Euro bailout news makes share prices surge: Wednesday Closing Report

Nifty may move sideways with a positive bias. It has to close decisively above 5,170 for an upmove

All Asian markets opened on a positive note today, and most of them ended in the green on unconfirmed media reports that Europe’s key bailout fund will be expanded by close to $2.50 trillion. US markets also had closed in the positive yesterday, on reports of agreements to strengthen the beleaguered euro-zone’s rescue fund. However, a UK newspaper report indicated on Tuesday that Germany and France had “agreed to leverage the euro-zone’s bailout fund to over 2 trillion euro as part of a ‘comprehensive plan’,” but “a senior euro-zone source poured cold water on the report.”

Domestic indices Sensex and Nifty also opened upwards due to these (unconfirmed) reports. The Sensex was 135 points up at 16,883 and the Nifty was 43 points up at 5,080. Both the Sensex and the Nifty hit their intraday lows at the beginning of the morning session at 16,874 and 5,075 respectively. These indices hit their intraday highs at the close of the session at 17,107 and 5,148. Both benchmarks were able to make a higher high and higher low today. Today’s gain wiped out all the losses of the past two-day fall. Yesterday, we had said that prices might head lower, but domestic bourses looked up due to the reports of a probable EU debt-fix. At close of trade, the Sensex ended 337 points up (2.01% gain) at 17,085, while the Nifty made a 20-day (including today) high, closing at 5,139 (up 102 points) or 2.02 percent. The Nifty may move sideways from now on with a positive bias. But it has to close decisively above 5,170 for an upmove.

After yesterday’s warning to France that its triple-A rating could be at risk, Moody’s came out with yet another negative blow today—the ratings agency cut Spain's sovereign ratings by two notches, saying high levels of debt in the banking and corporate sectors leave the country “vulnerable to funding stresses”.  

All the BSE sectoral indices ended in positive territory, the maximum gains being seen in BSE Realty (up 3%) followed by BSE Bankex (2.69%). The least to gain was BSE Consumer Durables (up 0.84%). All the Sensex 30 stocks ended in the green. The top five gainers were DLF (up 4.16%); Hero MotoCorp (up 4.13% due to good results announcements); Larsen & Toubro (3.74%); Jaiprakash Associates (up 3.33%) and Wipro (3.23%). Nifty 50 stocks had 48 gainers and 2 losers—Tata Power was down 0.30% and Sesa Goa fell 2.56 percent. Today’s gain on the NSE was on the back of today’s trade of 54.28 crore shares, close to its 10-day average of 54.44 crore shares.

Despite the good jump in the index, the NSE had an advance-decline ratio of a weak 87:387. At home, there was a mix of good and bad news. Finance Minister Pranab Mukherjee today said that foreign direct investment (FDI) in April-August period has doubled to $16.80 billion. However, he warned that the global slowdown would impacting India’s growth prospects, but expressed hope that inflation will start moderating from December. He added that the tight monetary policy regime followed by the RBI (Reserve Bank of India) has also impacted growth during the current fiscal.

Mr Mukherjee also said that the G-20 nations have started thinking over the issue that the euro-zone nations should first "credibly assess" their own solvency issues before the international community could extend any help.

Countries outside the euro-zone have warned of the damage the European crisis was already doing to their economies and underlined the urgent need for action from the 17-nation single currency area.

ONGC was up 1.80% after the additional secretary in the department of disinvestment, Sidhartha Pradhan, today said that ONGC's follow-on public offer (FPO) may take place next month, originally deferred due to weak market conditions. The government plans to divest 5% stake in ONGC through an FPO.

The government aims to raise Rs40,000 crore through the sale of stakes in state-run companies this fiscal year through March 2012 (FY 2012), but it has been able to raise only about Rs1,145 crore so far due to weak market conditions.

SBI was up 2.99% as Banking Secretary DK Mittal said today that the state-run lender will not raise funds through a rights share issue this fiscal year and the government, the largest shareholder, will capitalise the bank by other means.


Insurance complaints redressal: IRDA journal has its facts in place, but what is the ground reality?

The IRDA monthly journal focuses on customer grievances and the ways in which to deal with them. While a number of issues have been acknowledged, the way in which to deal with them may remain on paper, unless insurance companies follow guidelines—and if IRDA acts when insurers don’t

The Insurance Regulatory and Development Authority (IRDA) October journal has its focus on ‘Grievance Redressal’. While customer problems have been acknowledged, the ground reality suggests that solutions are yet to be implemented. The biggest proof of it is that a few days back, IRDA came up with a circular asking life and non-life companies not to reject claims on technical grounds of delay in filing (See: IRDA asks insurers not to reject health insurance on a routine basis, but don’t pin much hope on this directive ).

The primary target of this circular is mediclaim insurers—some of whom have stringent filing deadlines. This has led to a lot of complaints to IRDA from policyholders for genuine claims rejection.

The IRDA journal has an article, ‘Managing the Pain Points for the Customer’ by the general manager (GM) of United India Insurance. Here are some of the statements made by the GM—and the ground reality, which in a few cases, pertains to United India Insurance itself:

  •  After repeated grievances are reported regarding the same matter, insurers need to examine the root causes that create frequent grievances and take action to remove such causes to prevent the flow of repeating grievances. Reality - The mechanical claims rejection due to stringent deadlines for hospitalisation intimation and claims filing has been going on for more than eight months. There have been repeated complaints about intimation done within 24 hours and still the claims are rejected. It would take 4-5 months for complaint escalation to work and get the claim reimbursed. In other cases, repeated complaints of genuine cases for delay in intimation were faced with claims rejection—and condone requests were rejected as well.  
  •  Traditionally, insurers are blamed for not distinguishing between real and technical reasons for denying claims. This is where grievances have a real role for a merit-based relook. Technical reasons have validity when they touch the core areas of the claim, but in some cases they are invoked ignorantly or owing (to) poor interpretational capability.
    Reality—Third Party Administrators (TPAs) are mandated to strictly reject claims based on stringent deadlines. Even for genuine claims, condone orders from a higher authority from an insurance company is not working—in many cases.
  •   Toll free call numbers, FAQs on websites, ‘dos and don’ts’ for the customer while the policy cover is running are some of the services that are given to ensure that customers can manage the tenure of the policy against any error or misunderstanding.
    Reality—Expecting the customer to contact the insurance company within 24 hours of hospitalisation without a 24x7 customer-care service is next to impossible. Again, TPAs are also not available round the clock.
  • Anywhere, anytime service, past history of insurance coverage and claims, and benefit entitlements like no-claim bonus (NCB) or discounts, better hand holding during times of claims etc., are issues on which customers will seek instant services and relief.
    Reality—Getting NCB certification takes too many follow-ups. Moreover, even if the policy states that an NCB clause is available, the TPA will again contact the insurance company to check if the NCB is really valid—which only adds to the time taken for claims settlement.
  • Customer complaints are common in the financial services area. Hence Regulators, Ombudsmen, Consumer Forums and the Judiciary are hard on insurers who fail to honour their commitments by using interpretations that are one-sided or rely on the fine print without the application of mind.
    Reality—This statement finally mirrors the actual situation that many customers face.
  •  From the time of claim intimation to the final payment of the claim cheque, there are many processes and requirements on the part of the insurer, intermediary and the insured. Any slackness from any side is bad for the outcome, but the driver of the service is the insurer; and insurer pro-activeness is fundamental to this service—and insurer commitments are to be made transparent in this area.
    Reality–There are a number of examples of insurance companies who have ‘processes’ which don’t work—resulting in customer harassment.
  •  Cashless treatment for Health is always desirable to customers. To compel the insured to make out-of-pocket payments when they are cash-strapped is always considered to be against fairness
    Reality - Cashless for group mediclaim is still working fine, but individual mediclaim policyholders are denied cashless facilities in the same hospitals. Why does this happen? The Preferred Provider Network (PPN) in Mumbai for an individual policyholder does not include many of the major hospitals where the customer would be comfortable to go for treatment.
  •  A bad perception about a company's claim service attitude can irreparably damage a company’s brand equity and reputation. In claims, there are two types of urgencies—time and correctness of the settlement. Insurers are fixated about reducing the claims outgo and in the process, they let go (of) the time urgencies felt by the insured. Where customers understand that the final amount to be paid may take time, they would be highly relieved if an 'on account' payment can be released because it makes it clear that liability has been admitted.
    Reality—“Insurers are fixated about reducing the claims outgo” is true. Currently TPAs are clearing claim payment for even routine procedures like cataract after 3-4 months. Sometimes the cheques arrive just before expiration date—which indicates that they were withheld for some reason or in the expectation that the cheque would expire by the time customer deposits it. ‘On account’ payment is a dream on paper considering what actually happens in mediclaim.
  •  Grievances can arise in all areas of insurance service, but some of them are routine and can be handled quickly by insurers if tight processes and timelines are maintained in service. However, in the area of claims, there are areas of dispute where insurers may have been unable to take the right decision in the first instance. However, when the insured come up with a grievance, the insurer must utilise more experienced people to examine the grievance and take a decision based on the new inputs given by the customer.
    Reality – Why does the condone process (for genuine reasons of delay) not work in many cases? Hopefully, the IRDA circular may nudge insurers to relook at their approach to claims settlement.



mayank shah

6 years ago

Many tpa s in mumbai has a typical policy upload problem in i t system. Accordingly even if insured provides all details very well within time tpa do not generate pol no or crm no and simply advise insureds information received. When insured submits all documents they simply reject stating not informed hence not payable.Even claim submitted within 24 hours of discharge for cataract gets rejected stating not informed hence not payable, whereas insured has submitted within 24 hours of discharge.


Raj Pradhan

In Reply to mayank shah 6 years ago

yes, lot of problems even if hospitalisation intimation and claims filing is done on time.


6 years ago

Health Insurance in India is utmost unreliable for the common people. There are only 3 people who can extract money from insurers:
a. Well connected with politicians, media or administrative officers
b. Fat cows for Insurance agents who will pursue for settlement because their future depends on milking them for other "investments"
c. People who personally know someone who knows someone in the insurance company
In all cases, it is finally the poor/ignorant/common who ends up subsidizing the minority...

Harish Shah

6 years ago

How loose IRDA can be. Should IRDA nudge the insurance company or issue an order. What is stopping IRDA from issuing order? IRDA is supposed to work in the interest of the Policy Holders and protect them from Insurance Company who takes INSURED PERSON for a ride. Which insured person knowingly is not interested to get the claim amount and will not try to send claim intimation and submit the claim within the time frame given in the policy unless there is a genuine reason for delay? Is delay of a day or two in submitting the claim Intimation and a delay of 10-15 days for claim submission matters too much for an insurance company like United India, who advertises that they treat their customer as U Before I. Why is United India not prompt in settling the claim within say a month when the insured person is even denied cash less benefit and whose claim meets the entire requirement. Here again IRDA has not brought in any strict regulations. The subject matter has gone out of control by IRDA. It is time for Moneylife to take up the matter in the interest of Public Insured Person to have a person who can volunteer to file PIL in High Court.

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