Sachin Tendulkar buys Rs 100 crore cover for his 'dream' house

MUMBAI: Having moved into his "dream house", ace cricketer Sachin Tendulkar has now secured his five-story Bandra residence with a staggering Rs 100 crore insurance cover, one of the biggest insurance deals by an individual.


The cricket icon has bought the insurance from a consortium of general insurers, according to industry sources.

"A consortium of general insurance companies has given an insurance cover for the cricketer's home in Bandra for a value consideration of Rs 100 crore," an official of a public sector general insurance company, who wished not to be named, said.

As per the official, all the four state-run GIs along with a private insurer have provided the cover.

" Oriental Insurance Company, United India Insurance, New India Assurance and National Insurance Company are the four government-owned general insurers providing the cover along with a private insurer," the official said, adding the annual premium would be around Rs 40 lakh.

According to another insurance official, the cover has been taken in two parts. While a fire insurance policy has been obtained for Rs 75 crore, an additional cover of Rs 25 crore has been bought for household items like furniture, electronic gadgets and cricket accessories among others.

The fire insurance covers losses from blaze, terror attacks, natural disasters like earthquakes, and burglary among others. The insurance covers the cost of the land, compound walls, besides electrical equipment.

The Tendulkars had moved into the sprawling 6,000 square feet villa in Bandra West in September from a flat that had been allotted to the maestro under sports quota.

"Everyone has a dream of owning a house. I, too, had this dream. I am happy that I was able to fulfil it," Tendulkar had said while moving into his new abode.

The cricketer's residence stands on a plot that earlier housed a dilapidated bungalow, which he had bought for Rs 39 crore in 2007.

The villa has been secured with high-walled fencing to avoid curious onlookers. CCTV cameras and sensors have also been installed.

Insurance that should find a place in your portfolio in any year circle

2012 may see the launch of several innovative products in the life as well as non-life space. While they can be considered, here are covers that should find a place in your portfolio in any year Circle


Term Insurance: Circle of Life Term Insurance Health Insurance Personal Accident Cover Home Insurance Travel Insurance The cheapest, yet most under-sold, form of insurance, it is a must-have in the portfolio of any individual with dependents. Online versions of these covers are even cheaper. It does not offer a maturity benefit, but is in the best position to provide financial security to insured's family in the event of his or her demise.

Health Insurance: Irrespective of whether your employer provides group cover or not, you need to have an independent health policy covering your family. It will stand you in good stead in case of break in employment or upon retirement, when it will be difficult to buy a policy at a reasonable price.

Personal Accident Cover: Now, a term cover and health policy can protect your family and foot your hospital bills. But what if an accident leaves you disabled? That is when a personal accident policy can make good the loss of pay due to absence from work.

Home Insurance: A natural or manmade calamity can destroy your house built with your savings. With no (or damaged) house and a home loan to repay, only home insurance can come to your rescue. Hence, don't ignore your home loan contract.

LIC lays claim to no.1 spot in settlements

MUMBAI: Life Insurance Corporation remained well ahead of private rivals in living up to the purpose of insurance by settling 97.03% of claims in 2010-11, helping the state-run giant retain its market dominance even a decade after its monopoly ended.


Settlement of claims at LIC rose from 96.54% in 2009-10, the Insurance Regulatory and Development Authority said in its annual report. For the private sector, where the premia on policies are lower than for LIC, the claims-to-settlement ratio was 86.04%, up from 84.87% in 2009-10.

Higher the ratio of settlement to claims, the more customer-friendly a company is. The regulator does not provide statistics for individual private firms.

"Insurers should take all steps to ensure the incidence of claim repudiation is reduced to the barest minimum," the regulator said in its annual report. "For this to happen, they should adopt measures to explain to the parties upfront the exact coverage and exclusions."

LIC, which controls nearly three-fourths of the market, scored on another front: its repudiation of claims declined to just 1% in FY11, from 1.21% a year earlier. The remaining claims are under dispute. For private life insurers, repudiation rose to 8.90% of claims from 7.61% in FY10.

Settlement of claims is the key factor that decides customer satisfaction and a company's profitability. While genuine claims are usually settled by both private insurers and LIC, private players see more disputes. Stricter due diligence means more fake claims are detected at private companies, while LIC is relatively lax in rejecting fake claims, reducing its profitability.

"Insurance is not what you sell, but deliver," said AK Dasgupta, MD, LIC. "People trust LIC because of our strong claims settlement record. They know we have the ability because of our balance sheet and intention. People need insurance for two reasons - uncertainty and good return."

In 2010-11, life insurance companies settled 8.13 lakh claims on individual policies, with a total payout of Rs 7,595 crore. As many as 17,350 claims amounting to 336 crore were repudiated.

New motor insurance pool a welcome reform

The insurance regulator's move to reform the motor insurance pool to settle accident claims of victims is welcome. It will make general insurers manage these claims better and improve the health of the sector.


The reform entails dismantling the existing third-party motor pool, an arrangement where general insurers share motor accident claims according to their market share, whether or not they write motor business. From the next fiscal year, the existing pool will be replaced with a new one called declined risk pool, wherein insurers will share claims only on vehicles that are considered unfit to be insured.

This makes sense as insurance companies will have the freedom to choose risks that they want to keep on their books and cede ones that they do not want to. Safeguards are in place to protect policyholders' interests when insurers cherry-pick motor policies. An insurer cannot refuse to write a third-party motor policy and the rules say any refusal will be seen as a violation of the insurance law.

The safeguard is logical, considering that it is mandatory for every vehicle owner to buy a third-party cover. The premium will be fixed according to actuarial calculations. This is welcome, provided premiums keep pace with the actual cost of claims. That is a huge problem in motor insurance because there is no limit on the compensation or even the time for lodging claims. This must change, else, consumers will have to pay more.

Compensation awarded to road accident victims should be formula-based, with a cap on the amount and a time limit for filing a claim. This will ensure quick settlement of claims and reduce litigation. Irda has said that the current pooling system has led to an alarming depletion of capital for the industry.

This is untenable as insurers need capital to grow, meet their solvency needs and the ability to pay claims. The claims management has been inefficient and there are leakages in claims settlement. Proper audits of motor claims are a must to prevent leakages. Irda has taken the first step, but more reforms must follow to have a vibrant general insurance industry. Alongside, road and vehicle safety standards must improve.

2012: Smart ways to save tax & take advantage of DTC

Over the next 90 days, millions of Indian taxpayers will wrap up their tax planning for 2011-12. Unlike in the past, this year's tax planning will be quite different as not only have the rules changed, but many of the goal posts have also shifted.


The biggest change is that the favourite tax-saving instrument of risk-averse investors has now become market-linked. The Public Provident Fund (PPF) will give returns that are 25 basis points above the benchmark yield of the 10-year government bond.

Then there is the Direct Taxes Code that may come into effect from April this year. There is also a small, but significant, change for senior citizens.

Last year's budget lowered the age limit for senior citizen taxpayers from 65 to 60. It also introduced a new category of very senior citizens above 80 with a big exemption of Rs 5 lakh. Despite these alterations, some fundamental principles of tax planning remain unchanged.

Your tax planning should still be guided by your overall financial planning. "Don't go by advertisements because not all tax-saving investments will suit you," says Mumbai-based financial planner Kalpesh Ashar.

Your choice of instruments should depend on how soon you need the money, your expectations of returns and ability to take risk. Let us look at the instruments that different types of investors should have in their tax-saving portfolio this year.

Take the ELSS advantage: For the taxpayers who embraced market risk by investing in equity-linked savings schemes (ELSS), this may be the last year for investing in this category. The DTC has not included ELSS in the list of tax-saving options. These funds have the shortest lock-in period of three years among all Section 80C instruments. So, your funds are not tied up for five years as in fixed deposits (FDs) and National Savings Certificates (NSCs).

"Given the three-year lock-in period and the level at which the markets are now, it is unlikely that an investor will lose money by investing in ELSS," says financial consultant Surya Bhatia.

The low minimum investment in these funds (you can start with as little as Rs 500) makes them an ideal stepping stone for the rookie investor.

However, don't forget that ELSS funds can be risky. So invest systematically rather than in a lump sum. Remember, you have to invest the money before 31 March.

"There is a lot of uncertainty in the market now and it is best to exercise caution and stagger investments in ELSS funds," says Ajit Menon, executive vice-president and head of sales and marketing, DSP BlackRock Mutual Fund.

Investors can also opt for equity exposure through Ulips. Unlike ELSS funds that cannot be touched during the lock-in period, these insurance-cum-investment plans allow policyholders to tweak the equity and debt allocation according to the market conditions. The New Pension Scheme also gives equity exposure, but this is limited to a maximum of 50% of the corpus.

Save extra Rs 9,270 through the PPF this year: The overall limit for investing in the PPF has been raised to Rs 1 lakh now from Rs 70,000 earlier. For someone in the highest tax bracket, this enhanced limit of Rs 30,000 means a potential tax saving of Rs 9,270 a year. "By itself, the PPF is a good long-term investment option, even if it is not done because of tax planning," says Bhatia.

How & why Mukesh Ambani will define India in 2012

Mukesh Ambani

54 years, Chairman & MD, Reliance Industries
Sector: Corporate

Career Milestones:
In 2002, RIL announced the world's biggest gas discovery in KG Basin.

In 2008, he set up the world's largest refinery in Jamnagar.

In 2011, he inked a $7-bn deal with BP even as KG Basin find ran into trouble.

Why him:
Because he has some big-bang diversification plans up his sleeve: Reliance Industries is likely to accumulate a Rs 1.25 lakh crore cash pile by March. Its foray into high-speed internet services, likely to shake up the telecom industry, will become clearer in the coming months. But there are issues that demand Ambani's attention: the oil and gas business is suffering from production challenges and investors are likely to breathe down his neck demanding solutions. And there's the brother question: will Anil be part of his plans?

Hi 2011:
Inked a $7.2-billion deal with British Petroleum for a 30% stake in 23 RIL oil and gas blocks.
Announced entry into insurance by buying out Bharti's stake in the Bharti-Axa joint venture. The deal fell through.
RIL's stock price dropped after fall in gas output from the D6 basin.
Mumbai Indians, Ambani's IPL team, won the Champions League finals.

What next:
2012 is the big year for Ambani's 4G telecom venture, a project that the company has been working on for almost a year. Initial reports indicate that the company is likely to kick-start with low-cost 4G services on tablets. Such a project would require a massive rollout and capital expenditure. Market analysts don't rule out a foray in the financial services space through an acquisition or two.

Mukesh is a Bollywood fan and has a huge collection of movies. But he does not plan to enter the movie business like brother Anil Ambani.

Who else: Gautam Adani
49 years, Chairman, Adani Group
2012 will test one of India's fastest-growing conglomerate's ability to grow at a robust pace. The past year was a mixed bag for the Adani Group. In May, it spent $2 billion for a 99-year lease of Abbot Port in Queensland, Australia. A couple of months later, Adani Enterprises was named in the Karnataka Lokayukta report on illegal mining in the state, a charge the company has denied. Since then, its port expansion plans have also hit speed-bumps as security clearances have been delayed. Since the beginning of 2011, the group's m-cap has plunged by more than 60%. Will 2012 be bounce-back time?