The insurance industry is said to have registered 83 percent growth after the government opened its doors to privatization. Commendable. Better customer service, an array of products and most importantly increased awareness is what insurance is all about today. But then has the importance of insurance percolated right down to the bottom - the rural areas. Perhaps not to the extent expected. Reason why the insurance regulator has decided to allow life and non life insurance tie-ups especially taking into account micro-insurance.

With this the rural poor will be able to avail of affordable life insurance covers and also social security through health insurance and property insurance. Also not many insurance companies have been very pushy on the rural front. Most of them are known to be doing mere lip service when it comes to rural insurance completing the stipulated bit laid down by the insurance regulator.

All this stands to change now as the IRDA plans to bring about major changes with a focus on rural insurance.

In our last month’s newsletter we wrote about how insurers have been doing brisk business in unit-linked plans. Very soon the insurance regulator plans to come out with guidelines that will bring in more transparency and protection for unit linked policyholders. Insurance companies will now have to spell out the best and worst scenarios for unit linked plans. So those tall claims made by few unscrupulous individuals will have no basis. Also these products will have to have a life cover of three to five times the annual premium, a minimum lock in period not to mention the option of staying invested long after the maturity of the policy.
In our last issue we wrote about how the commodities market is all set for a boom. Gold, silver, castor, soya, rape/mustard oil, crude palm oil, RBD palmolein or cotton among 42 commodities can help you gain handsomely. Sounds unbelievable?

As per reports the commodities business is expected to grow at an annual rate of 40 percent over the next five years and if you are waiting to be a part of it all you need to start off with is a minimum of Rs 5000, a bank account and an agreement with a commodities broker who would have membership with the National Commodity and Derivative Exchange (NCDEX), the Multi Commodity Exchange of India Ltd (MCX) or the National Multi Commodity Exchange of India Limited. These are apart from the 22 other recognized exchanges all set to become fully functional soon.

If you have already been dabbling in stocks and shares you would find that there are a number of similarities like a demat account is a necessity here too. You could trade through the internet too since several established equity brokers are already into commodity futures.

The brokerage charges in the commodities market ranges from 0.10-0.25 per cent of the contract value and could vary depending on the commodities, trading and delivery transactions. Besides the prices of commodities also could vary from one exchange to the other.

Wondering whether you need to take delivery? Not really. Decide - it could be cash settlement if you which you must indicate at the time of placing the order and if you intend to take physical delivery you would need to have the necessary warehousing receipts.

Where will I get info? There are a number of websites that offer you information on commodities. Additionally there are several magazines and newspapers too that will cater to your needs since commodities is big business today. Commodities futures is no doubt an emerging investment avenue and if you strongly believe in having a diversified portfolio give it a thought.
Post-Independence, discontent against insurers reached a pitch. Business was chaotic, foreign insurers were leaving the country, and Indian insurers driven by greed and business considerations were not earning much credibility. The cry for nationalising insurance grew louder - a move that insurers were, of course, opposed to.

On 19 January 1956, the life insurance business was nationalised. In one swoop, the government snapped up 245 insurers and provident societies. Eight months later, the Life Insurance Corporation (LIC) was formed, which took over the businesses of the erstwhile private insurers, and started expanding at a frenetic pace. Today, this monolith has branches across the country, 800,000+ agents, and offers a bevy of insurance & investment products. LIC marketed insurance less as a risk management tool and more as a savings instrument with a tax advantage. A look at LIC’s policy profile shows that just 18% of policies in force are protection plans; insurance-cum-investment plans account for 60%; with the balance being pure investment plans. Still households embraced these safe investment avenues, with the sum assured (or the total value of cover) increasing Rs 1,476 crore in 1957 to Rs 4,59,201 crore in 1999. The corpus has continued to increase in leaps and bounds ever since.

Similar circumstance led to the nationalisation of non-life (or ‘general insurance’). As in life insurance, pre- nationalisation, there were an inordinately lage number of insurers, many of whom were notorious for flouting investment norms and delaying settlement of claims. Non-life insurance was nationalised in 1972. General Insurance Corporation (GIC) was set up as a holding company; a total of 107 private insurers were merged and grouped to form GIC’s four subsidiaries.

(Reference : The Layman’s Guide to Insurance)
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