Monday, March 23, 2015

Law on Insurance (as amended) et al



Whose health are we insuring?

What's less visible In health insurance RM RAJARATHINAM

Rajalakshmi Nirmal

The new health savings plan appears more advantageous to insurers and agents than consumers »

Reaction (to share own thoughts):

The upright poser, though intriguing to the core bound to be, called for is, - why and how, by any sane reasoning or logic,  the new product which the IRDAI has in its wisdom conceived of qualifies, even remotely or otherwise, to be fittingly termed an ‘insurance’ product ; so as to come strictly within the domain of the regulator/its rules book ? This is very much a like poser as has been surfaced in the aftermath of the The Insurance Laws (Amendment) Bill, 2015 passed by Parliament on March 12, 2015.

In short, the point of utmost concern is, - do not such newer and newer innovative ideas have the inevitable potential to eventually do away with whatever is still left to distinguish between an ‘investment’ i.e. ‘stock’  and  ‘insurance’ being, unlike stock, a socio- economic concept  ; more so, for all purposes, not merely for ‘taxation’ ?

Is there any 'expert', within or without the government machinery, to think or imagine any differently!


BusinessLine Twenty Years Ago Today: IFC for insurance cover

June 12, 1995 With time overruns becoming commonplace for most Indian projects, the International Finance Corporation (... »

Recent Article in Banking

₹50-lakh penalty on Future Generali

The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a penalty of ₹50 lakh on Future Generali Life Insurance... »

<> Insurers must correct pricing anomalies: IRDAI

Historically, concept of insurance protection, be it of life, health or property has been consistently regarded and rightly recognized as a ‘social welfare’or socio-economic  measure; and policies framed have been strictly in sync therewith.   

Nonetheless, some of the recent developments , founded on a radically varying line of thinking and altogether  different philosophy of life have crept in, and come to the fore. Such a turn of events, if considered purely with an altruist outlook, might not pass muster as a healthy change.

For an appreciation of the underlying sentiments, in proper light, it is worthwhile to pay due attention to the not -so- palatable -change as briefly reported HERE Trading on Insurance Policies in the Secondary Market ; and comments there under. Also, to, - We have a sound draft health policy, and readers’views thereon.
The above is indisputably a matter entailing larger public /societal interests ; hence , needs to be the foremost concern for the IRDA to be looked through, and taken on a priority basis, with a view to bringing about a change in the chosen direction.


<> Insurance of Apartment complexes in Bengaluru

An Update
This is follow-on of the previous posts on the subject matter.
Information since gathered from a so-believed reliable source is to the effect that Insurance company (ies) , when approached, refuse to provide insurance cover and issue a policy for an apartment complex . The reason said to be given is that unless and until the promoter/seller has affected the mandated  “Formal Conveyance” as per the KAOA (the special State law )- (what that really means and are its legal implications, refer the requirement as set out in detail in previous posts) the buyers, as a collective body of association of persons, do not have an  “insurable value”. .
Going by one’s limited knowledge , and understanding, of the scope/amplitude  of the concept of “insurable interest” , however, and as personally viewed,  such an excuse is prima facie misconceived and logically faulty; has no leg to stand on.
The field reality is , invariably, rather mostly, promoter/seller never cares , though lawfully obliged, to  take and maintain insurance  cover for the property , in the interim; that is, after the apartments have been sold; but the ‘final conveyance’, through handing over  of the title and other related property documents,  to  the Association, for no fault of it, is pending /deliberately delayed.
What needs to be noted is that, should the mentioned excuse be taken to be valid, wrongly so, but were ignorantly conceded/ yielded to, then most of the apartment complexes, including the RWAs, in Karnataka would be left with no insurance protection; thereby remain exposed to  great peril.
The intention in sharing above is with a view to eliciting information on what has been the common experience of the apartments’ complexes all around.
On the concept of, - INsurable Interest in relation to a 'proerety' , if scouted around, one can readily find a host of material of positive guidance. HERE is one:
This is seen to amply support the viewpoint shared and stressed herein above; if so, a denial by insurer to underwrite the co-purchasers' - ASsociations' 'risk' in an apartment complex is, to say the least, highly offensive, irregular and illegal.


As anyone is expected to be aware (refer posts before), largely prevailing  absence of or inadequacy of property  insurance  cover has provoked the most concern;  and  been openly given  went . Further that, the IRDAI,  as the empowered Regulatory authority has lately proposed certain measures to bring about the long desired but outstanding discipline in the insurance sector – See HERE : Insurers must correct pricing anomalies: IRDAI

(Left open/ Invited to EDIT/share)

 cross refer >

Check your existing insurance to find out whether you are really covered for earthquake damage. Property –buyers should ask for earthquake cover and pay additional premium

How to protect your assets from natural disasters - The Economic Times 

“You can’t stop natural calamities but you can minimise their impact on your finances by taking adequate insurance cover. Find out the best ways to protect your home and valuables.”
Is it not easier done than said? Of course, if listen to common sense, the nature given most valuable of all gifts, sane answer can only be , - YES !
To dilate a bit, with remorse:
In the aftermath of recent Nepal earthquake of devastating intensity, spelling disaster to lives and properties of a significant magnitude, the whole town, rather the country, is talking about the need for ‘home insurance’, including high-rise buildings. The tragedy /sad commentary is, the high-rise buildings who should be the most concerned of all, in any city or elsewhere, are the least perturbed and worried; reason is basically sheer callousness, ignorance and imbecility of the highest level.
The special law almost every state has in force mandates the obligation to have blanket insurance for a building complex. And the duty and responsibility, as a package of ‘maintenance’, is entrusted to the managing or governing body to stick to and abide by the mandate, no sooner the property gets conveyed to and becomes the property of the joint owners of the complex. Until that point in time, it is the promoter/seller who owes it, as a legally enforceable responsibility, to his/its customers, and keep protected fully under an insurance cover. The said responsibility, thanks to the low aroused in majority, has been, and continues to be, allowed to remain simply on paper for ages. Reasons behind are illusions /misconceptions of sorts. For intimately knowing at least some, if care and will to enlighten self, use the all powerful mouse on your table top, to Google search the plethora of material on the very same and related topics, by click using a couple of fingers.
Tail piece:
“Earthquake: Israel advises nationals to leave Nepal”
» Read more
Poor Mrs Grundy, a native, however, is simply aghast, more worried than annoyed; for, knows not, whereto?

Insurable Interests and Interests Insured in Property Insurance › ... › Property Insurance
While they did have an insurable interest in the building, their interests were not identified—only John Doe appeared as a named insured. Could this situation ...


Will it enable India’s population to leapfrog to health and well being? Yes, if implemented with care »

Trading on Insurance Policies in the Secondary Market


XTRACTS (for ready reading)

The Insurance Laws (Amendment) Bill, 2015 was passed by Parliament on March 12, 2015, replacing the ordinance promulgated last year. The Bill was first introduced on December 22, 2008 and seeks to amend the provisions in the Insurance Act, 1938, the General Insurance Business (Nationalisation) Act, 1972, and the Insurance and Regulatory Development Authority of India Act, 1999.
.......and it was held that policies were the sole property of the insured, who could transfer it and the insurer was bound to register such transfers. This decision is now under challenge in the Supreme Court. But now amendments to the above provision indicate that the insurer is no longer bound to register transfers.
The substituted provision according tot the amendment as is as follows

“38. (2) An insurer may, accept the transfer or assignment, or decline to act upon any endorsement made under sub-section (1), where it has sufficient reason to believe that such transfer or assignment is not bona fide or is not in the interest of the policy-holder or in public interest.

(3) The insurer shall, before refusing to act upon the endorsement, record in writing the reasons for such refusal and communicate the same to the policy-holder not later than thirty days from the date of the policy-holder giving notice of such transfer or assignment.

(4) Any person aggrieved by the decision of an insurer to decline to act upon such transfer or assignment may within a period of thirty days from the date of receipt of the communication from the insurer containing reasons for such refusal, prefer a claim to the Authority.”

[Emphasis added]
This is in accordance with the views of the Law Commission as expressed in its 190th Report on “The Revision of the Insurance Act, 1938 and the Insurance Regulatory and Development Authority Act, 1999” (para 6.1.19). The Report of “The KPN Committee on Provisions of the Insurance Act, 1938” had also suggested the addition of the following provision:
(9) Notwithstanding anything to the contrary contained in any other law for the time being in force, the Authority may, in the interests of policyholders or of the public prohibit, restrict or regulate certain types of assignments as may be specified by regulations made by the Authority.

These views were recommended to allay apprehensions of misuse of life insurance policy trading.

This step appears to be out of tune with developments in the international scenario. In the UK and Australia, free trading of policies are allowed. In U.S., there is no requirement of insurable interest at the time of transfer of assignment and policy trading is accepted with regulations in place. Considering policies more as an investment and less as a security could boost its value and the insured could gain more from selling it to a third party rather than surrendering it for a lesser value with the insurers. An overhaul of legislation in this area is required in India to implement the progressive step taken by the judiciary and tap the potential of policy trading in secondary markets.

(9) Notwithstanding anything to the contrary contained in any other law for the time being in force, the Authority may, in the interests of policyholders or of the public prohibit, restrict or regulate certain types of assignments as may be specified by regulations made by the Authority.

These views were recommended to allay apprehensions of misuse of life insurance policy trading. 

Ostensibly, the above is an idea, just as every like other, chosen to be borrowed from across the borders; purely driven by commercial considerations, motivated by short terms thinking, as opposed to those aimed at primarily promoting and with the intent of protecting societal welfare . 

Cross Refer:

Traded Life Policies (or TLPs) are most commonly United States-issued, whole-of-life assurance policies, but mainly Universal Life policies sold before they become claims, to allow the original owner to enjoy some of the benefits during their lifetime. A market for traded endowment and other life policies (or TEPs) has also existed in the UK for many years......

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