The Hindu Business Line : Insurance challenges

With financial services becoming market-driven, and with unforeseen fluctuations in interest regime, life insurance companies have to exercise utmost care in product designing and pricing, advises H. Narayanan in Indian Insurance: A Profile (www.jaicobooks.com). "For example, little did the seasoned life insurance monolith LIC think it would be obliged to withdraw some of its assured return plans a couple of years after their launch due to the southern slide of the interest rates, and. the returns on the capital could not sustain the schemes."

In a few years from now, the dividing line between the pubic sector and the private insurers will be thinning, the author foresees. "The public sector has to prove that it is capable of meeting the changing demands of the new generation." He cautions that the public sector will have to face the market on its own performance, if the Government chooses to do away with the sovereign guarantees.

As business grows, insurance companies may find it difficult to keep pace with the solvency norms by periodical infusion of funds, Narayanan anticipates. "Particularly, Indian ventures without any foreign equity tie-up may find the going difficult. This may lead to mergers and acquisitions." Profitability, he suggests, may lie in expanding into rural markets, which is a challenge for the private sector companies. "In spite of certain shortcomings, more than 90 per cent of the Indian population has faith in nationalised banks and insurance organisations."

A comprehensive read.

In-fighting spillover

Many family wars seem to be aroused, fuelled, and amplified by nothing less than lack of self-restraint - people acting on impulse or wish fulfilment. Thus observe Grant Gordon and Nigel Nicholson in Family Wars (www.vivagroupindia.com). "Some of the most poisonous wars are stimulated by more than just self-indulgence: by acts that trip a switch in the circuitry of conflict. Some are deliberate. Some are just thoughtless. Some are ambiguous."

The authors warn that, at times, parents can unintentionally start the rot in a family conflict by setting up their children to compete with each other, in the mistaken belief that it will make them more adaptive and strong. "In their most extreme manifestations some of these cases look more fictional than real. Every soap opera on television subsists on a diet of lies and concealments by parties. Without them the drama would be empty." Engaging presentation.

Saving on sourcing

Is tax optimisation a key consideration in sourcing? Perhaps, yes, but only for about one in two companies, finds a recent survey of retail and consumer companies by PricewaterhouseCoopers.

"Thirty-nine per cent do not factor tax costs into landed costs or only do so to a limited extent. Nearly one-third of the companies do not consider tax costs as part of their review of their global sourcing arrangements, but 61 per cent do measure their tax exposures to customs duties, corporate and environmental taxes. Only 18 per cent include tax efficiency as a metric in assessing employee reward," informs Global Sourcing: Shifting Strategies (www.pwc.com).

In the competitive arena of global sourcing, where cost benefits are already being achieved, there is therefore a significant opportunity for companies to get ahead through supply chain tax optimisation, the report notes. Worth studying.

D. MURALI

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