The chief executive officer and managing director of IndiaFirst Life Insurance, Dr P Nandagopal, says that the insurer is trying to usher in complete transparency in its operations with its customers
Will you be selling all your products online? Will you offer lower premium for such online sales?
All our products can be purchased through our website. The policy that is available online for lower premium is the 'IndiaFirst Anytime Plan', which is a pure term insurance plan. The other policies are offered at the same premium online or through other channels. It is because even in online channels, there will be personnel involved to help via live chat or in other ways. It is not about lower premiums-it is complete transparency we are giving to customers. We are offering customers an (online) experience, even if there is no immediate financial benefit for us. Instead of pushing the product, we want to generate pull for buying insurance.
In that case, wouldn't customers do all the research on the website and purchase the policy from other channels like bancassurance?
We are fine with that. We have not set any target for fiduciary benefits for our initiative. The results may not be immediate, but we want to provide value-added services to customers.
Is the pure term insurance plan only offered through the online channel?
No, it will also be offered through other channels like bancassurance, which constitute 95% of our sales. The premium for pure term plans through bancassurance will be slightly more than the online channel.
How many products do you offer? What is your mix of products? Does ULIP offer advantages over traditional plans?
We have about half-a-dozen products with a mix of ULIPs, traditional and term plans. The risk cover is important not just in the unfortunate incident of a death, but also for living years. Long-term savings and protection are important aspects of insurance products. Insurance has to be a long-term product to take benefit of rupee cost averaging and behavioural aspect of period savings. ULIPs certainly offer lot of advantages over traditional products in terms of transparency, lower charges and flexibility of investments. Asset allocation can be easily rebalanced over the period between equity and debt to follow a proper financial plan.
Will the 'LifeStore' offer help during the claims process? How smooth is claims settlement for death claims?
Yes. The customer can track the claim status online. This will also be available for death claims and not just maturity claims. The fund value is released without much delay to the nominee. The sum assured of insurance may take more time if there is need for (an) investigation. We have even paid death claims within two days in some cases. I am willing to expose my entire plans, each claims ratio. Every genuine claim has to be paid; but (obviously), fraudulent claims cannot be paid. Fraud does take place in some cases. For example, people suffering from cancer try to buy insurance, hiding their ailment details. It is wrong. This is a business of trust.
Will you be offering fund performance transparency like mutual funds? Can you also show that your fund performance is comparable to a good mutual fund scheme?
If there is any mutual fund or life insurance company that is more transparent than ours, please let me know. We give detailed fund performance including the Sharpe ratio (a measure of the excess return, or risk premium per unit of risk in an investment asset or a trading strategy). We will compare with indices with which we are legally allowed to compare. We cannot show comparison with mutual fund performance. Moreover, the performance has to be seen over the long-term period and not just one year. Insurance products are long-term in nature.
What is the cost of technology for your new initiative?
We have spent about Rs15 crore to Rs20 crore for the entire technology setup including hardware and all other peripheral costs.
IndiaFirst had launched the 'Ask Apply Get' (AAG) process to buy life insurance in three minutes (after the decision to buy insurance). The policy documents are also emailed in three minutes. How does it really help customers?
It's about starting the risk coverage immediately as well as the investment money starting to give returns. The customer can take his own time to make a decision. Once they make the decision, they will get the policy document in three minutes and exactly know their financial investment and insurance. It is (about) giving power to customers. Around 20% of our customers are outside the AAG norm and out of the remaining, 35% avail of the service. There is good scope of reaching out to more customers.
According to test results of UIDAI’s biometrics-based Aadhaar project, there could be up to 15,000 false positives for every Indian resident. Moreover, this figure is just for identification and not for verification
The Indian government and its de-facto tagging institution, the Unique Identification Authority of India (UIDAI), have not only ignored privacy concerns but also ignored sample test results of its pilot project. Both the government and UIDAI have been in such a hurry that they have neglected the basic principle of pilot testing and size of sample. For over 1.2 billion UID numbers, they have used data from just 20,000 people, in pairs, as the sample and have on the basis of the results gone ahead with the UID number through the 'Aadhaar' project.
UIDAI conducted a proof of the concept trial of the Aadhaar project between March and June 2010. In the results, it said, "The matching analysis was done on two sets of 20,000 biometrics, for a total of 40,000. However, the number of comparisons was several orders of magnitude more than 40,000, since each set of fingerprints would be matched against every other set of fingerprints in the data set".
On the false positive identification rate (FPIR), the authority said, "We will look at the point where the FPIR (i.e. the possibility that a person is mistaken to be a different person) is 0.0025%". This means, for every 1 lakh comparisons, there would be two and a half false positives. On a large scale, it means for a population of over 120 crore, there would be 18 lakh crore false positives, or, for every single Indian resident there would be 15,000 false positives! (Click to see the calculations)
David Moss, who spent eight years campaigning against the UK's National ID (NID) card scheme, has questioned the logic of the UIDAI and the government to depending on biometrics to produce the UID number. In a report titled, "India's ID card scheme-drowning in a sea of false positives", Mr Moss said, "those (the FPIR) conclusions do not follow from the evidence reported. Nothing in UIDAI's surprisingly low quality report suggests that it would be feasible to prove that each electronic identity on the Central ID Repository (CIDR) is unique. Not with a billion plus people on the database. Far from it, India can be confident, from the figures quoted in UIDAI's proof of concept trial report, that de-duplication could never be achieved."
Speaking about the UK's NID scheme, Mr Moss said, "There were many problems with the UK scheme. Not just biometrics. But biometrics is the easiest problem to understand and to discuss objectively and on which to reach an agreed decision, as it's quantifiable, there are no difficult value judgements to make and it's just technology. But it's not a very good technology, for, whenever there is a large-scale field trial, mass consumer biometrics prove to be too unreliable for the ID card schemes that depend on them, as opposed to the mere computer modelling exercises favoured by the US National Institute of Standards and Technology (NIST)."
In addition, there are issues like the reliability of biometric identification for a large population like in India. For the record, no one has ever issued IDs to such a huge population anywhere in the world. And whoever has tried to issue biometrics-based Ids, even for a small size, had to abandon or discard the idea altogether. Like the UK government abolished its NID scheme citing higher costs, impracticality and ungovernable breaches of privacy as reasons for cancelling the NID project.
The UK government spent around £250 million on developing the national ID programme over eight years. However, its abolition means that the government will avoid spending another £800 million over a decade. The NID was launched in July 2002 and as of February 2010, its total costs rose to an estimated £4.5 billion.
For the biometrics-based ID cards, there was one study done at Seoul in Korea. The study was done for ID cards issued for driver licences. It was designed in such a way that by swiping fingers, the drivers were able to access services like paying parking charges and redeeming a ticket. However, after one year, it was found that 5% to 13% users could not use the system. The tests were conducted with four different manufacturers, with drivers being white collar workers and housewives in acceptable quality criteria. In the end the study recommended frequent re-enrolment of users.
According to JT D'Souza, who analysed the pilot study conducted by the UIDAI, given the well-known lacunae in our infrastructure and massive demographics, biometrics as an ID will be a guaranteed failure and result in denial of service. He said, "The sum of false acceptance rate and false rejection rate (EER) reveals only part of the problem, which is rejection or acceptance within a short duration of enrolment. The bigger problem is ageing, including health and environment factors, which causes sufficient change to make biometrics completely unusable and requires very frequent re-enrolment."
The International Biometric Group (IBG) testing also shows that performance can vary drastically within technologies-some fingerprint solutions, for example, had next to no errors during testing, while others rejected nearly 1/3rd of enrolled users. "Most interestingly, the testing shows that over time, many biometric systems are prone to incorrectly rejecting a substantial percentage of users. Verifying a user immediately after enrolment is not highly challenging to biometric systems. However, after six weeks, testing shows that some systems' error rates increase ten-fold," according to the research, consulting and integration firm, which works closely with the biometric industry. The report is titled "Real-World Performance Testing".
Despite all the issues, the UIDAI and the Indian government are pressing hard to implement the UID number scheme across the country. While maintaining that the UID number is not compulsory, both of them are making efforts to make it mandatory using backdoor methods. Nobody is even ready to pause and think about the possible consequences of the failure to identify some poor person from a remote place. It may be a technical glitch for the authorities, but could be a question of life and death for the 'aam admi', who would be denied food and other benefits due to the failure.
"By the time the stillborn (NID) scheme was finally cancelled, the UK's Home Office had lost all credibility, it was totally demoralised and it is now excluded from discussions of the new, and still unspecified, Digital Delivery Identity Assurance project. Having given their unsolicited testimonials to the biometrics industry and its unreliable products, UIDAI will be left to clean up the expensive mess left in India as best they can when 'Aadhaar' is cancelled, while the biometrics industry road-show moves on to the next country and repeats the trick," Mr Moss concluded.
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Petroleum & natural gas and electricity regulators also named for keeping a total Rs2,142 crore outside government accounts
New Delhi: The top government auditor, the Comptroller and Auditor General (CAG) has rapped five regulators, including the Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority (IRDA) and Petroleum & Natural Gas Regulatory Board (PNGRB), for keeping their surplus funds worth over Rs2,142 crore, collected through fee and penalties, outside government accounts.
The CAG in its report has pulled up SEBI, IRDA, Pension Fund Regulatory Development Authority (PFRDA), Central Electricity Regulatory Commission (CERC) and PNGRB for "contravention of constitutional provision".
"Scrutiny of the annual accounts of the five regulatory bodies revealed that these bodies were retaining their surplus funds generated through fee charges, unspent grants received from the government, aggregating to Rs2,142.47 crore at the end of March 2010 outside the government accounts," the CAG said.
PTI reports that this practice by the regulators is in contravention of the instructions issued by the finance ministry that all ministries and departments of the government would ensure that funds of regulatory bodies are maintained in the public account, the CAG said.
"The finance accounts of the Union government, therefore, do not present a current and complete picture of government finances to the extent of funds of Rs2,142.47 crore lying outside the government accounts," it said.
Further, the CAG report noted that the finance ministry, in December 2009 and November 2010, had said that broad guidelines relating to operationalising SEBI and IRDA funds in the public accounts have been framed and conveyed to the Controller General of Accounts for drawing up the detail accounting procedure. "However, no funds in this regard, were opened in the public accounts of the finance accounts for the year 2009-10," the report added.
The CAG audit report for the years ended March 2008 and March 2009 had also highlighted retention of funds by IRDA and SEBI outside the government accounts.