Solvency II

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Mar 9, 2011

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Aon Benfield is advising Turkish insurers to take part in the European Union’s Solvency II protocol as high growth makes this is an ideal time for the country to embrace the regulation. Aon Benfield Analytics recently hosted its Solvency II conference in Istanbul to highlight the benefits and challenges of the non-EU country joining the regime, which is scheduled to incept in 2013.

Turkish insurers are currently regulated by Solvency I, which is over 40 years old and a simple factor-based approach. The country’s domestic regulator is keen for the insurers and reinsurers to sign up to Solvency II to bring the industry up to date and in line with the EU. Just 10 insurers piloted the Solvency II test scheme, QIS 4, in 2010, but most companies are planning to undertake the latest QIS 5, which will show how well prepared the country is for the new regulation. The Analytics conference attracted 40 insurer representatives, which is a clear testament to their commitment.

Speaking at the event, Marc Beckers, head of Aon Benfield Analytics for Europe, Middle East & Africa, said: “Solvency II is going to be a thorough and complex issue for both companies and regulators in Turkey. Insurers will reap the benefits of increased transparency and greater risk understanding but will need to dedicate time and resources to engage in a complex regime with challenging capital requirements.

“The Turkish insurance industry is in a high growth phase, so there is extra pressure to assess its risks in the most effective way. Solvency II is the next step in achieving this.”

Beckers also advised that a challenging part of the process will be the monitoring of catastrophic risks. The Turkish regulator acknowledged that they will need to decide who will design the catastrophe scenarios for Turkey and how to approach partial internal models to provide more realistic capital requirements than Solvency II’s Standard Formula.

In addition, bancassurance is a growing business sector in Turkey so these companies will need to review the risk/reward of addressing both the Solvency II and Basel III regulatory regimes.

Source : Aon Benfield Press Release

Aon Hewitt will introduce an advisory program to its 401(K) recordkeeping

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Mar 8, 2011

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Aon Hewitt announced that it will introduce a fully integrated advisory program to its 401(k) recordkeeping clients as it continues to focus on offering services to help improve financial security for American workers.

Under the relationship, Aon Hewitt Financial Advisors, LLC, an Aon Hewitt subsidiary, will serve as the provider of investment advisory services and serve as the fiduciary of the advice and management provided. After a careful search, Financial Engines was selected to serve as the independent sub-advisor and will provide the advisory platform to deliver the service, expanding the established strategic alliance between Aon Hewitt and Financial Engines.

“Our research shows that just 18 percent of workers are on track to meet their retirement savings needs,” said Scott Parry, leader of Aon Hewitt Financial Advisors. “Those employees who are falling short often make fundamental investing mistakes such as taking on inappropriate risk or not diversifying their portfolios that could easily be corrected given high-quality advice and management. By integrating the Financial Engines advisory platform into our broader administrative solution, we can deliver more personalized advice and management to 401(k) participants to help them avoid these pitfalls. This new service reflects our commitment to provide our clients with the right tools to help their workers save for retirement.”

The service will give participants whose companies choose Aon Hewitt for administration of their savings plan access to Financial Engines’ full suite of services including Online Advice and Professional Management. Aon Hewitt’s experience with pension and retiree medical plans is integrated with the solution to offer the total retirement picture to plan participants. Additionally, for workers who enroll in Aon Hewitt’s Professional Management program, registered investment representatives will provide personalized advice including help with savings, managing risk-appropriate portfolios, identifying their income needs in retirement, and turning their 401(k) savings into steady lifetime income.

“As the nation’s largest independent Registered Investment Advisor, we are committed to making retirement help broadly available to America’s workers,” explained Larry Raffone, executive vice president of Financial Engines. “We are excited that Aon Hewitt will deliver this service to more of its clients and we are proud to have been selected to partner with them to provide much needed retirement help to the full spectrum of investors.”

Aon Hewitt will introduce this service to defined contribution clients immediately. Aon Hewitt and Financial Engines will continue to support the delivery of advisory services under existing client agreements whereby Financial Engines provides advisory services directly to Aon Hewitt clients.

Source : Aon Hewitt Press Release

Appointment : Otto Thoresen in new ABI Director General

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Mar 8, 2011

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The Association of British Insurers has appointed Otto Thoresen as its new Director General it announced today. Mr Thoresen will take up the role on April 4 and will be based in London.

Otto Thoresen is currently Chief Executive of Aegon UK and a member of the Board of Management of AEGON N.V. He was appointed by an appointments panel of the ABI Board headed by ABI Chairman, Tim Breedon following an external recruitment process lead by Odgers Berndtson.

ABI Chairman, Tim Breedon said: “Otto is a leading industry executive who will bring strong leadership and proven industry expertise to the ABI’s work. He will have huge credibility representing the industry with the first hand-knowledge that comes from running a business in the current challenging regulatory and business climate.

Otto combines significant industry experience with a passion for improving the industry’s service to its customers and its reputation. His proven commitment to improving access to financial services and driving a focus on the customers’ needs will be a huge asset to the ABI as it continues to build greater trust in insurance products and tackle areas of customer detriment.

“Otto was the unanimous choice of the ABI Board Appointments Panel, having taken part in a competitive external search process, which resulted in a shortlist of five candidates. I am sure ABI members will be delighted that someone of his calibre will be leading the organisation forward.

“I am grateful to Maggie Craig for her hard work as Acting Director General over the last eight months. She has devoted characteristic energy and skill to keeping the ABI moving forward and will hand the ABI over to Otto in strong shape for the challenges ahead.”

Otto Thoresen said: “I am incredibly excited about taking on this challenge and representing all parts of the insurance industry at this critical time. This is an industry I care passionately about and I will relish the opportunity to engage in crucially important debates with governments, regulators, customers and stakeholders. The insurance industry is facing very significant changes over the next few years and it will be vital that we punch our weight and contribute all we can to the challenges facing us.

“Insurance has a key role to play in building and sustaining a healthy society. It is a vital product for most people but as an industry we still have much to do if we are to be completely customer-focused. The challenges are not necessarily the same for the general and life sectors but we know as insurers that we have to build on the progress of the last few years and always be on the side of our customers.

“The ABI is a strong trade body which I know well from my six years on its Board, most recently as a deputy chairman and Audit Committee Chairman. Its principal strength as an organisation is its close relationship with its members and I intend to develop this still further as Director General, especially with those sectors of the membership I have been less involved with during my career in insurance.”

Source : ABI Press Release

Eurotunnel reports 57m euro loss on insurance dispute

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Mar 6, 2011

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Rail operator Eurotunnel has reported a 57m euro ($79m; £48m) loss compared with a net profit of 7m euros a year earlier.

Eurotunnel said the loss was due to a dispute with insurers over payments arising from a fire in the Channel Tunnel in September 2008.

The firm also said the cost of servicing its debts had increased by more than 25% to 248m euros in 2010.

However, it forecast freight traffic to increase by 4% to 5% this year.

The firm also said it expected a 3% increase in passenger traffic through the tunnel in 2011.

“As announced previously, the delay in payment of the insurance indemnities has impacted heavily on our net result but the group is working to rectify this situation,” said chief executive Jacques Gounon.

New routes

Eurotunnel said it saw a 3% growth in customers numbers for its passenger rail service Eurostar, to more than 9.5 million in 2010.

The firm said truck shuttle traffic increased by 42% compared with 2009.

However, it said the number of trucks transported was still below 2007 levels, reflecting the slow economic recovery.

Eurotunnel is looking at an expansion in its traditional routes, with Eurostar looking into launching new services to Amsterdam, the south east of France and Switzerland.

German national railway company Deutsche Bahn is also looking to run direct services between London and major cities in Germany and Holland.

Eurotunnel estimates such new routes could represent a market of between 3 million and 4 million passengers per year.

The operator also noted the “serious possibility” that the current high price of oil may persist for several months.

It said this could potentially give Eurotunnel’s electrically-powered rail services an advantage over competitors – with operators in the airline and shipping sectors already having announced fuel surcharges on their transport costs.

Source : BBC

Libya added to marine insurers high-risk list

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Mar 5, 2011

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Libya has been added to London’s marine insurance market list of high-risk areas as violence escalates.

Libyan rebels vowing “victory or death” advanced towards the major oil terminal of Ras Lanuf on Friday, calling for foreign air strikes to set up a “no-fly” zone after three days of attacks by Muammar Gaddafi’s warplanes.

“The emerging risk had reached a level where as a matter of prudence insurers will require notification from vessels calling to Libyan ports or waters,” said Neil Roberts, a senior technical executive with the Lloyd’s Market Association LMA.L, which represents the interests of all underwriting businesses in the Lloyd’s market.

“On the issue of pricing, that’s a matter for individual negotiation on a voyage-by-voyage basis. It’s likely that things will change on a day-to-day basis,” he told Reuters.

Overseas Shipholding Group, the world’s No. 2 independent tanker company, told Reuters this week that some tanker rates had tripled as owners jack up rates and port operators struggle to load crude due to the uprising.

The Joint War Committee, which groups syndicate members from the LMA as well as representatives from the London insurance company market, added Libya to a list of areas it considered high risk for merchant vessels and prone to war, strikes, terrorism and related perils on Thursday. Other countries on the list include Iran, Pakistan, Ivory Coast, Somalia and Yemen.

The London marine insurance market plays an influential role in the global marine insurance industry.

“With reports of air strikes, if things go off target or even if ships are targeted deliberately, then underwriters will have quite serious concerns about their exposure on any vessels there or trying to call there,” Roberts said.

“It’s a reactive list, so if things improve to a point where underwriters are comfortable, then certainly Libya will come off,” he said.

Source : Reuters

AIG to repay $6.3 billion to US with latest stock sale

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Mar 4, 2011

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Bailed-out insurance giant AIG is expected to repay $6.3 billion to the US Treasury from the sale of its stake in industry rival MetLife, officials said Wednesday.

A Treasury statement said 146.8 million shares of MetLife common stock were sold at $43.25 per share, resulting in $6.3 billion of expected gross proceeds.

The proceeds will be used to pay off another chunk of the record bailout that AIG received during the height of the financial crisis.

AIG obtained the stake last year when its sold its American Life Insurance Company (ALICO) to MetLife for $16.2 billion, including about $7.2 billion in cash.

“This is the next chapter in AIG’s remarkable turnaround,” said Acting Assistant Treasury Secretary for Financial Stability Tim Massad.

“We are optimistic about the prospects that taxpayers will recover every dollar invested in AIG — something that many thought would be impossible when these investments were first made.”

The Treasury said additional shares of MetLife were sold for $3.3 billion. This money will be held in escrow as previously agreed to under the terms of the ALICO sale, and may be used later to repay the Treasury.

The Treasury made a total cash investment in AIG of approximately $68 billion through the Troubled Asset Relief Program (TARP), in addition to loans from the Federal Reserve to keep the key financial firm afloat.

AIG, once the world’s largest insurer, received more than $180 billion dollars from US taxpayers to help cover investments that collapsed amid the crisis. As of February 1, the total outstanding amount of Treasury’s preferred equity interest in AIG was $18.2 billion.

Washington, March 2, 2011 (AFP)

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