In your interest.
Online Personal Finance Magazine
No beating about the bush.
After a continuous drain of Rs7,315 crore over the past five months, equity schemes are back in the limelight
Happy days are here again for equity mutual fund (MF) schemes which saw Rs1,514 crore of net inflows in February after an outflow of Rs7,315 crore between August 2009-December 2009. During February, equity inflows jumped 54% from the Rs980 crore recorded in January.
“Markets are doing well and people believe that they will continue to do well going further. It could also be because of tax-saving schemes (ELSS) which are popular in February-March,” said Vivek Rege, chartered financial analyst (CFA) and managing director of VR Wealth Advisors Pvt Ltd.
Net inflows in equity MFs started vanishing and moved into positive territory post December which saw Rs2,185 crore of net outflows. In February, redemptions of all schemes stood at Rs7,52,798 crore.
During the same month, sales of all schemes fell 14% to Rs7,59,163 crore compared to Rs8,84,738 crore a month ago.
January saw the launch of three new open-ended equity funds like Axis Equity Fund, Fidelity India Value Fund and Sundaram BNP Paribas Select Thematic Funds—PSU Opportunities, while there were no new equity schemes launched in February. The Bombay Stock Exchange’s 30-share index, the Sensex, remained flat at 16,429 points in February from 16,357 at end-January.
Assets under management (AUM) of Equity Linked Savings Schemes (ELSS) are up by 1% at Rs22,664 crore compared to last month. ELSS schemes recorded a 25% hike in net inflows at Rs335 crore from Rs268 crore in January.
The views expressed by Mr Fali Poncha in this column are his personal views and not those of the company he serves
A Mediclaim policy is the most valuable investment an individual or a family can make, as it protects one’s savings/capital, which would otherwise get eroded by major medical expenses incurred through hospitalisation. It is, therefore, unquestionably incorrect to suggest that anyone is better off without taking a Mediclaim cover.
There is no doubt that all claims rejected would stand scrutiny.
There is also no doubt that the functioning of third party administrators (TPAs) generally leaves much to be desired. They have been granted total authority without the obligation to be accountable for their decisions and insurers plead helplessness when approached by an insured whose claim has been rejected or reduced unjustifiably.
The very functioning of TPAs has several deficiencies. When denying cashless authorisation, they do not distinguish between planned hospitalisation and emergency hospitalisation as in both situations they demand to be advised of final diagnosis and final line of treatment.
In most cases, the TPA’s infrastructure does lag way behind the volume of work, resulting in uncalled-for delays.
That the TPA system suffers from several deficiencies is known to the insurers, the General Insurance Council (GIC) and the Insurance Regulatory and Development Authority (IRDA). Several months back, the IRDA nominated a high level committee to submit its findings on the TPA system. However, to date, the general insuring public has no information as to the findings of this committee.
Almost from the beginning, insurers have applied little underwriting to this class of business. In the mindless competition for corporate business, they have willingly written group Mediclaim for corporates at loss ratios ranging from 200% to 400%, whereas the loss ratio for individual buyers of Mediclaim was consistently at sustainable levels.
Interesting insights would emerge if statistics were to be published relating to the following:
• The average rate of premium charged for individual covers and group covers i.e., the total premium as a percentage of total sums insured.
• The percentage of rejected claims to total claims submitted under individual/family policies and corporate group policies.
On the value of diagnostic tests, pre-granting of cover in order to determine pre-existing ailments would entail additional costs, but the result could be easily manipulated through resorting to medication pre-tests—like beta-blockers by hypertensive patients and sugar-level reduction medication by diabetics. A better and cost-effective solution would be to obtain medical history details from the family doctor along with the proposal form.
There are other failures which are difficult to guard against. The primary one being higher medical and surgical costs being charged by doctors to patients having Mediclaim cover and unnecessary tests being repeated by hospitals in order to inflate the per-bed/per-day recovery.
Having said that, there is no denying the fact that for insurers as a whole, total claims in a year exceed total premium recovered by 40%. This runs counter to the very principle of insurance which is to recover from many to pay a few, to provide an essential service at a fair cost.
I am of the firm opinion that if Mediclaim covers are underwritten on sound and fair lines and claims settled fairly and expeditiously, the industry could manage this class of business at breakeven or possibly a small margin of profit. With the considerable expertise within the insurance industry and the authorities overseeing the industry, I am confident that this can be achieved provided there is a combined will to tackle the problems firmly but fairly.
Any advice to the effect that it would be better to go self-insured would be akin to throwing the baby out with the bathwater. All that needs to be done is to ensure that the quality of the bathwater is good for the baby’s health.
(The author is chairman of International Reinsurance and Insurance Consultancy Services Pvt Ltd, an insurance brokerage firm)
The electronics giant intends to double the sales of its flat-panel display televisions in the current year. Sony is going to double its investment in promotions to Rs1,470 crore
Consumer electronics major Sony India on Tuesday said that it would invest up to Rs1,800 crore in the next one year on marketing and promotional activities to create awareness about its products in the country, reports PTI.
"We intend to double the sales of flat-panel display televisions in India in the current year, and to achieve that we are also going to double the investment in promotions to Rs1,470 crore," Sony India managing director Masaru Tamagawa told reporters.
He said that the company has invested over Rs700 crore in promoting its 'Bravia' range of flat-panel display TVs, which contribute more than one-third of its total turnover of Rs3,500 crore in India.
Besides, the company is also increasing its investment of Rs200 crore on promotions of other products in the country by 25% in the current year, Mr Tamagawa said.
"We are targeting a 30% market share in the current year in the segment. The total market for LCDs in the country is around 1.6 million units which is expected to grow up to 2.7 million units by the end of the current financial year," Mr Tamagawa said.
The company also announced that it is going to double its dealer network to 5,000 from 2,500.
Sony today announced the launch of 24 new models in NX, EXm and BX series under the Bravia umbrella of varying screen sizes between 22 and 60 inches.
The company said that its new range of TVs are also compatible with the Internet and Sony has exclusive tie-ups with some content providers such as YouTube to provide videos and clips for its Bravia range of TVs.
"Going forward, we are also going to launch 3D TVs in India for which the announcement would be made in the month of June 2010," Mr Tamagawa said.
He said that Sony is also the official sponsor of the FIFA World Cup 2010 and will broadcast some of the matches in the 3D format in India.
Separately, Sony India's parent, Japanese Sony Corp said that it will launch 3D televisions in June and expects the 3D TV to form about 10% of the total LCD market across the world, media reports said.