Software firms take lead in employee insurance

Software companies seem to benefit the economy in ways more than one. One of the indirect benefits have been in bringing more business to the insurance sector and sometimes to the broking fraternity also, as according to some brokers, not only are software companies more receptive to employee insurance, but the sum assured amount is also higher when compared to the traditional manufacturing companies.

"While software companies consider their employees as their asset, manufacturing companies consider their plant as their asset. So the former usually spends two to three times more than manufacturing companies, in providing insurance cover for their employees," N Raveendran, principal officer at the Chennai-based insurance brokerage, ALEgION Insurance Services Ltd, points out. In addition, software companies usually have more money to burn than manufacturing companies, he added.

"Compared to mid-sized and traditional manufacturing companies, software companies are more receptive to insurance, as their working style is tuned to the working style of companies in developed countries," Ramana Reddy, managing director of Helios Insurance Services Private Limited, said.

Helios, a direct broking agency based out of Hyderabad, has about 100 corporate clients today and according to Reddy, a majority of them comprise software companies.

This apart, there is also a difference in the sum assured value that software and manufacturing companies go for.

"While most of the manufacturing companies do not go beyond Rs 25 lakh in case of personal accident insurance, there have been some software companies that have taken insurance cover for Rs 1 crore also," Raveendran said. Moreover, manufacturing companies usually go for asset cover than employee insurance, he added.

"Mediclaim and personal accident insurance are the most popular products among the software clients followed by asset insurance and term-life insurance," Reddy said.

A case in point is Satyam that provides medical coverage to its employees and/or three dependents through the group medical insurance plan. It also provides personal accident insurance to its employees. While the sum assured amounts for its medical insurance plan ranges from Rs 1.8 lakh to Rs 4 lakh, it ranges from Rs 5 lakh to Rs 10 lakh for personal accident insurance.

The sum assured amount depends on the level at which the employee works in the organisation. Satyam has, for the past two years, gone through brokers or agents and not directly, in order to get customised insurance cover for its employees.

"Many software companies also send their employees abroad. Therefore, we have also tied up with a New Jersey-based broking company called Ficke & Associates Inc to act as our branch abroad," Reddy said.

K Muralidhara Reddy, principal officer of Hyderabad-based Excellent Insurance Broking Services Ltd, however, believes, "The sum assured amount taken by a company whether manufacturing or software, depends on the risk that a company's employees are exposed to. In many manufacturing firms where there are operational hazards, the sum assured amount for employee insurance might be higher when compared to software companies also."