While IRDA rules mandate that the policy document is required to be sent to the policyholder within two months there was a delay of more five months, which prompted the consumer forum to penalise the insurer
A Delhi consumer forum has held Apollo Munich Insurance Company guilty of deficiency in service and has ordered it to pay Rs5,000 as compensation to its customer for not sending the renewed policy document within two months, which is mandatory under Insurance Regulatory Development Authority (IRDA) rules.
The District Consumer Disputes Redressal Forum, North (New Delhi) observed that, “In our opinion receipt of the contract writing representing the terms and conditions of insurance policy is the right of the subscriber of the insurance policy and non-receipt of the insurance cover within a period of two months as stipulated in regulation referred to above is a deficiency in service, irrespective of the fact whether actually any damage or loss has been caused to the complainant or not.”
The case relates to New Delhi-resident Vivek Sharma who bought a family health insurance policy from Apollo Munich, valid from 4 September 2008 to 3 September 2009, after paying a premium of Rs9,500. The same policy was renewed in the name of his two sons on paying the premium of Rs2,416 through a cheque. The cheque was received by one, Devender Dhingram, company’s agent and was encashed on 23 September 2009. Further, even two months after encashment of the cheque, he did not receive his policy document. Despite repeated telephonic reminders to Apollo Munich, his issue was not resolved.
Aggrieved, Mr Sharma sent a legal notice, dated 15 February 2010, to the insurance firm, asking to send his policy documents and ID card along with payment receipt. Accordingly, Mr Sharma received the policy on 2 March 2010, more than five months after encashment of the cheque.
He approached consumer court citing that delay in sending the policy documents amounts to deficiency in service and claimed Rs40,000 as compensation. The counsel for Mr Sharma argued that under the guidelines issued by IRDA (Protection of Policy Holder’s Interest) Regulation, 2002, the policy documents are required to be sent within a period of two months from the date of receipt of proposal form by the insurer and failure to send the policy document after 30 days is deficiency in service.
Apollo Munich argued after the receipt of the legal notice, the policy documents were sent to the complainant on 27 February 2010 in compliance of his notice and no deficiency is attributable to Mr Sharma and he is not entitled for any relief. The company also cited a judgement where it was held that “unless complainant has made allegations of negligence and deficiency in service in the complaint, no amount of evidence could be looked upon a plea not put forward.”
However, the consumer forum did not accept the plea of insurance company stating that there is no such issue involved in the present case and held Apollo Munich guilty for deficiency in service for not sending within a period of two months.
The 2008 global meltdown revealed the inability of experts to foresee such a situation and act on it. A new study has warned that the situation could well happen again
Professor Mark Stein, the award-winning academic from the University Of Leicester School Of Management, in his award-winning paper-A culture of mania: A psychoanalytic view of the incubation of the 2008 credit crisis-had argued that that the financial world was suffering from collective mania in the two decades running up to the event. The paper was published in the Sage journal Organization.
"Unless the manic nature of the response in the run up to 2008 is recognised, the same economic disaster could happen again," warns Professor Stein, who yesterday was awarded the iLab prize for innovative scholarship.
He adds that, "Observing-but not heeding-the warning signs from the collapse of the Japanese economy in 1991 and the 1998 crisis in south-east Asia, the financial world in the West went into an over-drive of denial, escalating its risky and dangerous lending and insurance practices in a manic response."
Professor Stein defines the manic culture in terms of the four characteristics-denial, omnipotence, triumphalism and over-activity. "A series of major ruptures in capitalist economies were observed and noted by those in positions of economic and political leadership in Western societies. These ruptures caused considerable anxiety among these leaders, but rather than heeding the lessons, they responded by manic, omnipotent and triumphant attempts to prove the superiority of their economies."
He explains that increase in credit derivative deals, industrializing credit default swaps and the removal of regulatory safety checks, such as the repeal in the United States of the landmark Glass-Steagall banking controls were a manic response to the financial crises within capitalism.
According to Professor Stein, this behaviour was also strengthened by 'triumphant' feelings in the West over the collapse of communism. "Witnessing the collapse of communism, those in power in the West developed the deluded idea that capitalist economies would do best if they eschew any resemblance to those communist economies, thereby justifying unfettered financial liberalization and the destruction of the regulatory apparatuses of capitalism. The consequences of this manic response have been catastrophic, with the on-going Eurozone crisis being-in many ways-a result of this."
He adds, "Whether one examines the actions of banks and hedge funds, or the limitations of ratings agencies, auditors, regulators and governments, a more worrying and deeper question emerges concerning why so many parties, more or less simultaneously, were implicated in such unprecedented and extreme risk-taking."
While equity markets are rallying on hopes, copper prices, which signifies actual economic expansion, is subdued – even after China’s rate cut. Should equity markets be worried?
Copper is called the metal with PhD because it is the bellwether for economic activity. The metal is widely used in industrial and infrastructural sectors. Interestingly, while the equity market has rebounded from its depressed state of last week copper has not participated in the ongoing rally. Indeed, while the People’s Bank of China, the Chinese apex central bank, cut borrowing rates for the first time since 2008, by 25 basis points to 6.31%, copper has actually fallen. Meanwhile, Dow Jones Industrial Average shot up for three straight sessions and the Sensex is up by 1,000 points from its low of Monday. Markets are rallying on both the news and anticipation of monetary easing.
The recent price of copper, an indicator of real demand, is actually falling despite the euphoria in equity markets. According to Businessweek magazine, China’s biggest producer of the metal, Jiangxi, is considering halting exports to LME warehouses after prices declined. China forms 40% of the world’s copper demand.
The interest rate cut of China comes amidst a raft of gloomy news, mostly dire economic statistics from the United States, which particularly its poor employment figures—is a crucial indicator for its economic recovery. Spain has got its sovereign rating cut by Fitch to two notches above junk rating. And there are rumours that Greece will be headed for the European Union exit. However, the European Central Bank and the Federal Reserve have opted to keep rates unchanged, with the latter denying another round of monetary easing. Equities are rallying on hopes that a solution will be found to all these problems. But only copper prices—based on actual demand growth—will tell us that economic activity is indeed expanding as equity markets are anticipating.