After paying annual premium of Rs50,000 for five years, Mr Saxena’s policy was auto surrendered as the fund value was only Rs33,759. Intervention by Moneylife Foundation Insurance Helpline ensured that Tata AIA returned the full premium of five years. Find out how underwriting error was proved
Prakash Saxena (name changed), age 59 years was mis-sold Tata AIG (now called Tata AIA) InvestAssure Gold Whole life ULIP policy in March 2008 for investment purposes. Mr Saxena had paid five premiums with last payment in March 2012. The policy got auto-surrendered in May 2013 as the fund value was lesser than one year of premium of Rs50,000. Tata AIA letter dated 30 May 2013 states that there was non-receipt of premium towards due date of March 2013. Tata AIA sent cheque of Rs33,759 to Mr Saxena as a full and final settlement of all claims and demands under the policy.
Mr Saxena wrote to Moneylife Foundation Insurance Helpline as he had no clue what happened with his policy. He was even willing to pay premium to restart the policy, but the insurer had already mailed him the cheque after closing the policy. Moneylife Foundation Insurance Helpline found that something was inconsistent in the policy terms. The “Schedule of Benefits and Premiums” document clearly states “Number of years premium payable” is five and “Last premium due date” as 30 March 2012 and “Policy term” of 41 years. Mr Saxena had paid five premiums with last payment in March 2012. He did everything as was told by the policy to do. How did the fund value fall below the one premium amount mark? Was it the equity fund option that made the difference?
The answer was actually in the charges which ate over 80% of the annual premium payment. Old ULIPs (pre September 2010) had heavy front loaded charges. Moreover, the mortality charges are steep for older age and it differs with every insurance company. The product which was purchased for investment purposes of Rs50,000 per annum was actually giving insurance cover with only a small amount for investment purposes. It explains why the fund value was only Rs33,759 after five years.
But, did Tata AIA sell the right product to the customer or did they have policy terms that clearly benefitted them? Does Tata AIA benefit from not covering the policyholder who today is nearly 65 years for Rs15 lakh sum assured after enjoying the premium payment for five years? We can’t say. But, the policy terms had contradictions. If “Number of years premium payable” is five and “Last premium due date” is 30 March 2012, why was Tata AIA expecting the policyholder to pay sixth premium on 30 March 2013? If “Number of years premium payable” is five, then why is “Policy term” of 41 years knowing fully well that policy will auto surrender the moment the premium payment is stopped. This is due to the fact that over 80% of the premium payment was going towards the charges. There were clear underwriting errors.
Mr Saxena was under impression that he is buying a whole-life policy and Tata AIA knew that policy will be over after five years. Moneylife Foundation Insurance Helpline highlighted the discrepancies to the insurer. Tata AIA swiftly made a decision to refund the entire premium amount of Rs2.5 lakh to Mr Saxena and they have made the payment. It proves that if there is a genuine case that can be logically proved, the insurance company will have to make amends.
Moneylife has written to Insurance Regulatory and Development Authority (IRDA) stating that the case is not just of mis-selling, but flawed underwriting and hence a toxic product. We requested IRDA to find out from Tata AIA about how many such policies were fraudulently sold and auto-surrendered. Mr Saxena case should not be looked as one-off case, but IRDA help is needed to get justice to all the policyholders who had to suffer.
Moneylife had written about how one senior citizen relied on the misleading benefit illustration of HDFC Life Young Star product that conveniently ignored the steep mortality charges, which made up for 80% of the premium. The insurance company benefited by keeping the customer in the dark about how much part of the premium really goes towards mortality charges. It is certainly an ingenious way for a life insurance company as they benefit with hefty mortality charges due to higher age of the insured as well as from the expensive Waiver of Premium (WoP) feature. After all the other charges of premium allocation and policy administration charges are deducted, what goes into investment is negligible and hence the corpus after seven years was dismal. HDFC Life child plan sold to senior citizen erodes 96% of investment amount!
We are delighted to report several morale-boosting victories by the Insurance Helpline. Check them here
The uncertainty on extent of Open Marker Operationss and RBI’s approach toward OMOs should keep supply prone zone of the yield curve (>5-year to 14-year bonds) under pressure,forecasts Nomura
The bond market is still uncertain on the future of OMOs (bond buybacks - open market operations of RBI – Reserve Bank of India), says Nomura Financial Advisory and Securities (India) Private Limited in its First Insights research note. Along with the impact on rupee liquidity from FCNR (foreign currency non-resident) deposits, which questions the extent of the bond buyback requirement, the RBI Governor’s remark on OMOs in a post-policy conference also underlines the uncertainty: “I don’t know whether it should be long bonds or short bonds….we could debate what maturity of bonds we should use and whether we should have a significant effect in the long end and whether we should, those are all issues that are completely open for debate”. The uncertainty on extent of OMOs and RBI’s approach toward OMOs should keep supply prone zone of the yield curve (>5-year to 14-year) under pressure, forecasts Nomura.
Nomura notes that OMOs during the second half of the fiscal year have historically been heavily supportive of India’s bond markets and have kept yield curves flat, despite the issuance pressure in the belly of the curve. However, the current uncertainty on the RBI's approach toward OMOs will keep bonds with a maturity of greater than five years under pressure. As such, Nomura believes that, once market expectations of the terminal repo rate stabilise (the OIS - Overnight Indexed Swaps curve should guide us in this respect), investors can then look to accumulate bonds in shorter tenors (i.e., 3-year to 5-year). However, for bonds with tenors greater than five years, especially 7 years to 14 years (where bond supply is heaviest), the uncertainty (around OMOs) needs to be resolved before the market can stabilise there. As such, only long term investors (who are less prone to mark-to-market moves) should look to accumulate at good absolute levels (e.g., close to 9% on the 10yr benchmark).
Nomura expects that Rs1-1.2 trillion of OMOs in the second half of this fiscal year. However, the uncertainty over the RBI's approach to OMOs will likely dominate price expectations in the near term. Therefore, Nomura suggests that investors stick with the 3-year to 5-year part of the curve, and wait for clarity on the RBI's approach toward OMOs before looking at tenors beyond five years.
Before the bond market can reach a state of equilibrium, there is another source of uncertainty, according to Nomura. The market is still uncertain on the terminal repo rate. Looking at the OIS forward curves, the market is pricing in about an 8% terminal repo rate. However, given the uncertainty and ‘data dependent’ nature of the future outlook, it is likely that the market has not yet reached equilibrium levels in terms of market expectations of the terminal repo rate. In Nomura’s base case, it expects an 8% terminal repo rate before a prolonged pause.
RBI announced its second half borrowing calendar yesterday, with an expected Rs2.35 trillion of issuance. This was consistent with market expectations. There were some concerns among market participants that the second half borrowing calendar would include another Rs500 billion of bond supply to account for 'debt switches' that the RBI is expected to conduct in second half of this fiscal year, concludes the Nomura research note.
Manifestoes of political parties must make their stand clear on scrapping of Aadhaar and its biometric identification ahead of elections while state governments should withdraw from their MoUs with UIDAI following decision by the apex court
Supreme Court has exposed the ulterior motives behind the ‘voluntary’ 12-digit biometric Aadhaar/ unique identification (UID) number for creating a Central Identities Data Registry (CIDR) of ‘usual residents’ of India and for ‘doing government process re-engineering’ through its order on 23rd September. The questionable intentions of Planning Commission’s Unique Identification Authority of India (UIDAI) face yet another legal and constitutional scrutiny. UIDAI has failed in the earlier examinations. The Indian National Congress (INC) and the opposition parties appear complicit in the unconstitutional, illegal and illegitimate exercise because they failed to demand its scrapping and, instead, maintained silence when in breach of trust. Congress-ruled states and centre attempted to make it mandatory.
It may be recollected that Punjab and Haryana High Court bench headed by Chief Justice AK Sikri passed an order on 2 March 2013, after hearing a matter challenging a circular making Aadhaar mandatory. The moment Court raised questions of laws the circular was withdrawn by the Central government. The decision underlined that UIDAI is legally assailable and indefensible.
UIDAI and related projects treats every Indian as a subject of surveillance, unlike UK which abandoned a similar project (that used to be cited by Wipro Ltd in promotion of UID) because it is ‘untested, unreliable and unsafe technology’ and the ‘possible risk to the safety and security of citizens’.
It was recorded by Parliamentary Standing Committee (PSC) on Finance that submitted a report to both the Houses of Parliament on, 13 December 2011, trashing the biometric identification project and the post facto legislation to legalise UIDAI and its acts of omission and commission since 28 January 2009 till the passage of the National Identification Authority of India Bill, 2010.
Notably, UK Home Secretary explained that they were abandoning the project because it would otherwise be 'intrusive bullying' by the State, and that the government intended to be the 'servant' of the people, and not their 'master'.
The silence of Wipro, which had prepared the ‘Strategic Vision on the UIDAI Project’ document and submitted to the processes committee of the Planning Commission set up in July 2006, is deafening. This document too seems to be missing from public domain.
The Supreme Court order vindicates the Punjab and Haryana High Court order, PSC report and the Statement of Concern, dated 28 September 2010, issued by 17 eminent citizens including Justice VR Krishna Iyer, Prof Romila Thapar, SR Sankaran, Justice AP Shah, KG Kannabiran, Bezwada Wilson, Aruna Roy and Prof Upendra Baxi seeking halting of the project. The Parliamentary Standing Committee on Subordinate Legislation is also received compliants on “Subordinate Legislation for Biometric Identity Card NRIC and Aadhaar/UID is illegal and illegitimate and Constitutional, Legal, Historical & Technological Reasons Against UID/Aadhaar Scheme on 18.3.2013".
State governments, especially those ruled by non-Congress parties are so deaf that they do not seem to hear even when the verdict shouts, so to speak. In the aftermath of Supreme Court’s order, the State governments must withdraw from the memorandum of understanding (MoU) they signed with the UIDAI.
All the non-Congress ruled states are opposed to National Counter Terrorism Centre (NCTC) citing erosion of the State’s autonomy but quite strangely so far they have failed to see the link between CIDR, National Intelligence Grid (NATGRID), National Counter Terrorism Centre (NCTC) and Sam Pitroda’s Public Information Infrastructure and Innovations (PIII) which are part of the same political culture that leaves intelligence agencies beyond the ambit of legislative scrutiny.
The entire issue is quite grave because the genocidal idea of biometric identification is linked with the holocaust witnessed in Germany. Such identification exercises have rightly been abandoned in UK, Australia, China, US and France. Notably, Nandan Nilekani has admitted, "To answer the question about what is the biggest risk" of a centralised database of biometric identification, he said, "in some sense, you run the risk of creating a single point of failure also" during his talk at the World Bank in Washington on 24 April 2013. No one knows who will be held legally liable for such failures. Who is being held accountable for leakage of data from UIDAI at present?
Notably, World Bank’s president, who introduced Nilekani at the lecture, expressed his patronage for the project. It is not surprising given the fact that essentially it is part of its e-Transform Initiative launched in April 2010 for 14 developing countries in partnership with transnational companies like L1, IBM and governments of France and South Korea.
It is the inevitability failure to protect data led to the extermination of a large human population in Germany in the 1940s. In the case of CIDR and CIDR-linked initiatives, it is not the failure but the convergence of data, tracking, profiling, tagging and the violation of norms of privacy that is embedded in its design. Nilekani explained at his lecture at World Bank, "First of all, this is not an ID card project. There is no card. There is a number. It's a virtual number on the cloud, and we don't give a physical card. We do send you a physical letter with your number, which you keep in your pocket, but the real value of this is the number on the cloud".
The biometric number is an identifier, which is used to "authenticate" and verify whether or not the person is what the person claims to be. The ridiculous thing about the Congress, in general, and supporters of the project in particular is that they do not even know what Aadhaar is! On 31 January 2013, it came to light that the members of Union Cabinet were unaware whether it is a number or a card. Instead of facing the issue upfront, a Group of Ministers (GoM) was set up to resolve it but no one knows whether it has been resolved.
It also reflects how undemocratic Congress is. The decision to impose biometric Aadhaar number was autocratically and unilaterally decided without taking consent from even its own party members who are then expected to defend this indefensible project. Nilekani has misguided the party in this regard.
A tainted coalition of bankers, biometric technology companies and a section of mainstream media created an illusion among the uninformed citizenry, for five years, that an illegitimate and illegal biometric identifier will be able to do what the pre-existing 15 identity proofs could not do.
The advocates and supporters of biometric identification, who are part of the negative coalition that unconditionally and blindly supports linking of fish baits for trapping the poor in the biometric database, are game for turning the all the Indians into guinea pigs for an experiment that has resulted in incineration of human beings in the past.
The fact of this experimentation is revealed from what Nilekani said in his speech at the Centre for Global Development, Washington. He said, “Our view was that there was bound to be opposition. That is a given…we said in any case there is going to be a coalition of opponents. So is there a way to create a positive coalition of people who have a stake in its success? So, one of the big things here is that there is a huge coalition of, you know, organisations, governments, banks, companies, others who have a stake now in its future. So, create a positive coalition that has the power to overpower or deal with anyone who opposes it.”
Positive coalition of progressive political parties, peoples’ movements and informed citizens must expose the collaborators of undemocratic biometric technology companies, bankers and NGOs, and give a befitting reply. They lost in UK, Australia, China, France and USA; they will lose in India too.
Nilekani’s method of reasoning is a case study. On 23 April 2013, he said, "We came to the conclusion that if we take sufficient data, biometric data of an individual, then that person's biometric will be unique across a billion people. Now we have to find that out. We haven't done it yet. So we'll discover it as we go along". At his lecture at World Bank on 24 April 2013, he said, “nobody has done this before, so we are going to find out soon whether it will work or not.” No one can tell as to what his premise is, what the inference is, or how the inference is deduced.
Notably, the Strategy Overview document of the UIDAI said that "enrolment will not be mandated" but added, "This will not, however, preclude governments or registrars from mandating enrolment." It must be noted that Nilekani headed several committees whose recommendations made Aadhaar mandatory.
Tricked by the marketing blitzkrieg, some political parties are wary of taking a position that would appear to be against anti-poor. They may not realise that what may be the real beneficiary of this biometric identification is UIDAI, which wants to meet its target of enrolling 60 crore Indians by 2014.
Amidst leakage of files from the Prime Minister’s Office (PMO) and leakage of public money from scam after scams in the Congress-led government, the claim of attempting to reduce leakage in the system by using questionable plumbers like Nilekani does not inspire even an iota of confidence. Nilekani admitted at his lecture the Centre for Global Development in Washington in April 2013 that UIDAI has "created huge business opportunity for fingerprint scanners, iris readers."
The purchase of these machines is also a leakage that merits probe. Leakages can be plugged by rigorous implementation of Right to Information (RTI) Act and decentralisation of decision making, instead of adopting a centralisation approach and technological quick fixes.
The entire Indian and international media were taken for a ride regarding the so called turf-war between the Ministry of Home Affairs (MHA) and UIDAI. The media was made to understand that it was resolved by dividing the Indian population in two parts of 61 crore and 60 crore for coverage under National Population Register (NPR) which also generates Aadhaar number and UID. The fact is the terms of reference of the UIDAI mandated it "take necessary steps to ensure collation of National Population Register (NPR) with UID (as per approved strategy)", to "identify new partner/user agencies", to "issue necessary instructions to agencies that undertake creation of databases… (to) enable collation and correlation with UID and its partner databases" and UIDAI “shall own and operate the database". The executive notification dated 28 January 2009 that set up UIDAI mentions this. The entire episode appears to have been staged.
Nilekani has recommended Radio Frequency Identification (RFID) for the "unique identification" of vehicles. If the real motive is not surveillance then how that is UIDAI chairman wears several hats, like an intelligence person to undertake unauthorised and illegitimate tracking?
On 29 June 2013, Nilekani reportedly revealed that they were in preliminary discussions with embassies to use the UID number to “simplify visa application procedures”. Isn’t passport a sovereign document? Notably, Nilekani refers to Aadhaar as akin to internal passport. For passport, there is Passport Act, under what Act is this ‘internal passport’ being promoted?
The Supreme Court order must be looked at in the light of what of government of India’s approach paper on privacy states. The paper says, “Data privacy and the need to protect personal information is almost never a concern when data is stored in a decentralised manner. Data that is maintained in silos is largely useless outside that silo and consequently has a low likelihood of causing any damage. However, all this is likely to change with the implementation of the UID Project. One of the inevitable consequences of the UID Project will be that the UID Number will unify multiple databases. As more and more agencies of the government sign on to the UID Project, the UID number will become the common thread that links all those databases together. Over time, private enterprises could also adopt the UID Number as an identifier for the purposes of the delivery of their services or even for enrolment as a customer. Once this happens, the separation of data that currently exists between multiple databases will vanish.” On this ground alone, the UIDAI project should be abandoned as it concerns not only the present generation but future generations as well.
It is noteworthy that the Attorney General of India had submitted to the Parliamentary Committee that the UIDAI will function only till the passage of the UID Bill. The Bill was not passed. Now the UIDAI should cease to exist because it is legally invalid. How can a notification of Planning Commission be deemed legally valid when even the ordinance issued by the President of India become invalid if the Bill is not passed within six months.
Citizens Forum for Civil Liberties (CFCL) has been pursuing a campaign against the biometric based Unique Identification (UID) or Aadhaar Number, National Population Register (NPR), National Intelligence Grid (NATGRID), National Counter Terrorism Centre (NCTC), Radio Frequency Identification (RFID) and Direct Cash Transfer since 2010. It had appeared before the Parliamentary Standing Committee on Finance that trashed the UID Bill, on 13 December 2011, in its report to the Parliament. It was an applicant before the National Human Rights Commission (NHRC), which in an order on 27 December 2012 addressed to Secretary, Union Ministry of Home Affairs communicated human rights concerns regarding UID and RFID submitted to it by CFCL. CFCL is an applicant before the Parliamentary Standing Committee on Subordinate Legislation. CFCL is also an applicant before the Press Council of India on the complicity of some media organizations in the matter of enrolment for legally questionable biometric identification.
(Gopal Krishna is member of Citizens Forum for Civil Liberties (CFCL) and can be contacted at [email protected])
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