On global pandemic planning, the World Health Organization (WHO) has raised its pandemic flu alert to the top phase of its six-phase scale - indicating that the H1N1 virus has achieved sustained community transmission in a broad geography. AON Global Risk Consulting says that the declaration does not indicate a change in the severity of the current outbreak.

The Basel Committee on Liquidity Risk Management and Banking Supervision is set to unveil quantitative liquidity requirements for public consultation at its quarterly meeting in December. Earlier in September 2008, the committee had published its, "Principles for Sound Liquidity Risk Management and Supervision", a revised version of a set of 17 guidelines first written in 2000. While the committee expected banks and supervisors to thoroughly implement the revised guidelines, it offered no binding quantitative metrics for liquidity buffers or structural funding.

On the insurance front, at least 17 national insurance supervisors have signed plans for an internationally harmonized regulatory insurance standard similar to Solvency II, the International Association of Insurance Supervisors (IAIS) has confirmed. KPMG International and the Economist Intelligence Unit conducted a survey, "A Glimmer of Hope: Growth Prospects in the Global Insurance Industry and the Escalation of Risk and Capital Management", of 315 industry executives from 49 countries in March and April 2009 and the results show that more than half the respondents expected an improvement in organic growth (55%) and an improvement in growth by acquisition or takeover (53%) during the next 12 months. With regard to the global risk situation, economic turmoil and the second worst year on record for insured natural catastrophe losses did not deter falling commercial insurance prices in 2008, according to the 2009 RIMS Benchmark Survey book, the annual guide to the cost of risk for commercial insureds in North America.

This issue includes seven papers. The first paper, "Exploring Rural Markets for Private Life Insurance Players in India" by P K Gupta, explains that the keys to success in insurance penetration in rural areas for private players are accessibility, reasonably-priced products, effective communication and after-sales service.

The second paper, "An Economic Analysis of Failure Experience", by Mahito Okura, investigates the impact of failure experience. According to the author, high profitability of the investment, small interest rate, and large initial wealth are the conditions to enlarge the possibility of investment with the impact of failure experience.

The third paper, "Life Insurance Companies in India: Performance and Prospect", by S Sankaramuthukumar and Saravanan Laxmanan, looks into 16 life insurance companies and finds that these insurance companies can perform better by going for a strategic partnership with banks and post offices, wholesale inclusion of rural masses, developing underwriting skills, tuning grievance redressal mechanism, and hiking the FDI limit to help capital infusion.

The fourth paper, "Growing Indian Economy. Impressive Performance of Life Insurance Business", by M V S Srinivasa Rao, highlights how foreign insurers are lining up to enter India's life insurance industry, lured by a population of more than one billion people.

The fifth paper, "Emerging Trends in Indian Insurance Market", by T N Murthy, Riswana Ansari and P Raja Babu, finds that the savings part of insurance has channeled efficiently into long-term investments and would play a greater role in funding infrastructure projects with long gestation periods.

The sixth paper, "Distribution Channels for Incumbent Rural Insurance Industry" by Mrinalini Shah and Shweta Dixit, discusses that to have better penetration of insurance in rural India, the delivery system of insurance in these areas should be focused upon and the well trusted members and organizations of these areas like doctors, NGOs, post offices, etc., should play a significant role in educating and motivating people.

The seventh paper, "Social Insurance for Agricultural Laborers", by A Pouchepparadjou, N Swaminathan, M Kalamani and K S Kumaravel, discusses about the General Insurance Scheme covering 69.35% of the total (72,095) agricultural laborers living below poverty line in the age group of 18-60 years. The scheme is having Viable Business Proposition (VBP) because it captures the four key aspects of affordability, insurability, marketability and profitability of VBP.

- - Padma Srinivasan
Consulting Editor