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At a high court hearing of a public interest litigation filed by Gaurang Damani, IRDA’s legal representative stated that health insurance draft guidelines clearly specify that the TPA should get no incentive to reduce the claims ratio
At the Bombay High Court hearing, the Insurance Regulatory and Development Authority’s (IRDA) legal representative stated that the health insurance draft regulations have been approved by its board and it is now pending approval of Parliament. He added, “The final guidelines clearly spells that the TPA’s (third party administrator) role will be confined to only claims processing and not settling; they will have no incentive to reduce the claims ratio.”
According to Gaurang Damani, a social activist, who filed the public interest litigation (PIL), “TPAs are supposed to process claims, instead they’re settling claims. There are no standard guidelines to settle claims and it is left to the whims and fancies of the TPAs who are in fact not entitled to settle claims but are found to be doing so in several cases.”
The insurance company will make direct payments to the hospital and policyholder (not through the TPA). Cheques will have to be written by the insurance company and sent to the hospital (for cashless) and to the policyholder (for reimbursement). It means that cheques cannot be held by TPAs as a float. Mr Damani raised the point about a clause in the guidelines specifying that the TPA needs to send bank reconciliation data to insurance company, which was contradictory as insurer will be issuing the cheques. The IRDA legal representative confirmed that the clause has been omitted.
According to Mr Damani, “If mediclaim policies indicated the amount an insured was eligible for specific ailments, it will ensure that they have a clarity on which hospitals to go; the hospitals too would know how much they would get.” At the last hearing, the advocate for Association of Medical Consultants (AMC) agreed to indicate the amounts for 42 standard ailments. HC had directed the petitioner to send a notice to Association of Hospitals (AOH) and Bombay Nursing Homes Association to get the range of package rates for the 42 standard ailments.
The AMC was able to come up with indicative rates for 42 standard ailments with disclaimers about the rates excluding professional fees and surgeon fees which may vary. AOH and Bombay Nursing Homes Association have indicated that they will not be able to do so. AOH in its response states, “As the location, facilities and skill-sets vary in different hospitals, it is not feasible to fix rates for surgeries/procedures/illnesses. Hence, according to us there is no question of fixing the rates for the above.”
AOH offers possible solution to the dilemma. According to AOH, “We feel that if it is mentioned in the insurance policies the amount which the insured is eligible to receive towards, not only the hospital charges, but also towards the medicine charges for a particular ailment, it would be easier for the insured to decide which hospital he could afford for the treatment and in that event the hospitals could also know how much amount they would be receiving for treating a patient for a particular ailment by way of surgery or otherwise.”
The next hearing will be after three weeks which will discuss the pending issue of hospital rates and whether mediclaim policy should specify rates eligible for the insured for 42 standard ailments.
Domestic Institutional Investors (DIIs) have sold an estimated $3.5 billion worth of equities, in contrast to their foreign counterparts who have been pumping money as if there is no tomorrow. They are averse to financials while FIIs are heavily betting on exactly those
Yesterday, we had written about how FII ownership in Indian equities has reached an all-time high (http://moneylife.in/article/fii-holdings-in-indian-equities-at-an-all-time-high/31227.html ), and how the Indian stock market had reacted with respect to influx of foreign money pouring in. Equally interesting is the action of domestic institutional investors (DIIs) who remain cautious. DIIs have sold an estimated $3.5 billion worth of equities and hold only 12% of the BSE100 stocks in the third quarter, when compared to over 19% held by FIIs.
Interestingly, FIIs and DIIs have taken opposing stance on the same sector—banking and financial services. FIIs are bullish while DIIs are bearish. The top 10 FII underweight list in many ways mirrors the top 10 overweights list of domestic mutual funds (DMFs). In fact, while FIIs have kept ITC, L&T, State Bank of India, Tata Steel and NTPC as underweight while the DIIs have kept these stock in the overweight category. Similarly, while FIIs are bullish on HDFC, Infosys, Axis Bank, Kotak Mahindra Bank and Sun Pharma, DIIs have kept these stocks in the underweight category, reflecting their own investment strategy.
DIIs have continued to be big sellers in January and February. They continue to be overweight on consumer, capital goods and energy, while remain underweight on banking and software. The top stocks bought by DIIs were NMDC, Reliance Power and Cairn India.
DIIs have been reducing exposure to domestic cyclicals including autos (which FIIs are bullish on). They have also been switching out of defensives and putting more money into materials.
On other specific stocks, FIIs have sold Cairn India while DIIs have lapped it up. Ditto for United Phosphorus.
Last year, DIIs were net sellers for nine months out of 12 while the Sensex has moved up roughly 25%. As the market moved up, they’ve been taking advantage of the situation by cashing out, probably because they are facing redemptions as new money into mutual funds and insurance companies have dried up. Some of the DII dominant-held sectors, according to Edelweiss, as of the third quarter of 2013 fiscal are: 23% in capital goods, 17.6% in consumer goods (down from 18.1%), 11.9% in autos (down from 13%). Interestingly, DIIs have sold as much as Rs16,207.32 crore in the month of January 2013 alone, which is nearly the same amount that DIIs have sold in the third quarter of fiscal 2013 combined. On the other hand, FIIs have bought over Rs19,000 crore in January 2013 alone. FIIs have been net sellers in just two months out of 12 months last year, helped by quantitative easing of central bankers which found their way to Indian shores.
According to Edelweiss, of all the money that FIIs poured in the third quarter, a whopping 41% was taken up by financial sector companies, followed by the auto sector (11%). This is probably in gleeful anticipation of interest rate cuts, without realizing that the RBI is not like other central banks.