Rejection of claims: HDFC Life fined

Mumbai: The insurance regulator has imposed a penalty of Rs 1.05 crore on HDFC Standard Life for rejecting death claims within 90-days of the policy despite being told by the regulator not to do so. The regulator has also directed the company to reopen 21 rejected death claims. 

    Besides the fine for rejecting claims, the regulator has also penalized the company Rs 35 lakh for paying unauthorized commissions to group companies, including HDFC, HDFC Bank and HDB. In all, the IRDA has fined the insurer Rs 1.47 crore. 
    The penalties are a result of the on-site inspection carried out by the Insurance Regulatory and Development Authority (IRDA) between 26^th July 2010 and 30^th July 2010. The regulator had carried a series of inspections which had resulted in large penalties being imposed on other private life insurers as well. 
    HDFC Standard Life had introduced a Home Loan Protection policy in 2003 which was lodged with the regulator under the 'file and use' system. IRDA while clearing the proposal had asked the insurance company to withdraw all exclusions except the exclusion for suicide. However, the company went on to sell the scheme with the 90-day exclusion and rejected 21 claims where the borrower died within the 90-day period.

Insurer told to pay Rs60L for denial of foreign mediclaim

MUMBAI:The Maharashtra State Consumer Disputes Redressal Commission recently directed New India Assurance Company to pay nearly Rs 60 lakh to a Malabar Hill resident for wrongly repudiating her claim on the ground that an ailment she suffered from was caused due to alcohol. The order, say legal practitioners, is significant as it is among the few high amounts awarded by the state body that protects consumer rights.

The commission ordered the insurance company to pay Nina Thackersey Rs 52.07 lakh along with 7% interest from October 2010 and Rs 20,000 towards costs of the complaint. The interest amounts to Rs 7.3 lakh.

Insurer told to pay Rs 52 lakh for rejecting medical claim

MUMBAI: In a significant order, Maharashtra Consumer Redressal Commission has directed New India Assurance Company to pay Rs 52.07 lakh to a city resident for repudiating her foreign medical claim and deficiency in service.

Presiding member P N Kashalkar ordered the insurance company to pay this amount along with interest at the rate of seven per cent per annum from the date of rejection of the claim, October 20, 2010, till actual realisation, besides Rs 20,000 as costs incurred by complainant Nina Sudhir Thackersey
.

Buy Customised Accident Insurance Policy to Maximise Benefits

Nikhil Walavalkar explains how add-on benefits enhance the cover for individuals and take care of various conditions arising out of an accident at minimum cost     Many individuals believe that personal accident insurance policies pay only when the insured person dies in an accident. It is a misconception. Personal accident covers do not restrict themselves to death benefit only. For example, they also compensate for partial total disability that covers many conditions like loss of a toe, where the insured person gets 3% of the sum assured. Then there are plans that pay a fixed amount for the education of children if the insured person dies in an accident. Some policy variants in the market also offer hospital cash benefit — a fixed payout for each day spent in hospital due to an accident. Some policies also pay for house modification required for an individual who met with an accident. The point is, there are many add-on benefits you can sew up with your accident cover. "Add-on benefits offered with plain vanilla accidental death insurance try to enhance the insurance cover for individuals and are aimed to cater to various conditions arising out of an accident at minimum cost," says TA Ramalingam, chief technical officer, Bajaj Allianz General Insurance Company. However, don't get lost among the umpteen number of add-ons that come with personal accident covers. List your needs first and then approach the insurance company for a cover.  "You have to understand your risk profile and accordingly choose the cover. If you are a rig worker, then you are in the high-risk category and that warrants a comprehensive cover," says Gaurang Jhaveri, consultant – insurance, International Money Matters. People in the high-risk category, which includes underground mine workers, oil-rig workers and similar work profiles, are highly exposed to risk of accidents and loss of limbs. Such people must buy exhaustive permanent partial disability cover along with permanent total disability. Individuals belonging to the high-risk category will have to pay more premium compared to the individuals from standard risk category. "Insurance buyers must also consider the aspect of replacement of income," adds Gaurang Jhaveri. For an artisan each of his fingers is very important. Loss of fingers or loss of thumbs can materially impact his earning potential. Some policies pay as high as 20% of the sum assured upon loss of a thumb. Though this may not fully compensate the insurance buyer for his loss of income, it surely reduces the loss. Experts also recommend comprehensive covers for extensive road travelers.  The risk is even more if one rides a twowheeler regularly. Such individuals can also opt for policies that pay for house and car modification expenses, ambulance charges and family transportation charges. A point to note: the more features you buy, the higher the price you pay for your accident cover.  INSURERS HAVE SUB-LIMITS  These are expressed as a percentage of death benefit. For example, family transportation benefit is payable up to 1% of the sum assured or . 1 lakh whichever is lower. While buying these policies you have to look at each benefit and its respective sum assured, and not the sum assured for death benefit.  Since the premium is calculated based on the sum assured upon death, on many occasions, individuals ignore the sub-limits, which may lead to inadequate insurance.  There are instances where an insurer offers some important covers, such as hospital cash benefit along with personal accident insurance, to make the policy appear an enhanced offering compared to other policies in the market. "But many times such attempts end up compromising the benefits available to the policyholders to control the cost. Sometimes the sum assured is reduced and sometimes some key features are totally excluded," says Niraj Jain, CEO and principal officer, www.insurancemall.in, a "compare and buy" insurancebroking portal. For example, one may come across a policy where cash benefit for hospitalisation arising out of accident is capped at . 1,000 per day, which may not be of any help for many insurance buyers. If you need higher hospital cash benefit, it is better to opt for a standalone policy offering the same.  Though the premium may go up, it helps you buy hospitalisation benefit for the sum assured you want and covers hospitalisation arising out of illnesses too, which is not the case with hospital cash benefit under many personal accident insurance policies. You further get tax benefit under Section 80D of the Income Tax Act with a standalone hospital cash benefit policy.  Lastly, do remember that these are essentially low-cost products. You can buy a basic cover of . 10 lakh for a low risk category individual for as low as . 500. Most comprehensive covers with sum assured of . 10 lakh are available at approximately . 1,500. Not many distributors would push these products and it may be a great idea to shop online on insurers' websites.  nikhil.walavalkar@timesgroup.com

Sebi nod to Nippon Life’s 26% stake buy in Rel MF

Mumbai: Market regulators in India and Singapore have cleared the sale of Reliance Capital's 26% stake in Reliance Mutual Fund to Nippon LifeInsurance, Japan's biggest life insurer, for Rs 1,450 crore. Sebi and Monetary Authority of Singapore have both cleared the deal, Reliance MF said in a statement. Statutory approvals from RBI, Competition Commission of India (CCI) and PFRDA, the pension regulator, are already in place, the statement said. 

    With all the statutory approvals in place, the final agreement between Anail Ambanicontrolled Reliance Capital, the promoters of Reliance MF, and the Singapore-arm of Nippon Life is expected to be signed over the next few weeks. Once closed, this will be the biggest FDI in the Indian mutual fund industry. The buyout, by the largest insurance firm in Asia, values the fund house at Rs 5,600 crore. 
    Reliance MF is the largest fund house in India, managing around Rs 1.40 lakh crore in assets in MFs, government-sponsored public funds, managed accounts and hedge funds.

The insurance premium on a diesel, CNG and LPG car is usually up to 20% higher than that for a petrol vehicle.

Low on Fuel Cost, High on Premium

Exchanging your old petrol car for a diesel, CNG or LPG one may be a sensible way to save some money on fuel, especially if you drive a lot. You can also consider fitting a CNG or LPG kit in your old petrol car. 

However, experts would warn you that you should be prepared to shell out more for maintenance of the car. What they won't tell you is that even your car insurance premium would go up with your change of car. According to the terms and conditions of India Motor Tariff 2002, an additional premium of . 60 per vehicle is to be charged towards liability cover on account of CNG/LPG system. However, the actual difference can be big, depending on the make and age of the vehicle. There is no standard differential and the actual premium varies from model to model and insurer to insurer. 
"As a broad rule of thumb, typically, there is a difference of approximately 10-20% in the owndamage premium between a petrol car and one running on other fuel types, including diesel, LPG and CNG," says Arun Balakrishnan, CEO, Berkshire Insurance. 
Here are a few things you should remember about car insurance if you exchange your car for a diesel one or install LPG/CNG kit in your vehicle. 
FUEL TYPE AND PREMIUM 
Compared with diesel, CNG and LPG cars, petrol cars are typically considered the least risky. The cost of the petrol variant of a car is typically lower than the diesel and CNG variants. That explains the lower premium. 
"Typically, diesel cars have a higher premium. This is by virtue of the fact that (a) diesel variants of the cars are more expensive, hence the IDV is higher (b) diesel cars are considered 'high usage' cars by insurance companies, and, hence, they have a slightly higher risk associated with them," says Balakrishnan. 
"It has been observed that usage of vehicles running on CNG/LPG is high and, hence, chances of an accident (involving them) are high when compared with vehicles that run on petrol. Therefore, to a certain extent, the risk is high in these cars vis-à-vis petrol cars," says Amitabh Jain, head — customer service motor, ICICI Lombard. Also, some parts of nonpetrol cars are more expensive than petrol cars. This also increases the cost of car insurance. 
TRANSFER OF NO-CLAIM BONUS 
"No-claim bonus (NCB) is the reward given to the driver of the car for not making any claims. Hence, the accumulated NCB does not change if the old petrol car is exchanged for the new diesel/LPG/CNG car," says Vijay Kumar, president - motor insurance, Bajaj Allianz General Insurance. 
A) BUYING A NEW DIESEL/LPG/CNG CAR 
The NCB transfer eligibility, however, is a function of the cubic capacity (CC) of the engine of the current car and the new car. "If the CC of the new car engine exceeds a certain limit (in terms of engine CC) in comparison to the old car, the policyholder will not be eligible for the NCB transfer," Vijay Kumar says. 
For example, if an individual upgrades his car from Maruti 800 to Mercedes Benz, he/she cannot carry forward the NCB benefits. "We have seen a driving pattern of the driver and rewarded him/her with NCB in the absence of claims. This basically ascertains the driver's discipline. But we cannot assume that the driver will exhibit the same discipline in driving a much bigger car with a very high CC," says Vijay Kumar. 
Hence, if you owned a vehicle up to 1000 CC, and upgrade to a vehicle with 2000 CC, you can carry forward the NCB. But, if it is anything higher than 2000 CC, the benefits may not be transferrable, insurers say. 
B) FITTING A KIT 
If you fit an external LPG or CNG kit, you can carry forward the NCB for the new car. However, the premium charges will be hiked by at least . 60 as per existing stipulations. It can get higher based on other factors. Once you fit a kit in your car, you should intimate in writing to the insurer immediately. "After getting it endorsed in the RC of the vehicle, the insurer may conduct an inspection which may be required and the difference in premium is collected post approval," says Amitabh Jain. 
If the policyholder fails to intimate the insurance company about the change in the fuel type of the car, he/she may run the risk of claim rejection in future. "If there is any change in the risk perception of the vehicle, the change in the difference has to be communicated to the insurer and the addition in premium will be levied," says Vijay Kumar. 
Why Premium on Petrol Cars is Less 
Diesel variants are costlier than petrol variants of a car. Hence, the IDV, and consequently, the premium on diesel cars are higher 
Diesel, CNG/LPG cars are high-usage vehicles. Hence, chances of an accident involving them are high. The premium is also, therefore, higher vis-à-vis petrol cars 
Some parts of non-petrol cars are more expensive than petrol cars. This also increases cost of car insurance

‘Jadoo ki jhappi’ for investment

 Jadoo ki Jhappi' gained popularity after its clever use and depiction in theblockbuster 

M u n n ab h a i MBBS. Medically, the benefits of a hug have been well known for a long time. A simple hug helps lower blood pressure, reduce heart rates and improve blood circulation, among other benefits. Just like a hug, some of the simplest things are likely to be the most beneficial for your health too — eating wellbalanced meals in moderation, eating on time, getting adequate sleep, daily exercise and a daily dose of meditation. 
    In much the same way, your financial health can also be well taken care of through the use of some simple steps. These include: tHaving a contingency/ emergency fund of at least three months of expenses to take care of unforeseen job losses/medical emergencies tA well-controlled expenseto-income ratio (ideally less than 65%) and loan-toincome ratio (ideally less than 40%) tAdequate life insurance to protect your family's lifestyle in case something was to happen to the primary bread earner tHealth coverage for yourself and your 
    dependents so that a medical emergency does not derail both physical health and financial health tInsurance for your home that is likely to be your most valuable asset tA well-diversified portfolio that consists of a combination of investments that have traditionally beaten inflation like real estate and equities, and assets that have fairly predictable rates of return like deposits and bonds tA small portion of your portfolio in gold to act as a protection for the rest of your portfolio tClearly defined goals for what you want your money to do for you -education for your children, an independent retirement for yourself and your spouse, a larger home, etc tA well thought out taxsaving plan that is aligned to your financial goals tUndertaking an annual financial health check-up. If 
you believe you need professional help for this, do not hesitate to seek it tAvoid using products that are too complex and you do not understand tAvoid putting all your money into a single investment type or asset class just because it has given the best rate of return in the recent past 
    To conclude, the simple things in life are often the most effective and make the most difference. So, keep your finances simple and your hug handy. Simplicity should keep you in great physical and financial health. 
    The author is a Mumbaibased certified financial planner and founder of Plan Ahead Wealth Advisors

Insurnace: How new health cover norms can benefit you

The insurance regulator has proposed measures to bring transparency and standardisation in health insurance. Here's how they will impact you. PREETI KULKARNI      Following the Bombay High Court order in December last year, the Insurance Regulatory and Development Authority (Irda) had promised to draft guidelines to protect the interest of health insurance policyholders and make the system more transparent. Recently, the insurance regulator proposed certain norms, which could bring the much-needed standardisation in the industry. While some of the norms are already in place, there are several fresh proposals as well. Here's a look at the newer ones.  Step: 30-day deadline for claim settlement.  Impact:You can take insurers to task if the claim is not processed within 30 days of submitting the required documents. "While this was already a part of Irda (Protection of Policyholders' Interest) Regulations, 2002, it never found a mention in insurance policy documents. From now on, it will have to be included in the policy documents," says civic activist Gaurang Damani, who had filed the public interest litigation (PIL) in the Bombay High Court, demanding that regulations be framed for the health insurance sector. Irda had agreed to draft the guidelines as a fallout of this case.  Step: Specific reason required for denying a claim.  Impact: Since the insurance company has to give the reason for rejecting a claim in writing, it could bring down the instances of claim repudiation on flimsy grounds.  Step: Insurers to pay hospitals directly.  Impact: This may make the payment process smoother. "When the cheques for claim settlement were issued by the thirdparty administrators (TPAs), payments used to be delayed often. Besides, it was difficult to ascertain whether the TPA had passed on the entire claim amount approved by the insurer to the claimant," says Damani.  Step: Contribution clause will not come into play in the case of multiple policies.  Impact: Policyholders with two or more indemnity-based policies can make optimum use of their total coverage. Till now, a claim made on two policies was split between the two insurers in the ratio of the sum insured. "The policyholder will now have the option of choosing the insurer with whom the claim is to be settled," says Amarnath Ananthanarayanan, CEO, Bharti AXA General Insurance.  Step: Standardisation of cumulative (no-claim) bonus.  Impact: This will provide a better understanding of the benefits for every claim-free year. The Irda has asked insurers to state its workings explicitly in the policy document. It has also laid down norms for withdrawing this benefit in the event of a claim. The no-claim bonus can be rolled back at the rate at which it was offered or it can be included in the sum insured after charging the premium applicable to this additional cover.  Step: No arbitrary hikes in premiums.      Impact:You won't have to face any more nasty surprises at the time of renewal. Insurers can hike premiums only after explaining the reasons for it to Irda. They will have to justify it on the basis of the preceding three years' claims experience, expected claims experience, and the rationale for the proposed pricing.  Step: Loading policies to be more transparent.  Impact: You will know the likely premium increase in advance. "If your claims in each of the three consecutive policy years (except the current one) exceed 500% of the current premium, the insurer can hike the premium according to the predetermined table disclosed at the time of issuing the policy. This step will benefit policyholders immensely," says Segar Sampath Kumar, DGM, New India Assurance.  Step: Reward for good claim record and continued renewals.  Impact: You can hope for an enhanced cover or discounts on premiums for low claims and consistent renewal of policy.  Step: Reimbursement of some preinsurance check-up expenses.  Impact:Non-life insurers may have to reimburse at least 50% of the cost of checkups conducted before issuing the policy.  Step: Insurers to set up dedicated grievance redressal cells for seniors.  Impact:Senior citizens often complain about a raw deal at the time of claim settlement despite having paid premiums. So a dedicated channel will expedite the process of redressing such grievances. Seniors can now hope for a quicker resolution of disputes on premium hikes or claim repudiation.  Step: Insurers to provide a 'customer information sheet' containing key details to policyholders.  Impact:Since the information sheet will cover key benefits, exclusions and grievance mechanisms in simple language, it will help bring down policyholders' confusion on what they are eligible for.  Step: Non-allopathic treatment to be covered by insurers.  Impact:Those preferring treatment under alternative systems of medicine, such as ayurveda, unani and homoeopathy, can now get the expenses reimbursed if they opt for these. So far, most insurance companies had restricted themselves to expenses related to allopathic treatment. Some insurers extended coverage only if the insured person underwent the treatment at a government hospital, while others offered it only to their group mediclaim policyholders. The draft norms now allow insurers to cover such expenses if the treatment is availed of at a government hospital, an institute recognised by the government/accredited by Quality Council of India/National Accreditation Board on Health or other suitable institutions.  Irda guidelines that are      already in place  Issuance till 65 years: Insurers have to issue fresh mediclaim policies to individuals at least up to 65 years of age.  Lifelong renewability: New products cannot impose an exit age cap. They will have to be renewed throughout the policyholder's lifetime.  Renewal not to be denied on flimsy grounds: Renewal requests will have to be compulsorily accepted, except in cases of fraud, moral hazard or misrepresentation.  Customers cannot be forced to switch:  Insurers cannot compel a policyholder to shift to a new product if the latter finds its provisions to be disadvantageous to him.

SUCCOUR FOR SENIORS Insurers in fix over pricing health cover for 85-yr-olds

Mumbai: Insurance companies are in a dilemma over pricing health insurance policies for people over 85 years of age considering that there is no claims history for this group. 

    The need to introduce covers for this age has arisen because of new regulations that bar companies from having a maximum age for those who have been continuously buying insurance. There is also the likelihood that with the incidence of hospitalization rising with age, part of the burden may be passed on to younger buyers. 

    "The regulator has also brought personal accident and critical illness covers under health insurance. But these are benefit policies which provide a lump sum amount to make good a loss in earning. These covers may not be suited for older people for whom there is no income loss," said Shreeraj Deshpande, head of health insurance at Future Generali India. 

    According to T A Ramalingam, head of underwriting at Bajaj Allianz General Insurance, pricing policies for older people will be difficult since there is no data on the claims history. "We are asking our actuaries to start working on pricing policies for people up to 110 years of age since in future there will not be any exit age. While the number of people requiring hospitalization in that age group would be high, usually no major surgeries are performed on those above 85 years," he said. 

    While there may not be many high value claims, the frequency of hospitalization is expected to be very high in this age group which will push up the premium. But if even with high premium the claims ratio (the ratio of claims paid to premium) is more than 100% than other insurance buyers would end up subsidizing this group. 

    "If the higher cost is passed on to younger buyers, there could be a negative spiral with fewer young people buying insurance thereby pressurizing companies to raise rates further," said Deshpande. 

    Unlike life insurance where it is possible for insurers to sell long-term policies with "level" premium (paying the same amount over the years), non-life companies cannot sell 'level' premium policies. 

    One reason is that health covers do not provide fixed benefits; rather they make good the loss suffered by the insured in spending for treatment. 

    Health insurers say it is impossible to predict what will be the cost of health care after a few years. 

    "There are too many variables. Medical inflation itself is rising at 10-15% every year," said Ramalingam. 

    He added that companies also had to take a call on the extent to which they could increase premium for someone who claims consistently. In the new draft guidelines the regulator has said that if there is a claim insurance companies should reduce the cumulative bonus at the same rate at which it has accrued. Insurance companies can also continue with the bonus by charging a higher premium.