Moneylife Events
The New Health Insurance Regulations and how they benefit you
In the first part of the Moneylife Foundation event titled, “Back to Basics: Investing and Insurance”, Gaurang Damani tackled the latest developments and changes in the health insurance regulations. Mr Damani has worked for long to help customers get a more customer friendly insurance environment. Numerous PILs filed by him have helped in getting pro-consumer clauses into the regulations.
 
He began by discussing how the process of getting a health insurance policy can itself cause considerable stress. The various tests, clauses and compliances. All this is of course after the stage of having to go through the innumerable products on offer.
 
He said that in the new Health Insurance Regulations (Regulations of 2013), there are some salient features related to Premiums, Senior Citizens, Policy issuance guidelines, claims and TPAs, among other things.
 
He pointed out that under the new regulations, the premium cannot be increased arbitrarily after a claim is made and especially in multi-year policies. He said that the “loadings of premium on renewal shall have to apply across the policy portfolio and cannot depend upon an individual's policy experience.” For multi-year policies on the other hand, the premium would be fixed for at least a block of 3 years.
 
For senior citizens, who have often been soft targets for the sales force of insurers, the new regulations specify an entry date of 65 and clarify that there cannot be any exit date. “The regulations also say that the insurers and the TPAs both will have to set up separate grievance cells for senior citizens.”
 
“As for portability of policy, it can be done upto 45 days before the maturity of the policy and even the cumulative bonus would be portable. On the other hand, the free-look period has been set at 15 days from the policy date and the free-look period only applies to policies with a term longer than a year,” Damani said, speaking about the policy issuance guidelines in the new Regulations.
 
Some other important points that Damani made, were that no policy can be withdrawn without IRDA approval and that without the consent of the policy-holder, the insurer or its intermediaries could not force the person to shift his or her policy. 
 
“One of the most important parts of the new regulations is that the TPA's powers have been greatly clarified. The TPA will have no power in rejecting claims and the TPAs function in forwarding claim papers has also been made stricter.” He added that, “As per the instructions of the Insurer, the claim is being settled/ denied .....” is the text the letter regarding the claim should have, laying the responsibility of the claim with the insurer and not the TPA.
 
Mr Damani also covered other issues and advice related to health insurance. He explained that it was important for the insured to keep an eye on his bed-charges as allowed under the policy and keep within the limits prescribed. He said that Co-pay was an important concept and it implied a specific amount that has to be borne by the policyholder.
 
Finally, on the issue of dispute resolution he said, “grievances must be acknowledged by the Insurer in 3 working days and resolved in 15 working days. For claims-related complaints, consumers can write to the Grievance cell of the Insurer and if there is no response, then write to [email protected] or call toll-free at 155255 or on www.igms.irda.gov.in or mail. For claims disputes of less than Rs20 lakh or any disputes regarding premiums; non-issue of insurance documents, the complaint can be made in writing by the customer himself (no lawyer is required), within 1 year of dispute, to the Office of the Ombudsman.”
 

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Nifty, Sensex in no-man's land – Weekly closing report
The S&P BSE Sensex closed the week that ended on 9th January at 27,458 (down 430 points or 1.54%), while the CNX Nifty ended at 8,285 (down 111 points or 1.32%). In the previous week we had mentioned that Nifty may hit 8,500 over the coming week.
 
This week although trading on Nifty began on a negative note by the end of the week, on Thursday and Friday, the benchmark regained strength.
 
On Monday it began on a positive note but was pulled lower after hitting the day’s high bringing to a halt the six days of consecutive gains. Nifty closed at 8,378 (down 17 points or 0.20%). The pessimism of Asian counterparts and the Greek concerns played negatively on the market sentiments.
 
At the two day “Retreat for Banks and Financial Institutions” called “Gyan Sangam” held on 2 January 2015 and 3 January 2015, PSBs suggested that eventually the government should reduce its stake in PSBs to less than 51%. It also suggested that the government should transfer the government's stake in PSBs to a bank investment company.
 
As we anticipated on Monday Nifty was pulled lower on Tuesday. Nifty closed at 8,127 (down 251 points or 3.00%). The two days of loss wiped off all the gains made in the six days of rise ending 2 January 2015. The market moved lower as the oil prices sank to 5 and half year lows and worries over excess supply increased.
 
The seasonally adjusted HSBC India Services PMI Business Activity Index declined to 51.1 in December 2014, from 52.6 in November 2014.
 
On Wednesday the Nifty witnessed a highly volatile session and closed in the red again. Nifty closed at 8,102 (down 25 points or 0.31%).The Department of Financial Services, Ministry of Finance, issued a circular to the chief executive officers of all public sector banks, financial institutions and insurance companies assuring them of non-interference in matters of commercial decisions, transfers, and postings.
 
Nifty reacted in line to the positive performance of the Asian indices on Thursday. As we anticipated, the Nifty bounced back and closed at 8,235 (up 133 points or 1.64%).
 
The Indian economy is moving on the right track with efforts to fast track reforms, raising prospects of pickup in growth from 5.4% in FY15 to 7% by fiscal year 2017, says a Macquarie report.
 
On Friday the Nifty remained in the green for most of the session. The trend was weaker at the beginning of the session and gaining strength by the end of the session. Nifty closed at 8,285 (up 50 points or 0.61%). Infosys yesterday posted its December 2014 quarter result which was better than the estimates.
 
The government is likely to exempt state-run firms ONGC and Oil India from payment of fuel subsidy during the remainder of the FY2014-15 due to a steep decline in global oil rates to around US $50 per barrel.
 
Among the Nifty stocks, the top five stocks for the week were Hindustan Unilever (14%); Kotak Mahindra Bank (7%); BPCL (5%); Asian Paints (5%) and Maruti Suzuki (3%); while the top five losers were NMDC (-8%); BHEL (-7%); Sesa Sterlite (-7%); Punjab National Bank (-6%) and ICICI Bank (-6%).
 
Of the 1,492 companies on the NSE, 517 companies closed in the green, 949 companies closed in the red while 26 companies closed flat.
 
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were:
 

 

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A short-term breather for Southern Urea units?

The three urea makers in the South, which are currently using naphtha as feeder stock, must have a definite assurance that the subsidy will not be withdrawn till gas connectivity is fully operational

 

The government had notified that the three naphtha based urea plants in the South of India, which are owned by Madras Fertilizers, Southern Petrochemical Industries Corporation and Mangalore Chemicals & Fertilizers, that subsidy will be stopped from September last year. The plants were not ready for switching over to gas instead of naphtha as feeder stock and so, from October these plants stopped production. They were not ready, simply because the gas pipe lines were not in place.
 
Now, after losing three months of production, and being subjected to unjustifiable demands, the Union Minister for Fertilizers has announced that the subsidy would be available for the next 100 days. What happens after 100 days?  Would the pipeline be ready for gas supplies?  In the meantime, to meet the national needs, urea had to be imported from the international market at current prices.
 
In this connection, it may be recalled that due to the farmers’ agitation in 2013, work on the GAIL pipe line, being laid through some farm lands had to be stopped, as the Tamil Nadu government wanted these to be aligned to the national highways.  The matter of this 300 kms pipe line is in the Supreme Court.
 
After the stoppage of production by these three urea producers, naphtha produced by the Chennai Petroleum Corporation, a subsidiary of Indian Oil Company had to be exported at low prices.  In addition to supplying naphtha, they were also selling other related products to these urea units.  The urea producers had demanded that instead of shipping out naphtha why not make it available at export parity price to them?  Seeing the plight of the Urea producers, the Tamil Nadu Government made the first move to waive the 5% Value Added Tax.
 
In the meantime, there has been some good news that came from B Ashok, Chairman of Indian Oil Corporation, while on a visit to Chennai.  While meeting the media persons, he gave details of the Ennore LNG import terminal with a capacity of 3 million tonnes costing about Rs5,130 crore, in North Chennai, and is expected to be completed by 2017.
 
The LNG pipeline will be laid by IOC mostly following an existing route for liquid petroleum products, for which IOC has floated a joint venture with TIDCO (Tamil Nadu Industrial Development Corporation), who will work within the guidelines set by the State.  It may be stated that IOC has LNG resources overseas in Canada and Cameroon.
 
In the case of Mangalore Chemicals and Fertilizers, it has been in the news due to take over bids etc, but which also had stopped production from October. However, with the announcement of subsidy extension by 100 days, they expect to resume production in the next few days. Following the steps of Tamil Nadu Government, Karnataka State Government also agreed to waive the 5% VAT.  MCF has already incurred the capital expenditure of over Rs300 crore for converting the factory to be able to change over from naphtha to LNG-based operations.  However, it will take a couple of years before the LNG pipeline can be coupled to the plant.
 
The agitating Union leaders in the Mangalore Chemicals and Fertilizer plant had sought the intervention of the Union Minister for Fertilizers, saying that the Central government must ensure expeditious arrangement for gas connectivity and pleaded that till this is done subsidy must continue.
 
It is a sad state of affairs that subsidy on such essential items like Urea was withdrawn without any forethought because laying the gas pipeline is not within the realms of control of the fertilizer plants. The farmers agitation in Tamil Nadu hit the headlines a long time ago and all the concerned parties were trying to work out an acceptable formula. As mentioned, the matter is now with the Supreme Court.
 
The three urea makers in the South, who are currently using naphtha as feeder stock, must have a definite assurance that (a) subsidy will not be withdrawn till gas connectivity is fully operational; (b) 5% VAT will be waived till this (gas connection) occurs and (c) naphtha will be supplied to the urea makers at export parity price.
This move will at least prevent import of urea at international price and save the much needed foreign exchange.
 
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)
 

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COMMENTS

Dr Anantha K Ramdas

2 years ago

It may be of interest for readers to note that the Matix Fertilizers and
Chemicals plant at Panagarh, in West Bengal, in which an investment of Rs 4700 crores was made by Kanodias of Datamatics group has been idling for almost two years. Essar Oil had promised to supply 2.8 mmscmd of methane from 2012 but has not been able to do so. Now Essar may be able to reach 60% of the needs by middle of 2015 and 100% by first quarter of 2016.

Since our gas supplies are erratic, such urea plants must take into account the alternative stand-by routes so that they do not suffer.

Matix when fully operational would be able to produce 1.3 mt of urea and would be the first plant in the world to to use CBM (coal bed methane) as feedstock.

The promoters should also consider the prospects of using naphtha if balancing equipments can do the trick and overcome the current impasse?

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