Global cues point out to a soft-to-flat opening for the Indian market today. The US market ended almost unchanged in overnight trade as investors treaded cautiously ahead of the Federal Reserve’s “quantitative easing,” to be announced next week. Asian markets were also trading weak on poor economic data from across the region.
The Indian market opened on a firm note on Thursday taking cues from its Asian counterparts, which were trading with marginal gains in early deals. Nervousness on the expiry day of the October futures and options (F&O) contract led the market into the negative terrain for a short while after which the indices bounced back into the green on news that food inflation for the week ended 16th October had eased. The market stayed in a narrow range near the neutral line but got a boost in the noon session as the European markets opened higher. A sudden bout of selling in the last half-hour saw the indices tumbling into the red once again touching the day's lows. However, a marginal reversal resulted in the market settling off the day's low, but in the red for the third day in a row. The Sensex ended 64.33 points (0.32%) down at 19,941. The Nifty stood at 5,987, a decline of 24.95 points (0.41%) over its previous close.
The US markets closed almost unchanged on Thursday as investors remained jittery ahead of the Fed’s “quantitative easing,” due to be announced next week. The markets ended lower despite a sudden decline in initial jobless claims. Initial jobless claims fell by 21,000, to 434,000, last week, the Labor Department said.
The Dow shed 12.33 points (0.11%) to 11,114. The S&P 500 added 1.33 points (0.11%) to 1,183. The Nasdaq gained 4.11 points (0.16%) to 2,507.
Markets in Asia were weak in early trade on poor economic data from across the region. Chinese stocks fell for the fourth straight day, trimming the best monthly gain in more than a year, on speculations that the government will enhance measures to curb inflation and property prices. Japanese industrial output fell 1.9% in September from August and core consumer prices declined 1.1% from a year earlier after a 1% drop in August, government reports showed.
The Shanghai Composite was down 0.51%, The Hang Seng was down 0.59%, Nikkei 225 tumbled 1.70%, Jakarta Composite declined 0.12%, Seoul Composite tanked 0.97% and Taiwan Weighted lost 0.35%. On the other hand, KLSE Composite added 0.01% and Straits Times surged 0.05% in early trade.
The Reserve Bank of India (RBI) may go for another round of hiking short-term lending and borrowing rates by 25 basis points each, next week on concerns of high inflation, a Ficci survey said.
Most economists, however feel that given the tight liquidity situation, the central bank would refrain from raising cash reserve ratio (CRR), which is a portion of deposits that banks keep with RBI in cash
Sun-Plant Agro, whose application was rejected by SEBI and was supposed to wind up its scheme in 2003, continued to raise funds under the guise of ‘sale of plants’, which was just a collective investment scheme
Market regulator Securities and Exchange Board of India (SEBI) has asked Kolkata-based Sun-Plant Agro Ltd not to collect any money from investors or to launch any scheme in the name of sale of plants.
In an order issued on Thursday, SEBI's whole time member Prashant Saran, asked Sun-Plant Agro not to dispose of any of the properties or alienate the assets of the scheme and not to divert any fund raised from the public at large kept in bank accounts and/or at the custody of the company.
Sun-Plant Agro was raising funds in the name of 'sale of plants'. It allegedly sold plants to purchasers, maintained the plants and thereafter provided returns on the amounts invested at the end of the scheme in the form of wood, even though no identity or marking of the particular plant which was sold, was provided to purchasers.
SEBI said that such activities of the company carry the features of a Collective Investment Scheme (CIS), specified under Section 11AA of the SEBI Act read with Regulation 3 of the SEBI (CIS) Regulations.
The company ought to have wound up the scheme in 2003 pursuant to rejection of the application for provisional registration by SEBI and the filing of the 'Winding Up and Repayment Report' by the company. However, the activities of Sun-Plant Agro and the details of amounts received by it against cost of trees during 2003 to 2010 prima facie indicate that even after submission of the Winding Up and Repayment Report in 2003, the company has been carrying out activities of a CIS without obtaining a Certificate of Registration from SEBI, the market regulator said.
Interestingly, the company, which calls itself 'ISO:9001:2008 certified eco-friendly organisation', has partnered with the West Bengal Wasteland Development Corporation (WBWDC). Sun-Plant Agro, with WBWDC, plans to plant the jatropha crop over about 30,000 acres in the arid districts of Bankura, Birbhum, West Midnapore and Purulia over the next 15 years.
IRDA has not disclosed details of repudiation of claims for 2009-10 for reasons best known to it. Private life insurers have come out pretty badly vis-à-vis LIC in this regard
Claims experience has to be one of the most important factors to consider before finalising life insurers, because every insurer will love to collect premiums, but few insurers will feel the same about claim payments.
Unfortunately, this crucial data is not available for 2009-10. LIC comes out better than private insurers in this regard. It too does not disclose its repudiation number for 2009-10, but hinted that it was slightly higher than 1.33% which was the figure in 2008-09. Looking at the atrocious claims repudiations percentage of private insurers, they may be the ones having something to hide. Can the Insurance Regulatory and Development Authority (IRDA) publish the numbers soon?
Based on 2008-09 data, the most incredible statistic is that of Aegon Religare with no claims settled, 71.43% claims repudiated and 28.57% claims pending. Please see: www.docstoc.com/docs/58633842/IRDA-claims-settlement-08-09.
It could be that for 2008-09 there were lesser claims being generated because of new business, and unfortunately, the claims that came in had to be genuinely repudiated. We have to give the benefit of the doubt if that is the reason. When a life insurance company gets a claim within three years of policy start there is always investigation and possibility of claim repudiation.
Bharti Axa Life has recently unveiled its new brand positioning - "Jeevan Suraksha Ka Naya Nazariya." It has a service guarantee of "Release of Fund Value within 48 hours" of receiving claim intimation. It is even advertised on TV. In 2008-09, Bharti AXA Life had 53.20% claims settled, 44.83% claims repudiated and 1.97% pending. Low claims pending shows that Bharti Axa certainly is making quick decisions on claims, but high claims repudiation means that one out of two claimants will never get claims paid, forget about the 48-hour claims settlement. We will again give the benefit of the doubt to this insurer if the 2008-09 data is indeed skewed due to new business.
The reason for repudiation can be due to incorrect/hidden details in policy forms filled by a policyholder with or without abetment from an agent. It is imperative that the policyholder fills up the policy form completely and in good faith without the agent filling any policyholder personal data. An ethical agent who is properly trained by the insurer will not mislead the potential customer just for getting commission. The policyholder will be at a loss because the policy form will be scrutinised only at the time of claim.
The other reason can be policyholders themselves indulging in fraud. As far as fraudulent claims are concerned, the insurer has every right to repudiate the claim.
According to Vipin Anand, chief-corporate communications, LIC, "Repudiation of claims also has investigation cost and possibly litigation cost in cases of a policyholder filing a grievance. In some cases, these costs can be greater than the claims cost. LIC can repudiate claims on technicalities and policy wording, but it does not do so unless there is a fraudulent claim. Moreover, LIC is in a strong financial position and does not worry about the bottom-line when genuine claims have to be paid. We pay on (an) average 77,000 claims in a day. "
Private insurers are struggling to break even and will surely be scrutinising claims to a greater extent. It will be hard for them to keep up with the giant called LIC. When will private players measure up to the insurance behemoth?