These proposals are part of the recent IRDA initiatives to make functioning of ULIPs more transparent
In a bid to further streamline the system governing Unit Linked Insurance Plans (ULIPs), the Insurance Regulatory and Development Authority (IRDA) on Tuesday proposed to do away with wide variance in charges imposed by insurers for surrendering these securities-linked products, reports PTI.
In the draft guidelines, the regulator suggested the surrender charge during the first year of the policy be fixed at 12.5 per cent of the premium paid in case the policy term is less than 10 years. For longer duration policies, surrender charges are proposed to be capped at 15 per cent. At present, insurers levy up to 60 per cent surrender charge in the first year, which drops to 30 per cent in the second year.
Most insurers, however, are following best global practices in ULIPs, said IRDA, which is currently in a tussle with market regulator Securities and Exchange Board of India (SEBI) over their regulation.
Analysts said the statement sharpens IRDA’s stand that not much is wrong with ULIPs, as is made out in certain quarters. The insurance regulator has issued a draft paper, suggesting uniform surrender charges for ULIPs.
The regulator also proposed various uniform norms that should be adopted by insurers for closing the policies or reviving them. As per the draft, there would be no charges for surrendering a policy with a maturity of under 10 years, if the policyholder surrenders his/her policy after six years.
For a policy with a maturity of over 10 years, there would be no charges if the surrendered from the seventh year.
The insurance regulator also imposed maximum limits that insurers could charge from policyholders, if they surrender their policies before the sixth year, in case the policy has under 10 years of maturity. If the surrender is before the seventh year of a policy with over 10 years maturity, there are ceilings prescribed on the charges as well, IRDA said.
Similarly, the grace period for payment of the premium will be 15 days if the premium payment mode selected is monthly. In other cases, it is fixed at 30 days.
The watchdog further said a policyholder must be given an option within a period of five years of the beginning of a policy to revive or reinstate the policy. However, the insurer will have the right to decline revival of the policy based on the grounds of moral hazard or medical conditions.
In case a policy lapses, a notice should be issued to the policyholder asking him/her to take a decision whether to continue with the policy or not within 30 days of receipt of such notice.
These proposals are part of the recent IRDA initiatives to make functioning of ULIPs more transparent. Recently, it asked life insurers to disclose the commission paid to agents for ULIPs, amid a debate over huge payouts given to them vis-à-vis mutual funds.
At a time when a turf war is on between the two regulators over ULIPs, the insurance regulator said the share of these policies has increased from 50.95% to 54.80% of life insurance business in 2009-10.
I got the opportunity to test drive the ‘new’ Maruti-Suzuki Wagon-R, a few days ago. Here is my very brief report. In terms of usable space inside, it is bigger than its predecessor, and it is almost as good as the old Maruti Omni van. It goes without saying that the box-shaped rear compartment was designed keeping in mind all those relatives and friends who will drop in from abroad with huge big suitcases. In addition, the new Wagon-R also has a Bharat Stage-IV-compliant engine, which means you can pretend you are driving the much snazzier funky A-Star, while actually showing the world outside that you have a practical side too.
However, what the new Wagon-R manages is something unique. There are some important changes to overall dimensions and there is a great deal of improvement with the suspension too—giving it every right to be called a ‘new’ car. Despite all of this, it continues to look like the good old tried and trusted previous version of the Wagon-R. This is interesting, considering that when the ‘old’ Zen was done away with, the ‘new’ Zen Estillo was a totally different car. In fact, it was actually almost a Wagon-R, but that’s another story.
I had a lot of fun with the ‘old’ Wagon-R on the Maruti test track, over a decade ago. With help from some inside support, we managed a specially-rigged version, put five huge people inside, and then put it through its paces. On the not-fast corners, we went too fast, and they were tight ones. It simply would not lift the offside wheels. I am proud to let you know that we tried the same thing with the ‘new’ Wagon-R too, and unlike other ‘tall-boy’ models, this one also sits flat on the ground like a chapati made on a Japanese machine.
However, one can do without all the fuss about the blue lens in the headlamps. It looks kind of weird on red and other clashing colours—a bit like seeing an old re-run of Zeenat Aman wearing those coloured glasses in Hare Rama Hare Krishna. It is my choice from among the latest releases in smaller hatchbacks.
The Tale after the Sale
After-sales service has always been the cornerstone on which the success of a business is built—the return of the repeat customer, one who brings her friends and family along too. I have suffered in the recent past at the hands of some of the ‘prestige’ brands entering India, where the ‘free-service’ experience was marred not just by the thoroughly unprofessional and rude attitude from the gate guards onwards, but also the hefty bill for extras.
So it was with a bit of a laconic attitude that I headed for the 2nd free service due on my son’s car. I need to point out that I have not taken a car to a workshop or after-sales outlet from this company for a few years now. It used to be a disaster, best avoided, for more than a few reasons. For a public sector company until not very long ago, things have really changed, to say the least.
From security guards, who have been apparently trained to handle customers, to an efficient process covering documentation and handing over, to a car being returned properly serviced—it had no complaints. I have my little tricks—chalk dust on battery terminals, tyre positions, double-check specific things like filters and brakes—everything written in the book had been done.
One of the most important components of a ‘which brand to buy’ decision has to do with the post-sales experience. Not all Maruti-Suzuki workshops are probably as well-fitted and serve as their own ‘Maruti Service Masters’ in Delhi and other cities; but it is worth the extra distance driven and time spent in their factory.
Especially when they also have free Wi-Fi for customers. After all, they are holding on to a 50% market share. Now, a similar check on the others, soon.
Veeresh Malik started life as a seafarer, and in the course of a work life, founded and sold Pacific Shipping and Infonox Software, to return to his first love—writing.
Selling pressure has abated; we may witness a short rally
The market was up on strong global equities and gains in L&T and ONGC stocks. The Sensex ended at 16,875, higher by 40 points (0.2%) while the Nifty settled at 5,066, higher by 6 points (0.1%). The indices were down at the morning session on weak Asian markets with the Sensex touching an intraday low of 16,744. A strong recovery started from the mid-morning session, taking a cue from the rally in European markets. The benchmarks pared most of their gains in the afternoon session.
Asian stocks were up with a recovery in the Chinese market on Tuesday. Key benchmark indices in China, Japan, Singapore, Hong Kong and Indonesia were up by 0.07% to 1.36%. On the other hand, indices in South Korea and Taiwan fell by 0.18% to 0.5%.
US stocks rebounded in late trading on Monday as bargain-hunting propped up indices, setting aside concerns that efforts to tackle the eurozone debt crisis could cripple the global economy. The Dow edged up 5.6 points (0.05%) to end at 10,626. The S&P 500 added 1.2 points (0.1%) to close at 1,137. The Nasdaq rose 7.3 points (0.3%) to close at 2,354.23.
The Europe Commission threatened action on debt speculators and Greek prime minister suggested a ban on such activities. In October, the European Commission, the EU's executive body, will draft new rules for buying and selling of credit default swaps, part of the largely unchartered $600-trillion derivatives market that ballooned ahead of the global financial crisis. The International Monetary Fund (IMF) said that the global economy needs policy support and risk exists in the system, which is clear from the Greece debt crisis. The Asian Development Bank (ADB) said that strong growth outlook and prospects for better returns will increase capital inflow in the region, however, it will also increase appreciation pressure on the currencies.
Back home, the Indian Meteorological Department (IMD) said that arrival of the monsoon is not likely to be affected due to the cyclone in the Bay of Bengal. A depression in the Bay of Bengal is intensifying and India had issued a cyclone alert at ports in the eastern parts of the country on Monday.
Foreign Institutional Investors (FIIs) were net sellers of Rs1,224 crore. Domestic Institutional Investors (DIIs) were net buyers of Rs381 crore. The rupee was up on the strong equity market. However, the euro debt crisis limited its gains.
Shree Renuka Sugars (up 3.8%) is renegotiating the price of its proposed Rs1,530-crore acquisition of Brazilian sugar and ethanol maker Equipav amidst differences over the amount of debt on the Brazilian company's books. DLF (up 0.8%) will sell its stake in ultra-luxury hotel group Aman Resorts as part of a planned exit from the hospitality business. Axis Bank (down 0.5%) has received bids from six suitors for its private equity arm. IL&FS Investment Managers, Aditya Birla Private Equity, Shapoorji Pallonji Group and US-based Darby Private Equity are among those that have shown interest in buying Axis Private Equity.
NTPC (0.3%) plans to float a $4.2-billion tender to procure high-end power equipment on the condition that they are made in India. The tender will be for around eight units of 800MW. Godrej Consumer Products (GCPL) (up 1.1%) has completed acquisition of Indonesian household insecticides maker Megasari Makmur Group and its distribution company for an undisclosed sum. The Indonesian firm manufactures and distributes household products, including household insecticides, wet tissues and air-fresheners.
Shriram EPC (up 1.8%) has received two orders. One of the two orders, valued at Rs49 crore, is from Prakash Industries to set up a coal-handling plant at its Champa power plant in Chhattisgarh. The other order, worth Rs76 crore, is from Bangalore Water Supply and Sewerage Board for providing sewerage systems.