For an insurance company, it actually helps if clients default on policies that have not acquired any surrender value
A business paper recently carried a story about life insurance policies worth over a trillion rupees which have lapsed. Some of the interesting bits are:
i) A total of 9.1 million policies lapsed in 2009
ii) The lapse ratio for ICICI Prudential Life Insurance Co Ltd, the life insurance arm of India’s largest private sector lender ICICI Bank Ltd, stood at 53% in 2009, up from 40% in the previous year. About 777,000 conventional policies worth Rs25,269 crore lapsed, the highest among private insurers by value. (Obviously, ICICI does not want to miss market share any which way)
iii) In terms of lapse ratio, Aviva Life Insurance Co India Ltd, leads the list with 32,000 policies or 59% lapsed
iv) Reliance Life Insurance Co Ltd saw its lapse ratio almost double—40% in 2009 against 21% a year ago.
iv) Life Insurance Corp of India (LIC) declined to 4% for 2009 from 6% in the previous year. In absolute terms, nearly 7.3 million traditional policies worth Rs52,926 crore lapsed. Almost half the conventional policies that lapsed in the industry in 2009 were sold by LIC.
If this is not rampant mis-selling, I do not know what is. Most insurance companies do not repay or refund anything, if the policies are less than three years paid up. After three years, the agents’ commissions drop to ‘small’ levels of 2.5%-5%, so he cares two hoots. He would rather tell the fool (the client) to take a different policy after ditching the old, since it would give him a higher commission.
The great thing is that the paper quotes the Max New York honcho as saying that it is not mis-selling but “it indicates a lack of understanding on the part of policyholders”. Sir, who delivers the ‘understanding’?
Most insurance companies have a scheme or a process to ‘revive’ lapsed policies within around three years of the last premium paid. After that, they quietly pocket the money. So, for an insurance company, it actually helps if clients default on policies that have not acquired any surrender value. Probably, they must be hoping for this to happen every year and would be part of their business goals for each year. Probably, they reward agents who bring in such kind of clients into their web of deceit.
It is time people woke up. IRDA, being run by retired guys with either LIC or RBI backgrounds, will never help the insured. They are the owners’ representatives. The ideal rules would be:
i) When policies lapse, blacklist the agent/withdraw his IRDA code, so that he can get no more commissions and sell no more policies. This is the best way to ensure that the mis-selling stops.
ii) When there is a lapse, the insurance companies should refund the amounts collected less the charges they have actually incurred. For instance, if I have paid Rs2,000 per year for two years, I should get a refund of something like Rs2,000-Rs3,000. This should be made statutory and any violation should result in a heavy penalty on the insurance company.
iii) A list of lapsed policies should be put online compulsorily.
iv) Surrender values should be made compulsory even for a one premium old policy. Why should the insurance company rob the payer?
The other option is to explore if third-party buyers of lapsed policies can emerge legally. Maybe they can take a call on whether to revive the policy and take the assignment in their favour and continue it. All possibilities exist.
I am sure that the IRDA will do zilch to resolve this issue. It is high time that the finance ministry stepped in and passed the supervision to another body where the insured is also taken care of. If SEBI can handle mutual funds, I am sure it can handle insurance also. After all, every product they sell (except the pure term policy which they hide) is an investment product with some optional insurance.
A United Nations (UN) special rapporteur said that the health and safety situation in many shipbreaking yards in India still remains 'critical' and there is a need to improve training facilities and working conditions for labourers
The health and safety situation in many shipbreaking yards in India still remains 'critical' and there is a need to improve training facilities and working conditions for labourers, a United Nations (UN) special rapporteur (reporter) said on Thursday.
Professor Okechukwu Ibeanu, the special rapporteur of the UN, also noted that only 3% of the 400,000 metric tonnes of e-waste generated in India is recycled in authorised facilities and recommended a national plan for safe management of electronic products.
The UN special rapporteur on the adverse effects of the movement and dumping of toxic and dangerous products and wastes on the enjoyment of human rights, was addressing the media after wrapping up a 10-day visit to examine India's progress in disposal of hazardous wastes.
Prof Ibeanu, who visited shipbreaking yards in Alang in Gujarat and Mumbai and an e-waste recycling facility in Roorkee, acknowledged the 'significant progress' made by India, including in developing an 'impressive' regulatory framework for environmentally sound management of toxic products.
Pointing to the differing opinions on environmental impact of shipbreaking, he also favoured an independent study to assess the adverse effects that may be caused by the discharge of hazardous material into the natural environment.
While noting the 'consistent efforts' being made by authorities in Gujarat to reduce risks to workers, he said, "The health and safety situations prevailing in most of the shipbreaking yards I visited remain critical as witnessed by 12 fatal accidents that occurred in Alang during the course of last year."
The five-day training provided to workers in Alang is 'grossly inadequate' and the facilities should be improved, Pro Ibeanu said. "In Mumbai, workers do not receive any form of training, making them more prone to serious accidents and injuries," he said.
Identifying other "shortcomings", Prof Ibeanu said that medical facilities established on or just outside the yards in Alang and Mumbai do not possess sufficient human, technical and financial resources to provide any treatment other than first-aid for minor injuries.
"The Red Cross facility I visited in Alang is not equipped to deal with serious accidents, and can only count on four medical doctors to provide healthcare not only to some 30,000 workers in the yards, but also the neighbouring villages of Alang and Sosia," he said.
He said he was 'shocked' to see the conditions in which most workers live in Alang and Mumbai. "Semi-skilled and unskilled workers live in makeshift facilities lacking basic sanitation facilities, electricity and even safe drinking water," Prof Ibeanu said.
On e-waste, the UN expert said while the Indian government is making efforts to meet the challenge, the international community should come up with technology assistance.
Prof Ibeanu, who will submit a report to the UN Human Rights Council, said the dismantling of electronic equipment by small-scale informal laboratories can pose health risks and favoured a national implementation plan for proper management of electronic products, with special focus of integrating informal recyclers into the formal economy.
IIT-B will be working closely with its Industrial Research Consultancy Centre during the annual tech festival starting from Friday
A unique initiative to transfer technologies developed at the Indian Institute of Technology-Bombay (IIT-B) to the industries, Techfest-2010, will be working closely with the institute's Industrial Research Consultancy Centre during the festival starting from Friday.
Techfest-2010 will include several activities including lectures by eminent scientists worldwide, exhibitions, and some other features like techno-entertainment 'Technoholix' and interactive installations from around the world, called 'scintillations'.
The exhibitions, which will be held at Powai (Mumbai), would include some of the best global exhibits including those from the Royal Society Summer Science Exhibition-UK, ETH Zurich-Switzerland, Indian Navy, Indian Space Research Organisation (ISRO) and National Disaster Management Authority (NDMA) who would be giving demonstrations on some disaster management techniques.
"With over 25 exhibits from over 15 countries, exhibitions at Techfest will be bigger than ever," said Nikhil Kashid, one of the student organisers.
The biggest draw at Techfest for students this year will feature a multitude of competitions with international participants, ranging from the best in robotics to ones with social objectives like developing devices that run on renewable sources of energy.
Technoholix will showcase the best in techno-entertainment at the end of every day and will include a breathtaking performance by 'Mountain Bike stunt group-M.A.D' from UK, display of urban acrobatics and extreme martial arts by Nexus Europe and a unique fire and pyrotechnics display by dynamic fire troupe, Pa-li-Tchi from the Czech Republic.
Scintillations will be a brand new segment of Techfest 2010 and will consist of interactive installations from around the world. Scintillations will consist of The Sunlight Eiffel, FlickrGettr, Light Ripples and Discovery Dome.
Techfest will also have lectures by experts from Google, the Large Hadron collider and developers of Wi-Fi, Mr Kashid said.