Writes to RBI, Trai and Irda; says it will help banks bring down risks
T E Narasimhan | Chennai | November 26, 2014 Last Updated at 12:55 IST | Business Standard
The Credit Information Bureau (India) Ltd (CIBIL), India’s first credit information company, has said that it has written to Reserve Bank of India (RBI), Irda and Trai to enable the Bureau to collect data from service providers that would facilitate the first time borrowers to have an indicative credit score.
Speaking on the sidelines of Fifth Annual Credit Information Conference, organised by CIBIL, M V Nair, chairman, CIBIL said that this will go a long way in helping the Government’s financial inclusion plans.
As of now the lenders have no idea, about an individual’s credit worthiness if that person happens to be first time borrower. By providing this data, the lenders will have an idea of the borrowers, which inturn will bring down the risk.
Industry is going through tough times and their is a strain in asset quality, which is a major concern.
For 8-11% growth in economy, we need about 20-25% bank credit growth. For sustain profitable growth, managing risk is important and information is key for the same, he added.
Nair also said that delinquency in the retail credit portfolio, which includes auto, credit cards, personal loans and housing, is less than 1.5%. “This is a healthy sign,” said Nair, who insisted that accuracy is the key.
There are some concerns on data accuracy provided by financial institutions which leads to lots of mismatch when it comes to calculation of an individual score. The institutions should ensure the accuracy, said Nair.
He pointed out participation of FIs have gone up tremendously, especially public sector banks. Today compliance is 72%, compared to 65% three years back, and CIBIL hopes to increase it to 90% in 3-4 years.
The company is also on the verge of completing data collection from MFIs and will put a system in place that would give credit score for MFIs borrowers. The system will be rolled out in two years, he said.
Source : http://goo.gl/nRheF9
Deepti Bhaskaran|Kayezad E. Adajania|Vivina Vishwanathan|First Published: Fri, Jun 14 2013. 07 08 PM IST| Livemint.com|
As you climb the stairs of Parisrama Bhavan in Basheer Bagh to reach the Insurance Regulatory and Development Authority (Irda) office in Hyderabad, you are greeted by a billboard in the stairwell that asks: Is your insurance company listening to you? If not, the billboard goes on, you can register your complaints online and track their status through Integrated Grievance Management System, IGMS, or call at 155255.
This in fact is the first board you see before you enter the office. Its placement is indicative of the regulator’s focus and its effort to reach out to aggrieved customers directly. And Irda is not alone in this regard. Capital markets regulator Securities and Exchange Board of India, Sebi, too has taken some institutional measures in the form of Sebi Complaints Redress System or SCORES to effect speedy disposal of complaints. In fact, SCORES is a step ahead because it also claims that it adjudicates on a case to case basis to ensure fair settlement. The mandate for IGMS, however, is to ensure speedy settlement of complaints and not adjudication. This is true even for the Standardised Public Grievance Redress System or SPGRS, that the ministry of finance has put in place only for the public sector banks (PSBs) for now.
With regulators taking a keen interest, consumer grievance management seems to be getting institutionalized and companies are beginning to create dedicated departments to have a focused approach towards consumer complaints. But given the fact that it’s still early days and the systems are yet to become popular, it maybe too early to judge their efficacy. But if the regulators are using the help of technology to reach out to you, you should also know how to reach out to them with your complaints. Read on to understand the processes of consumer grievance redressal set up recently in the financial sector.
Capital markets and mutual funds
Sebi set up SCORES in June 2011. So if you have a grievance with your investments that come under Sebi’s jurisdiction, such as mutual funds (MF), equity shares, depository participants (DP) and brokers, you can complain directly to Sebi through SCORES.
Visit Sebi’s website (www.sebi.gov.in) or http://www.scores.gov.in, fill in your basic details like your name, address, email id, register your complaint, submit any documents that you may have as evidence and sit back. Sebi, then, forwards your complaint to the firm and keeps a track of it. You could, alternatively, send your complaint to Sebi by post.
To ensure that the company against whom the complaint is filed actually receives the complaint, Sebi has made it mandatory for every listed company, MF, stock exchange, depository and so on, to nominate one person in charge of investor complaints. When Sebi gets a complaint, it sends an alert message to this official within seven days; he is then mandated to look into it. Though Sebi has not specified a fixed time limit within which the firm must respond, it mandates the company to send its first response within seven days of receiving the complaint and then about another 30 days generally to resolve the complaint. If the firm fails to respond, Sebi sends one to two reminders to the firm. If you have submitted the complaint online (on Sebi’s website), your firm will email you the response and will also update Sebi. If you complain by post, the firm sends you its reply by post, and it is mandated to mark a copy to Sebi.
If you are unhappy with the company’s response, you can go back to Sebi and tell them to take a relook at it. Further, there have been instances where Sebi, on its part, is not particularly satisfied with the firm’s response. In such cases, Sebi gets back to the company itself. “There was an instance where the investor did not get dividends for the shares he held of a bank. When the firm said that it sent duplicate dividend warrants, we got back to the company and told them to send this investor, two more reminders with a gap of seven days. We did this to ensure that if an investor misses one response from the company, the follow-up reminders should catch his attention,” says a senior Sebi official who did not want to be named.
Wait for about 30 days after you complain. If you don’t hear anything, you can quote your Unique Complaint Registration Number (UCRN)—a number you get after you first lodge your complaint on Sebi’s website—and send Sebi a reminder. Sebi penalizes those who fail to respond. The penalty varies and is subject to Sebi’s decision. Such actions taken against firms are also periodically listed on Sebi’s website here (http://tinyurl.com/mblgx3n).
While Sebi claims that its process is robust, an investor association we spoke to, is not impressed. “Over all it is very unsatisfactory. There are areas of concern. Firstly, the communication between Sebi and the complainant, after the complaint has been filed, is absent. At best, the investor gets a response “in process” when he gets in touch with Sebi to check the progress, but that sort of reply is not enough. These are automated responses and don’t mean much. Secondly, if grievances are just not resolved, despite Sebi’s intervention, nobody knows what happens to such complaints. In such cases, where Sebi can’t can’t do anything, they still should be able to take some action. Which they don’t do. I raised this query and asked them what they do in such cases. They didn’t have any answer to that,” says Virendra Jain, founder and president, Midas Touch Investors Association.
IGMS was set up by Irda in 2011. It works like a central repository of all the consumer complaints received by life insurance and non-life insurance firms. In that sense it’s a handshake between Irda’s grievance management system and the insurer’s individual grievance management system. The way it works is like this. You can register a complaint either through mail, phone or even verbally with an insurance company and the insurer will register that complaint in its grievance management system. In fact it is mandated that every insurer must have a grievance redressal policy approved by Irda and a grievance cell that will be presided over by a nominated person from the board.
Once your complaint gets registered, it will automatically flow in the IGMS which is monitored by Irda. Irda gives the insurer 15 days to settle the complaint. “Regardless of the nature of grievance, insurers have 15 days to settle the matter. However, 15 days start from the day of receiving all the necessary documents and proof,” says Yateesh Srivastava, chief operating officer, Aegon Religare Life Insurance Co. Ltd. If your complaint is not settled within 15 days, the system will raise a red flag so that Irda can take note of the delay and direct the insurer to settle the complaint. You can also approach IGMS by logging into http://www.igms.irda.gov.in or calling up the toll free number 155255. However, Irda encourages you to approach the insurer first.
The mandate of IGMS is restrictive because through it, Irda does not adjudicate on individual complaints. The basic idea of IGMS is to effect speedy disposal of complaints and have a repository that would help Irda track the nature of complaints in order to make systemic corrections. “We used to submit data on complaints even earlier but it was post-facto. So, the idea of IGMS was to track complaints and the effectiveness and timeliness of response on a real time basis. The regulator, however, depending upon the trends that complaints throw up, can always question the insurer,” says T.R. Ramachandran, CEO and managing director, Aviva Life Insurance Co. India Ltd.
In other words, Irda could go beyond the mandate. “Even as the regulator’s role remains directive, it can track complaints and even penalize the insurer for a glaring mistake,” says Srivastava. Irda also publishes data on complaints on its consumer awareness website http://www.policyholder.gov.in. According to this website, Irda in FY12 logged in about a lakh complaints on unfair business practice in the life insurance industry. This is 32% of all the complaints received. Irda on its website, http://www.irda.gov.in, also warns companies who violate regulations to fall in line. For instance in March, based on various compliants, Irda issued 15 warnings to Oriental General Insurance Co. Ltd and National Insurance Co. Ltd.
The industry feels that IGMS has led to speedy disposal of complaints. However, some feel more needs to be done. “Customer complaints are definitely being taken more seriously since Irda has a constant watch but what action the insurer takes is still work in progress. Irda should also think about taking action on complaints because approaching the ombudsman is very time consuming and they are short staffed,” says Kapil Mehta, founder, Securenow.in.
So if you want arbitration on the complaint, you will still need to go to the insurance ombudsman. Ombudsman are divided according to the regions and you will need to approach the one in your area. The verdict of the ombudsman is usually binding on the insurers and the ombudsman is supposed to issue a verdict within three months from the receipt of the complaint.
Except for PSBs, the banking sector lacks a similar integrated redressal system. In case of the PSBs, the department of financial services under the ministry of finance has put in place an online complaint redressal facility and inked guidelines on SPGRS last year. This SPGRS forms needs to be uploaded on the website of the PSBs. For instance, in the Bank of Baroda website you can find the form at http://tinyurl.com/kda93kl.
The idea was to meet the rising expectations of customers for prompt redress of their grievances. This system again works like a repository in the sense it integrates complaints received from multiple channels into a common digital platform. The bank in question is expected to solve grievances within three weeks or 21 days. The system has an inbuilt management information system for analysing performance. Says V.N. Kulkarni, chief counsellor, Abhay Credit Counselling Centre, “The SPGRS is one of the new ways to send complaints. However, the issue of resolving consumer complaints faster still remains. The move is in the right direction, but number of days to resolve the grievance should have been reduced further.” He adds that, “Only banking related issues can be addressed through the existing system. For complaints related to third party products such as insurance and MFs sold through a bank, you will have to approach the respective industry and regulators. This is because banks only acts as an agent while selling the third party products.” SPGRS is still being introduced in the banking system. We will have to wait and watch to see how it works out. You should remember that if the grievance is not solved via SPGRS, you can then approach the banking ombudsman.
Banking ombudsman is one of the last recourses to address banking related complaints. The ombudsman will look into complaints against all banks. As a customer you can approach the ombudsman only after he has exhausted all the options of customer redressal services of his bank in 30 days. For approaching the banking ombudsman, you need to first check under which jurisdiction you fall (see http://tinyurl.com/aqkhmwc). Usually, the banking ombudsman gives ruling within 30 days. If you are not satisfied with the ruling of the banking ombudsman and you have been unable to get your money back, the next thing is to approach the appellate authority, who is Reserve Bank of India’s deputy governor; currently, K.C. Chakrabarty.
The second layer of consumer redress is being put in place, although with some restrictions, but it seems like it still has to cover some ground. You as a customer should, however, actively make use of these systems to get your complaints settled in a timely manner.
Source : http://goo.gl/7Gdli
By Manshu Verma | Onemint.com |
As I always say there is no best financial product be it mutual fund or insurance. If they are best today there is no guarantee that they will be best when we will need those most. So as a client you have to stick to some basic principals while choosing the products. So let’s check this for term plans.
Important factors in choosing term insurance plan
1.Claim settlement Ratio: The most important criteria of selecting any insurance policy including term plan is claim settlement ratio. Why we are buying life insurance? If I am not there my family will get the sum assured & have financial security. But what will happen if our claim gets denied – whole purpose of taking term plan will be defeated. So it’s better to check it rather than sorry. You can check claim settlement ratio here & also latest one here(December 2010 Quarter at onemint).
How can you reduce chances of claim rejection?
Don’t allow agent to play checkers. If you are buying term plan there is 90% chances that you called the agent. He is in very hurry to fill the form & pocket his commission.
Don’t hide anything – if you smoke or drink mention it – if you have any other medical ailment disclose it.(even if you think it is very small)
Mention which other life insurance policies that you hold – from any insurance company including ulip & endowment.
If you follow these points there is a good chance that your claim will not be declined.
2 Reputation of the company – there is no definition or cannot be easily explained as it depends on 2 factors working style/financial health of the company & your past experience. So it is very subjective & changes with the time but still will be considered to increase your confidence. Or take it other way round there are 10-15 good insurance companies & you are not having confidence on 2 of them you can eliminate them from total choices.
3 Low Premium – People think this is the most important criteria but actually it is least important. This criterion should be explored only when you have shortlisted polices on above 2 points.
Pattu shared this article “Can Private Insurance Firms be Trusted” by Livemint
So this way you can reach the term plan that you should buy.
In Financial Planning there are many strategies that can be followed to make sure that you are adequately insured & your claims will not be denied but there is a very simple strategy that I think everyone should follow.
Divide your Term Plan into 2 parts:
There are lots of benefits of this strategy.
1 In case if in future you realize that your sum assured is more you can discontinue one of the policies. This can happen due to either demotion or loss in job OR a windfall profit that you get which was not anticipated.
2 In case one of the insurance claims got denied or delayed still your family has a chance that they will not lose everything.
3 If you have rightly filled details in the forms & one of your claims got denied – your family or your advisor can reach insurance ombudsman that claim got passed from X co but Y co has denied it. Your family has a great chance that even this claim will be passed if followed properly.
Now, you know how and which term plan to choose. Reach your financial advisor & ask him to calculate your insurance requirement. Go for it and believe me your approach to life will change.
First Published: Wed, Feb 23 2011. 12 30 AM IST, LIVE MINT
Updated: Thu, Feb 24 2011. 09 05 AM IST
Among the many questions put forth to Mint Money, the two most persistent are: Will the private sector insurance company pay my claim? Will they be around and what is their payment history? It is fairly easy to answer the first question: the regulatory rules make it difficult for any insurance company to run away with people’s money. The second question, however, has no black and white answer and there are nuances that you will have to understand. To give you a cogent reply, we looked at the claims record (for the year 2009-10) of all 23 insurers and examined them on three parameters: claims settled, claims repudiated and claims pending. The final takeaway is this: a poor ratio does not imply a company with poor customer service standards. Read carefully to understand how these three ratios are to be used to evaluate your insurer.
Claim settlement ratio
On the face of it, a lower claims settlement ratio (30% would mean that three out of 10 claims are settled and the rest are refused) would point to a company that does not pay its customers when claims are made. While Life Insurance Corp. of India (LIC) has a claim settlement ratio (CSR) of 97%, more than half of the companies in India have a CSR of more than 78% with that of six insurers being above 88%. Most insurers that didn’t settle even half the claims, started operation in 2007-2008 with Shriram Life Insurance Co. Ltd being the sole exception. Shriram Life launched operation in the year 2005 yet its claim settlement for the year 2009-10 has been only 40%. We expanded the net wider and one of the first private companies to set shop in India came under the net of top 10 companies that have poor claim settlement performance. Max New York Life Insurance Co. Ltd, launched in 2000, has settled only 66% of the claims. “(The) 2010 fiscal was an aberration for us since we decided to change our claims management processes,” said a company official. “We got a lot of claims in the previous year that prompted us to analyse our underwriting and claims settlement processes.”
What it means: Older insurance firms will have a better CSR than the new ones. Kamalji Sahay, managing director and chief executive officer, Star Union Dai-ichi Life Insurance Co. Ltd explains: “Young insurers have claims which are typically in the initial stage of the policy tenure. Early claims need extra investigation and hence usually they take more time in settlement. However, other indicators like claims repudiation and claims pending records will shed light on claims settlement practice of companies.” Sahay refers to a provision of the life insurance industry where insurers can rigorously investigate claims that are made within three years of buying a policy and the process can take as long as six months. Policies older than three years must be settled in a month’s time. And since insurers who set shop in 2007 or later will have all their claims that are made within three years of buying the policy, they have a poor CSR.
How to use this: If you see a company set up before 2007 with a CSR of below 78%, consider it a red flag.
Claim repudiation ratio
A claim repudiation ratio (CRR) of 40% means that four out of 10 claims made get rejected by the insurance company. Aegon Religare Life Insurance Co. Ltd, which incidentally was also the first insurer to launch term plans online, has the highest percentage of claim repudiation. Of a total claim of 50, Aegon Religare rejected 22 claims: a 44% claims repudiation record. LIC has the lowest percentage of claims repudiation at 1%, however, even that one percentage point means 8,227 policies in the case of LIC.
What it means for you: The CRR is as much a reflection on the underwriting standards of the insurer as a reflection on the policyholder who gives incorrect or shoddy information at the time of buying the policy. Says Samir Bali, leader-insurance, Ernst and Young: “A high percentage of claims repudiation may mean that the company has poor standards of underwriting. Lack of medical check ups, wrong information in the proposal form may lead to claims repudiation.” A high CRR also reflects poor training of agents who encourage their customers to fill up wrong information so that the policies are accepted by the insurer.
There is a third factor that influences the CRR—the products sold will also lead to low or high CRR numbers. Says Chirag Jain, chief operating officer, Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd: “The percentage of claims repudiation will also depend on the portfolio of the insurer. So a insurer having a large chunk in pension plans will have a favourable percentage of claims repudiation while an insurer dealing largely with term plans will have a relatively adverse percentage of claims repudiation.” This means that a company with a higher term insurance portfolio will have a worse CRR than a company focused mainly on money-back or endowment plans since in the latter the fund value builds up to make the payment at claim, while in a term policy it is a pure risk cover.
How to use this data: A company older than four years and with a high claims rejection ratio typically means poor underwriting standards.
Claims pending ratio
A claims pending ratio (CPR) of 50% means five out of 10 claims registered were pending at the end of 2010 fiscal. While most insurers have their claims pending for less than three months, insurers also have policies for more than a year pending with them. Says Yateesh Srivastava, chief marketing officer, Aegon Religare Life Insurance Co. Ltd: “Sometimes the beneficiary doesn’t give sufficient documents or just sits on the claims. We can’t settle the claim unless we get all the required information and hence the delay.”
What it means for you: A high CPR need not mean a bad company. For example, the 50% CPR of DLF Pramerica Life Insurance Co. Ltd looks bad, but only till we see that it is five out of 10 companies we are looking at. Again younger companies will tend to have more pending claims since they take more time to investigate and cases of fraudulent practices are highest during early claims. “Typically we find that policyholders who make early claims take a policy with the knowledge that they would be invoking the policy soon,” said Jain. “Hence we find that medical information is not accurate which leads to further investigation. Hence early claims call for investigation and hence claims are usually pending in case of young insurers.” In other cases, claims could also be pending because of lack of documentary evidences. The regulator mandates the insurer to settle the claim within 30 days of receiving all required documents. However, the claims remain pending till such time insurers receive all the documents.
How to use this data: For a company that’s more than four years old, a high pending claims ratio means poor claims settlement standards.
What you should do
These numbers don’t give any conclusive results if just the numbers are looked at. A pure number analysis tilts the balance in favour of older investment product portfolio heavy companies rather than newer firms with a larger pure play insurance cover portfolio. Despite this handicap, the ratios offer an insight into the hygiene standards in companies. You can do two things to use these ratios to your advantage. One, if the claim happens early in the life of the policy there will be a much more rigorous investigation than a 10- or 15-year-old policy. So ensure that the data input is correct, no medical truths been twisted and the papers are in a location that your beneficiary can get them without you being around to point out the second drawer under the dining room cabinet. Two, fill up the insurance proposal form as if your life depends on it. Well, not only yours, but the future life of your dependants does actually depend on the due diligence done by you when you filled that life cover form. And as for the one question, yes your insurer will settle your claim but only if you have been meticulous in giving all the information accurately. And if you still run into a problem, you have the Insurance Regulatory and Development Authority and subsequently the insurance ombudsman to seek recourse in.
Source : http://goo.gl/RHMmB
Business Line (THE HINDU) | PTI | NEW DELHI | DEC 24:
Life Insurance Corporation (LIC) has a better record of paying death claims than that of private life insurers, said regulator IRDA in its latest report.
“The claim settlement ratio of LIC appeared to be better than that of the private life insurers”, said Insurance Regulatory and Development Authority (IRDA) in its annual report 2011-12.
While LIC is the only state-run life insurance company, there are about two dozen companies in the private sector which provide life cover.
According to the report, LIC has settled 97.42 per cent cases relating to death claims during 2011-12 compared to 89.34 per cent by private sector companies. The industry average worked out to be 96.26 per cent.
“Settlement ratio of LIC increased to 97.42 per cent during the year 2011-12 when compared to 97.03 per cent during the previous year,” it said, adding that private insurers repudiated higher number of claims as compared to LIC.
On the positive side, settlement ratio of private insurers improved during the year to 89.34 per cent from 86.04 per cent in the previous year.
As far as industry is concerned, the settlement ratio increased marginally to 96.26 per cent in 2011-12 from 95.58 per cent a year ago.
LIC had 70 per cent market share in 2011-12 in the life insurance industry, while the rest is with 23 private sector players.