European Insurers Gearing To Sell Life Assets

Two of Europe’s largest insurers are gearing up to sell billions of euros in life assets — a niche corner of dealmaking keeping bankers busy amid the coronavirus pandemic.

Allianz SE is planning to divest as much as 9 billion euros ($9.9 billion) of life insurance assets in countries including Italy. The potential sale, which comes after a review by Allianz of its European life business outside its home market, may fetch about 500 million euros [US$549.2 million], the people said. Any divestment could help Allianz free up regulatory capital amid the coronavirus crisis.

Italy’s Assicurazioni Generali SpA have plans to move ahead with the disposal of a French life insurance portfolio, in what’s set to be a landmark deal for the industry in France. The potential sale could involve between 1 billion and 2 billion euros [US$1.1 billion and US$2.2 billion] of assets. Generali has been considering selling a so-called back-book portfolio linked to savings products in its life insurance unit and had earlier asked banks to pitch for a role on the deal.

The consolidation of closed-life books will be a driver of M&A activity in western Europe’s insurance sector this year, including France and the Netherlands. Dealmaking in the sector has proved resilient against the impact of COVID-19 at a time when overall mergers and acquisitions volumes are down 23% in the region.

The market for back books has been growing in recent years. Heritage assets which sit on companies’ or insurers’ balance sheets rose by 40 billion pounds ($49 billion) to 580 billion pounds [US$712.5 billion] between 2016 and 2018 in the key markets of U.K., Germany and Ireland.

The Allianz and Generali divestment could attract interest from specialist consolidators. No final decisions have been made, and there’s no certainty the deliberations will lead to a transaction.

Big insurers including AXA SA have been pivoting away from the capital-intensive business of writing life policies. Those consolidators focus on buying assets that are less profitable for insurers in the low-interest-rate environment. 

AXA - No Escape - To Pay Coronavirus-related Revenue Loss

AXA said on Tuesday (May 26) it would meet the bulk of claims from some restaurant owners after a Paris court ruled last week the French insurer should pay one owner two-months' worth of coronavirus-related revenue losses.

The ruling on a disputed contract was seen as opening the door to a wave of similar litigation.

AXA also said it would provide a further 500 million euros (US$546 million) in aid for small companies. AXA planned to compensate business interruption losses to the majority of restaurant owners whose contracts were similar to the one studied by the court. These contracts represent less than 10 per cent out of total contracts with restaurant owners.

Cashing On Your Life Insurance

When you’re scrambling for cash in a crisis, your life insurance policy might never cross your mind. You bought it to provide for your family when you’re gone, but you’re still here and looking for ways to pay your bills. 

In some cases, a permanent life insurance policy, such as whole life, might provide the emergency cash you need. Taking money from your policy could increase your tax burden, and you risk leaving your family short on funds if you die. But if you’re in a financial bind, tapping the cash value of a whole life insurance policy could be a reasonable option.

Does your life insurance have cash value? - Not all life insurance policies have funds tucked away inside. To get cash out of your life insurance, it needs to be a permanent policy, such as whole life, that has had time to build cash value.

Term Life Insurance - doesn’t qualify. It’s typically the most affordable type of life insurance, but the main trade-offs are that term life lasts for a limited time and has no cash value. You can’t take money out of this type of policy.

Permanent life insurance - often costs much more than term life, but part of the premium goes into an investment account that you may be able to tap. Whole Life Insurance, also sometimes called ordinary or straight life insurance, is the most common type of permanent policy. Other variations, such as universal life, variable universal life and indexed universal life, may also have cash value.

If your policy is relatively new, it’s unlikely to have much cash value yet. Building cash value is like growing a savings account with small deposits over time. You’ll typically need to pay premiums for several years before there’s enough cash value to be useful.

Also be aware that the cash value of your policy can be much less than the total premiums you’ve paid or the amount of insurance you bought. If your whole life policy’s cash value grows undisturbed, it should eventually reach the death benefit of the policy, but that may not happen until you’re 100 years old.

Four ways to tap life insurance cash value - If your policy has cash value, you can tap it for whatever you need, but taking cash out of your life insurance policy is a serious decision. Details differ from one policy to the next, so be sure to read your contract or check with your agent before you take action. Here are four options to consider.

1: Surrender the policy - You can cancel your life insurance policy entirely and receive the surrender value, which is the cash value minus any fees. If you choose this option, you won’t be covered by the policy anymore, and your family won’t get a death benefit when you die. Depending on how long you’ve had the policy, you might pay a penalty for cashing out early. And if your payout is more than the premiums you paid, you could owe income tax on that gain. Surrendering your policy may not be a good idea unless you’re certain you no longer need the life insurance to provide for your family after you die.

2: Make a withdrawal - You can usually withdraw part of the cash value in a whole life policy without canceling the coverage. Instead, your heirs will receive a reduced death benefit when you die. Typically you won’t owe income tax on withdrawals up to the amount of the premiums you’ve paid into the policy. This option may also be called a partial cash surrender, since you are surrendering part of your coverage.

3: Borrow from the policy - Many policies allow you to borrow against the cash value. Borrowing against life insurance may be easier than getting a loan elsewhere because there’s no credit check and a flexible timetable for repayment. When you take a life insurance loan, you’re generally expected to repay it with interest at some point. If you die before paying it all back, the amount you owe is deducted from the benefit paid to your heirs.

4: Cover your premium - If you need money to pay bills, and one of those bills is the life insurance premium itself, your cash value may come in handy. You may be able to skip making out-of-pocket premium payments on your whole life policy. Instead, you can use the cash value to cover your premiums for a while, keeping your policy safe while you weather a financial storm.

Credit Insurance & Variations

If you have a mortgage, personal loan or auto loan, you might have been offered credit life insurance from the lender. Not to be confused with traditional life insurance, credit life insurance promises to repay all or a portion of a revolving debt balance in the event you pass away. But, with limited flexibility and high costs, standard term life insurance might be a better option. So, if you’re considering a credit life insurance policy, here’s what you should know.


What is Credit Life Insurance? - Credit life insurance is a type of life insurance that’s designed to pay off the remaining balance of a person’s outstanding debt in case they pass away. Often, when you apply for a personal loan, mortgage, auto loan or a line of credit, lenders or banks will try to sell this type of life insurance.

If you purchase a policy, the lender or bank is the beneficiary of the policy and gets the payout, not your family. Credit life protects the interests of the lender.

Some of these policies are tied to the face value of the borrower’s debt balance. As you pay off your outstanding debt balance, the face value of the policy decreases. If you pass away, the proceeds of the policy pay off the remaining balance of the loan. Other policies may have a level death benefit, which means the death benefit will remain the same over the term length of the policy.

Generally, credit life insurance is a guaranteed issue life insurance policy, which means all applicants are approved for coverage regardless of their health conditions. Costs will depend on several factors including the type of credit and credit balance.

Advantages of Credit Life Insurance - The key benefit of a credit life insurance policy is that it will pay off a specific revolving debt balance if you pass away. There are several reasons why this could be beneficial.

Primarily, it could streamline the estate process. Typically, the executor of an estate reviews all of your assets and liabilities and then repays your debts with the available assets. If you purchase a credit life insurance policy, the executor won’t have to use your financial resources to repay that specific debt balance.

Another benefit is that a credit life insurance policy can help a co-signer, joint account holder or spouse (if you live in a community property state). If you pass away, these individuals would be financially responsible for repaying an outstanding debt balance. A credit life insurance policy would relieve them of this financial obligation.

Additionally, you can purchase a credit life insurance policy even if you’re not in good health. Whether you have a chronic medical condition or you’re ineligible for a term life insurance policy at an affordable rate for other reasons, there’s no health exam required to qualify for credit life insurance.

Disadvantages of Credit Life Insurance - While the benefits of credit life insurance may have some appeal, the disadvantages could outweigh the upside. Here are some to consider.

First, since the lender typically sells you the policy, the policy’s premium will be folded into your monthly loan payment. In some cases, the lender will add a single lump sum premium to your loan balance, meaning you’ll be paying interest on your credit life insurance premiums for the life of the loan.

Second, many credit life insurance policies have a diminishing face value. As you pay down your loan balance, you’ll still pay the same premium but for less coverage. For example, if you had a $50,000 loan balance at the outset of the policy and paid off $30,000, you would still pay the same credit life insurance premium for $20,000 worth of coverage.

Another downside to this policy is that credit life insurance is designed with one purpose in mind: to repay a specific debt, such as a personal loan. A payout will not wipe out all of your debt (like car loans, credit cards and student loans).

Credit life insurance also lacks flexibility for the death payout. A payout goes directly to the lender. Since your family doesn’t receive the money, they don’t have the option to use the funds for other purposes.

Can I Cancel My Credit Life Insurance? - While rules may vary by the insurance provider, you should be able to cancel a credit life insurance policy at any time. Depending on when you cancel, you might be eligible for a full or partial refund. Generally, your refund will be calculated by the Rule of 78 or a pro-rata method.

Rule of 78: With the Rule of 78, lenders calculate interest for the entire term of the loan and then assign a share of that interest to each month. If your lender uses this method and you have a 12-month loan, they would add the numbers 1 through 12 together, which equals 78. 

Next, they would assign a portion of the interest to each month in reverse order. Therefore, the first month the borrower may pay 12/78th of the interest of the loan and so on.

Pro-rata: The pro-rata method is a little easier to understand. Let’s say you cancel your credit life insurance at the beginning of the 6th month of coverage but you have paid for the entire year. With the pro-rata method, you may get a 50% refund on the policy.

If you pay off the debt early, you may also be entitled to a refund or credit for the unused premium payments.

Some lenders may offer a “free” introductory period for 30 to 90 days. But if you want to cancel, you will be responsible for taking action. If you forget to cancel after the introductory period, you may not receive a full refund for the policy.

Other Types of Credit Insurance Policies - In addition to credit life insurance, there are other types of credit insurance policies you may want to be aware of:

Credit disability insurance: This pays for all or a portion of your monthly loan payment in the event you become ill or injured and cannot work during the policy term. Often, there is a waiting period before your policy benefits kick in (such as a 14-day waiting period). Some credit life insurance policies may also pay off your debt in the event you are disabled and no longer able to work.

Credit involuntary unemployment insurance: Also known as involuntary loss of income insurance, this insurance policy pays all or part of your monthly loan payments in the event you lose your job through no fault of your own, such as a layoff.

Credit property insurance: This policy protects your personal property used to secure a loan if it’s destroyed by an event such as theft, accident or natural disaster. But before you buy this credit property insurance type, take a look at your homeowners insurance policy or renter’s insurance policy. If you have a comprehensive policy, buying credit property insurance might duplicate your existing coverage.

Term Life Insurance as an Alternative - In many cases, credit life insurance isn’t the best option. Term life insurance is generally a less expensive and a better solution, especially if you’re on the healthy side.. Since term life insurance policies are “medically underwritten,” your cost is determined by factors such as your age, gender and health. Generally, the younger and healthier you are, the less you’ll pay for a term life policy. But affordable term life is also available at older ages and for people with some health conditions.

In addition, term life insurance allows more financial flexibility. You get to select your beneficiary and your beneficiary gets to decide how to use the death benefit money. For example, your beneficiary could use the money to pay off a mortgage, medical expenses or student debt.

Another consideration: Term life insurance doesn’t have a diminishing face value. If you purchase a $500,000 policy, that’s what your beneficiary will get if you pass away within the policy term. That’s a big difference from credit life insurance. With credit life insurance, your coverage amount reduces as you pay down the loan balance.

Indonesia Consolidate 4 State-owned Insurers

Indonesia's consolidation of four state-owned insurers under one holding entity is intended to breathe new life into an industry rocked by mismanagement scandals. But what has been left out of the government's plan is raising questions.

Bahana Pembinaan Usaha Indonesia, a financial group fully owned by the government, has been made the parent of four state insurers with a combined 60 trillion rupiah ($3.6 billion) in assets, under a decree signed by President Joko Widodo last month.

The quartet of companies are Jasa Raharja, which focuses on travel accident insurance; Jasindo, which does general insurance; Askrindo, financial and general insurance; and Jamkrindo, which provides credit insurance for trade and business.

The consolidation is part of a wider restructuring program overseen by Indonesia's minister for state-owned enterprises. He wants to drastically cut the number of SOEs and their subsidiaries from some 800 currently.

Jiwasraya - But the insurance plan does not so far include two other insurers, Jiwasraya and Asabri. Management scandals at both companies were widely assumed to have been the impetus for the accelerated consolidation.

Jiwasraya is the country's fifth largest -- and oldest -- insurer with a 5.9% market share and a wide range of products including health and life insurance and pension plans. But since the company defaulted on 802 billion rupiah of claims in 2018 -- a figure that ballooned to 12.4 trillion rupiah late last year -- it has been mired in scandal.

Prosecutors have alleged years of mismanagement, including investments in bad stocks and window dressing of financial statements, that are believed to have cost the state nearly 17 trillion rupiah in losses. Several people have been named as suspects in the case, including former company executives.

Asabri - A similar scandal was revealed this January at Asabri, which specializes in insurance and pension funds for military and police retirees. A Supreme Audit Agency official said Asabri's alleged malfeasance may have cost the state over 10 trillion rupiah in losses.

But Indonesia's SOE ministry says the purpose of the consolidation goes beyond simply rescuing scandal-hit companies and is really about improving the overall performance of state insurers.

"We've had an experience of merging bad, damaged banks into Bank Mandiri," SOE ministry spokesman Arya Sinulingga told a hearing with lawmakers last month, referring to Indonesia's second largest lender by assets. "[Mandiri] has become good. Now it is a mainstay of the government. So, we're designing a solution [for state insurance firms] in a similar direction."

Industry players have expressed concerns that the Jiwasraya and Asabri scandals could erode public trust in insurers in a still largely under-penetrated market.

Industry - However, data from the Indonesian Life Insurance Association, or AAJI, shows that the gross written premiums of the industry grew 6% to 196.7 trillion rupiah in 2019, reversing a decline in the previous year.

And the size of the market has almost doubled from 101.5 trillion rupiah in 2014, making Indonesia among the fastest growing globally. Analysts are upbeat that the consolidation will prove positive, but still say there is a case for including the other two companies.

In the long run, the industry at large is also expected to benefit. Improved operational synergy between state insurers could speed up technological and product innovation, which in turn will increase insurance penetration in Indonesia.

Optimism over the consolidation, however, comes just as the coronavirus pandemic is injecting uncertainty into the industry as an economic slowdown is expected to reduce purchases of insurance products.

The industry is expected to witness higher growth from 2021 onwards due to increased awareness and earlier forecasted a compound annual growth rate of 7% for gross written premiums in Indonesia's life insurance industry, reaching 253 trillion rupiah in 2024.

Private Hospital Charged For Profiteering

About a couple of weeks back, a private hospital in Kuala Lumpur charged a patient RM201.60 for 18 masks used by its nurses. The hospital now has to pay RM200,000 fine for profiteering.

According to the Domestic Trade and Consumer Affairs Ministry (KPDNHEP), the private hospital was imposed with a compound of RM200,000 for selling three-ply face masks higher than its ceiling price. KPDNHEP said the compound for the offence the hospital committed under Section 11 of the Price Control and Anti-Profiteering Act 2011.

If the hospital fails to pay the RM200,000 compound within the specified time, it will be charged in court.

The issue came to light after a patient's father lodged a complaint. The patient alleges that he was charged RM201.60 for 18 masks that were used by the hospital's staff while treating his four-year-old daughter. According to the father, while masks are an essential item for the hospital's staff to wear, especially amidst the pandemic, the fact that it charged a patient for the items used by its staff was shameful

At RM201.60 for 18 three-ply masks, a single mask at the private hospital was charged at RM11.20, compared to the maximum price of RM1.50 per piece.

The private hospital was overcharging by RM9.70 for each piece of the mask worn by its nurses to treat the complainant's daughter, who was admitted for COVID-19.

According to the ministry's Enforcement director - they carried out checks that showed that the face masks were sold at a very high price of RM11.20 each. Several documents on the transaction, including the face masks, were confiscated.

Manipulative Boss In Office

Imagine always taking the blame for your boss. Worse still, imagine your boss denying you what you deserve under the pretence that you have not been doing things right. A manipulative boss is basically the kind of boss who uses emotional and political influence to control your actions and keep you dependent on them.

Such boss can either teach you how to fight for yourself or can kill your morale. The boss may even pretend to be mentoring you or coaching you to be a better version of yourself but the truth is, you do not need them and you can never be good enough to them. So here, is how to tell when your boss is trying to take control of your career and your life.

Focussing On Your Weaknesses - A good boss is one who pays attention to your strengths while still encouraging you to work on your weaknesses. They may use bonuses, verbal praise, encouragement, or even empowering activities to help you grow your skills.

However, a manipulative boss will focus on what you are not good at or not doing up to their unattainable standards while completely ignoring your strengths. Often, this will happen when for example, you ask for a raise or other people around you seem to be noticing your strengths. They might even throw veiled threats your way and constantly remind you of things like how many job seekers are itching to replace you. Some will even go to the extent of shooting you down in front of your colleagues or shouting at you so as to weaken your confidence. By playing up your weaknesses, this kind of boss doesn’t want you to grow or simply wants to deny you something. Basically, this kind of boss doesn’t want you to ask questions.

Micromanages Your Work - Do you know that boss who has to comb through everything you do and every decision you make? Simply put, you are there to do their bidding and they do not trust your decisions. Everything you do is questioned for no reason because they did not come up with the idea or approve it before you implemented it. Every detail has to go through them and if you make a minor change along the way, they have to approve it. In some cases, they will ask you to present a mountain of evidence and justifications for simple actions just so that they can frustrate you.

The micro manager wants to kill your confidence which then means that you will not have the confidence to rise above your current position. They will shoot down all your ideas and in some cases, come up with the idea later on and front it as their own. Some micromanagers even pretend to ask you for your opinion and then go right ahead and ignore it.

Your Boss Always Passes On The Blame - Good leaders are known to take charge of their actions and decisions. But, a manipulative boss will never take blame for their actions but will be quick to take credit for your work. Simply put, this boss will either have you do something they are scared of doing and then blame you for the outcome or will have you admit to a mistake they made. Although it is a sign of weakness, such a boss will even throw you under the bus in order to shine or come out blameless.

Drops Names Of Senior Managers To Make You Do Their Bidding - Imagine having a conversation with your boss and in every third sentence, they drop the name of a person in senior management, usually, a person you have no access to. The message here is that they are simply putting you out of harm’s way, or that their actions and ideas have been sanctioned from above and there is nothing you can do. Some will even do this to justify wrong actions and most of the time, they have not actually been directed by anyone in senior management but simply want to control you. Name-dropping is a show of poor leadership skills and shows that your boss cannot stand by their decisions and actions and will most likely let you take the blame when things go wrong.

Plays The Frenemy Card - We all know them. They are extremely friendly when they need help or when they are trying to get you to trust them but will quickly turn into a person you cannot recognize when it suits them. You can never really tell what mood they are in. One minute, you are laughing together and the next minute, they are throwing you under the bus or shouting at you. In the worst case scenario, they try to get close to you so that they can gather information from you and use it against you.

A manipulative boss can make your life at the company impossible. All you have to remember is that you are not the problem. The best you can do is ensure that you do your job well and be firm in your actions and decisions.

AXA Must Pay - Restaurant Closure - Covid-19

A Paris court ruled that insurer AXA must pay a restaurant owner two months’ worth of coronavirus-related revenue losses, the restaurateur’s lawyer said on Friday, potentially opening the door to a wave of similar litigation.

The ruling will be watched closely by restaurants, cafes and nightclubs in Britain and the United States which are also threatening legal action against insurers who have not paid out on business interruption policies.

Axa said it would appeal the ruling. It argued there was a difference in interpretation over a specific type of contract signed by a several hundred restaurant businesses with a single brokerage.

The case was brought by Stephane Manigold, who owns four restaurants in Paris. He filed a lawsuit demanding that AXA cover his operating losses after a government order in mid-March to close bars and restaurants to try to slow the spread of the virus.

“This is a collective victory,” he told Reuters after the ruling.

The court said that the administrative decision to close the restaurant qualified for insurance cover as a business interruption loss.

“This means that all companies with the same clause can appeal to their insurers,” Manigold’s lawyer, Anais Sauvagnac, said.

AXA has a 13% market share among French craftsmen and merchants. AXA said it only had 200 contracts in its portfolio with French businesses in various sectors that provide business interruption guarantees when there is no physical damage involved.

AXA said it was in the process of compensating those 200.

Advanced Technology Trending Insurance Industry

Advanced technology has already become an integral part of the insurance industry. Nowadays, one can easily compare the life insurance quotes by clicking a button. Not only this, managing coverage or checking the policy status can be easily done via mobile app. These days, paper insurance has mostly become a thing of the past.

Insurance technology is likely to mature even more in the coming years. While there are many insurance technology trends are emerging, we can see them becoming more popular throughout the insurance industry.

Predictive Analytics - There are many insurance companies, which use predictive analytics to collect various data, to predict and understand customer behavior. However, there are new ways that can be utilized to enhance accuracy. Nowadays, insurance companies can use predictive analytics for:

- Identifying the risk of fraud

- Pricing and risk selection

- Sorting claims

- Identifying insurance buyers at risk of cancellation

- Anticipating trends

Artificial Intelligence - Customers always want to have a personalized experience, specifically while purchasing as important as life insurance. Artificial intelligence offers the insurer the capability to create such personalized experiences, fulfilling the demands of modern customers.

With artificial intelligence, the insurance company improve the claim settlement ratio of the company and can fundamentally change the process of underwriting. AI also helps the insurer to access the data faster and in a more accurate way.

Thus with the help of AI, the insurer can not only speed up the process of insurance but it also helps to improve the reliability of the company.

Social Media Data - In this day and age, the popularity of social media and its role in the insurance industry is thriving beyond clever advertisements and marketing strategies. Engaging in social media data is improving the risk assessment for the life insurer, boosting the capabilities of fraud detection and enabling entirely new experience for the customers. Moreover, SMD helps the customer to interact one on one with the insurer which increases the credibility of the insurance company. Moreover, customers can file a claim, check quotes and request other services simply by login using their Facebook credentials.

Chatbots - According to the experts, it is estimated that by 2025, 95% of all the customers' interaction will be done by chatbots. Utilizing artificial intelligence, chatbots can communicate with customers effortlessly, saving everyone within an insurance company time and money. A chatbot can help the customers through the application process of the policy or the process of filing a claim, saving the human interference for more complex cases.

Bringing the 24X7 customer service phrase to reality, a virtual assistant can interact with the customers 24X7 via text or voice and clear any doubts or queries of the customers regarding the life insurance policy.

Machine Learning - To improve the accuracy of the insurance companies many insurance technology trends are interlinked with one another. As per Forbes, Machine learning is technically a subdivision of Artificial Intelligence, however, it is more specific. Machine learning is built on the concept that we can develop machines to learn and process data on their own, without the constant supervision of a human.

With the help of machine learning, the insurance company can not only improve the processing of claim settlement, but it can automate it. When files are accessible and digital via the cloud, it can be analyzed easily by using pre-programmed algorithms which will result in improving the accuracy and processing speed. This automated review can influence more than just claims – it can also be used for risk assessment and policy administration

Wrapping it Up! - The insurance companies are always looking for the latest and highest developments in insurance technology. It not only helps them to stay ahead of competitors in the market but also helps them to deliver the best experiences, which the customers expect in the modern market. With all of the technology advancement going to market in recent years, you can follow these technology trends to make your business more strong and effective.