Investor Issues
High Court wants IRDA to set up Ombudsman for policy-holders

Instead of dragging insurance-related complaints to court or consumer forum, the insurance regulator can have an ombudsman to handle it, says the Bombay High Court while hearing a PIL filed by Gaurang Damani

Mumbai: The Bombay High Court has suggested the Insurance Regulation and Development Authority (IRDA) to set up an ombudsman to address insurance-related grievances of consumers, reports PTI.
The suggestion was made by a division bench of Chief Justice Mohit Shah and Justice Anoop Mohta while hearing a public interest litigation (PIL) filed by a city-based social worker Gaurang Damani pointing out the hardships being faced by mediclaim policy holders.
"The IRDA should consider setting up of a forum or an ombudsman to look into the insurance-related complaints. Instead of dragging such matters to court or consumer forum, you can have an ombudsman to handle it," the bench said.
The IRDA informed the court that draft regulations have been prepared for settling insurance claims and that they would be placed before its Board for consideration.
The bench has posted the matter for further hearing on 7th January and directed for a senior officer of IRDA to remain present in the court for assistance.
Damani in his PIL had alleged that there were no standard guidelines to settle insurance claims and it was often done at the whims and fancies of third party administrators (TPA).
He also argued that the TPAs were not entitled to settle claims, but were found to be doing so in several cases.
"TPA receives financial incentives to reduce claim ratio," said Damani adding there was discrimination in settling insurance claims of individuals and that of corporate clients.
According to the PIL, problems began in July 2010 after public sector insurance companies, acting through TPAs, suddenly stopped offering cashless mediclaim benefits to consumers in top hospitals in the metros.
Earlier, over 1,500 hospitals used to offer cashless policy claims and there was no need for a patient to bother about paying cash while undergoing treatment as it would be settled by the insurance company. The scheme was, however, withdrawn reportedly due to many irregularities witnessed.


SEBI comes out with instructions for bourses on governance

Stock exchanges and clearing corporations are now required to submit background and related information to establish that their shareholders/promoters are fit and proper persons

Mumbai: Market regulator Securities and Exchange Board of India (SEBI) announced exhaustive instructions related to ownership and governance for stock exchanges and clearing corporations, a move aimed to promote their effective and transparent functioning, reports PTI.


Stock exchanges and clearing corporations are now required to submit background and related information to establish that their shareholders/promoters are "fit and proper persons", among others.


Entities seeking recognition to operate as a bourse or clearing corporation need to submit various information, including business feasibility plan for the next five years, financial statements and bank account details, to SEBI.


A key element in execution of orders on exchanges, clearing corporations work with bourses to handle confirmation, delivery and settlement of transactions.


In a circular, market regulator SEBI said the applicant should provide satisfactory information regarding appointment of heads of key departments such as legal, listing, member registration, trading and surveillance in case of a stock exchange.


Once the recognition is granted, stock exchanges can commence operations with a minimum of 50 trading members while there should be at least 25 clearing members to start a clearing corporation.


Those exchanges and clearing corporation having a networth of less than Rs100 crore and Rs300 crore, respectively, at the time of commencement, have to submit plans -- within 90 days -- for achieving minimum threshold networth levels. These plans have to be approved by respective shareholders.


Outlining instructions for executive compensation at stock exchanges and clearing corporations, SEBI said variable pay component would not exceed one-third of total amount and 50% of the variable pay would be paid on a deferred basis after three years.


As per SEBI, employees stock options plan (ESOP) and other equity linked instruments would not form part of the compensation for the key management personnel.


Before giving compensation, entities are required to consider their financial conditions such as net profit and revenues.


SEBI unveils steps to prevent flash crash at bourses

Among others, SEBI has directed stock exchanges not to execute orders exceeding Rs10 crore in the normal market

Mumbai: To prevent instances of flash crashes on stock exchanges, Securities and Exchange Board of India (SEBI) came out with stringent norms that require bourses to ensure that brokers implement appropriate risk checks before executing a trade, reports PTI.


"... it has been decided to prescribe a framework of dynamic trade based price checks to prevent aberrant orders or uncontrolled trades," SEBI said in a circular.


The measures come more than two months after a massive 900-point flash-crash of the benchmark stock index Nifty, wiped out nearly Rs10 lakh crore of investor wealth. The flash crash, that happened on 5th October, had halted trading for about 15 minutes.


Among others, SEBI has directed stock exchanges not to execute orders exceeding Rs10 crore in the normal market.


These orders include ones placed on stocks, exchange traded funds (ETFs), index futures and stock futures.


In addition, exchanges have to ensure that appropriate checks for value are implemented by the stock brokers based on the respective risk profile of their clients.


"These measures would be implemented in phases in order to ensure the Indian stock exchanges deploy latest technology while maintaining adequate controls," the circular said.


All the measures are to be implemented within one month of the issuance of circular.


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