Key Highlights for Insurance Bill in India: Increased Consumer Safety & Scope of Investment

The Insurance Bill passed in March 2015 in both the houses is expected to have a deep impact on the Indian Insurance industry. Much anticipated and awaited, this amendment offered a bunch of benefits to both the Insurance Company and the policy holder. Increased power to regulatory bodies, more protection to policy holders and increased level of foreign investment in the sector are some of the key features of the Insurance Bill.

Listed here are some major highlights of the bill and how they can affect you:

Increased Foreign Investment: The new amendment allows up to 49% foreign investment in Indian Insurance companies from now onward. This increased capital flow is expected to revitalise the industry all together. The national players now will be able to invest in new products and expand their portfolio manifold.

What does this mean to you: how is this going to effect you as a policy holder? Well, at a glance it may seem of no significance at all, but increased foreign participation means, increased competition, wider product range and more professionalism. The increased competition in the market will also reduce malpractices such as miss-selling and misleading the policy holders. So, in long run this move can actually change the entire scenario of Indian Insurance market.

An Empowered IRDAI: This act goes a long way in strengthening the fist of IRDAI. This governing body will now onward be involved in the grass root level, such as appointing insurance agents and monitor their eligibility, capability and professionalism.

Also this governing body is now empowered to regulate the key areas of Insurance Companies such as expenses, investments, commissions payable to agents, code of conduct etc.

What does this mean to you: This enhanced power to IRDAI is sure to curtail many malpractices that are rampant today in Insurance market in India. So, as a policy holder your money will now be safer than before.

Consumer safety: Indian Insurance market was never as safe as it is now from consumers point of view. If you are worried about being misled by the insurance agent, then this act will give you peace of mind. In an effort to curtail the malpractices, the new amendment levies penalty ranging from INR 1 Crore to INR 25 Crore on any Insurance Company that indulges in mis-selling and misrepresentation.

What does this mean to you: In view of this high penalty, companies are likely to enforce stringent norms for their agent, which will in turn give you more protection as a consumer.

The Bill will also make the payment process easier for the nominees of any policy holder.

Another very significant amendment that the Bill brought is the shortening of repudiation time period for any policy. Repudiation time is the particular time period within which a policy can be declared null and void in light of wrong information furnished by the policy holder. The new bill has shortened this time to 3 years, to keep the consumer interest intact.

Health Insurance: Health insurance in India never quite received the status of a separate business vertical. But this Insurance Bill identified and addressed the problem. The amendment defines “Health Insurance Business” in full details and includes personal accidental coverage and accidental coverage while traveling in it.

What does this mean to you: This move will definitely forge a path for many robust insurance products related to health.

Empowered Industry Council: The two Insurance industry councils The Life Insurance Council and General Insurance Council are now given the status of self-regulatory bodies under this Act. Now, these two industry councils are entitled to frame bye-laws for their meeting and elections. Also the bodies can levy fees and collect them from its members.

What does this mean to you: Empowerment of these bodies has now opened up the ways of communication between the stakeholders of the industry.

Opening up the Reinsurance business front in India: The new amendments in the law have opened up the reinsurance segment quite broadly. With 49% foreign investment cap, the foreign investors can now insure a portion of the Insurance Company.

What does this mean to you: A re-insurer takes away a major risk factor from your insurance company. Re-insurance companies are generally more knowledgeable about international insurance practices. Thus opening up the re-insurance possibilities will bring in knowledge and expertise from the international players as well as make the insurance companies much more stable.

With all this key points, the Insurance Bill, 2015 was robust and actually could stand up to most of the expectations.

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Insurance For What!? The Oddest Things Ever Covered

At some point in everyone’s life, insurance becomes a necessity. Whether coverage is required by law, like an auto policy, or by prudence, it is a virtual certainty that you will need to hedge against loss. The run of the mill policies (life, home, auto) are understandable. If you lose your home in a flood, you’re going to be glad you had coverage. But then there are others that make you scratch your head. The fact of the matter is, if you’re willing to pay the premiums, no matter how strange or even impossible the scenario, someone will cover it. Here are some examples of the odd, outlandish, and otherworldly things people have insured.

Alien Abduction

Yes, this exists. And it’s not just a one-off occurrence; there are companies in parts of the Southwest that make their revenue almost exclusively off of covering people in the event that they are taken into a spaceship by extraterrestrial beings. In most cases, it operates as a special form of life insurance. If someone is abducted by aliens and never seen again, the family they leave behind will be compensated, assuming they can prove the abduction happened. Other companies offer a more specialized version of this to cover survivors of space-napping for their psychological and medical costs. Again, it seems that it would be very difficult to prove the particulars and collect on one of these policies. No evidence exists that anyone has collected but (much like the truth) the policies are out there.


People have purchased coverage for all manner of valuable body parts over the years. Betty Grable, a popular film actress and pin-up girl in the 1940s, took out a policy on her legs for a cool million bucks. Jennifer Lopez is rumored to have her famous posterior covered for ten times that much, should disaster befall her. But the oddest body part is the infamous tongue of legendary Kiss frontman, Gene Simmons. After rumors had surfaced that he had surgery on it, Simmons got a policy to make sure that he was compensated in case some over-zealous fan bit it off. A tale that’s hard to swallow, but true.

Lottery Winners

This policy might even be less likely to pay out than alien abduction insurance. In the United Kingdom, an employer can purchase a policy to cover the incidentals arising out of two employees quitting because they won the lottery. It has to be at least two people, and they can’t be sharing a single ticket. The odds of a single employee winning the lotto are slim; the chance that two winning tickets will be bought by people working for any single company is virtually none. One wonders if the Camelot Group, the organization that runs the UK lottery, has purchased such an insurance policy. If two of their employees won, that would certainly raise some eyebrows!

Next time you’re speaking with your insurance salesman about covering your car, see what else they offer, just for fun!

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Disasters Occur In A Political Space

Although there are those who would disagree, Natural Disasters are probably not driven by politics, but nor are they immune from politics. Far from it. The actions taken by human actors undoubtedly affect the prevention, mitigation, and damage of natural disasters and their aftermath.

The ‘shock’ refers to the natural act itself e.g. the earthquake. The ‘aftershock’ comes later. Post-earthquake 2010-2012 in Christchurch, New Zealand, the Earthquake Commission, the Canterbury Earthquake Authority, the Christchurch City Council, and the Government of the day equate to the net impact of the ‘aftershock’ on the population – the physical ‘disaster’ is far from the whole event. It is also made up of those shocking post-disaster events, such as delayed insurance payouts, top-down authoritarian decisions, ineptitude of professional bodies, evidence of corruption in the post-quake city – and the list goes on…

Though governments are supposed to care about the social welfare of their citizens, they also have an interest in maximizing government income and though governments do spend on both preventative and palliative measures to lessen the impact of a potential natural shock, they also use natural disasters to redistribute power through the political effect, for example favouring disaster spending in regions that are politically aligned with the party in power. Dire circumstances provide rapacious governments with a stronger ability to increase their level of theft and to hide it. Disasters can be used as a blunt policy instrument to target or reward populations and to enrich a government and the ‘corporate classes’.

Interesting too, is the fact that a time of crisis can increase markedly the amount of information a population has about current or incumbent politicians and their governance style and outcomes. This is because disaster produces a highly informative environment where voters are continually debating and experiencing the performance and merits of the operators in power – be that a Prime Minister or a City Council. It is in these high information environments that voters learn enough to enable them to consider taking the decision to replace the political incumbents.

For example, certain incumbents in Christchurch are currently responsible for rebuilding a city infrastructure and restoring the lives of affected communities to some semblance of order. During normal times there is usually little information about how good a job the incumbent did or is doing, but during an earthquake or hurricane voters quickly learn a lot more about whether the incumbent has done a good job and who these people actually are. When there is this much information floating around, information about performance may become sufficiently informative to overcome a voter’s initial tendency to support an incumbent. Their likelihood of re-election by the persons of the affected area therefore has the potential to ‘take a hammering’. And the truth is that as voters we often understand little beyond our own or our local community’s pain and pleasure… as voters we often have only a vague, or at worst primitive understanding of the connections between incumbent politicians actions and our own pain or pleasure. Governments also rely on national media disinterest (or control) to ensure that populations outside the affected area get to hear little of their manipulations within the area.

Educated voters are fully rational, and research shows that re-election rates are lower for incumbents following natural disasters. The mechanism is informational. A rational voter votes retrospectively – i.e. based on what they perceive to be the past performance of the incumbent-but does so only because that past performance is informative about expected future performance.

Confidence in a country’s disaster preparedness depends on confidence in the ability and willingness of its government to mandate and oversee levels of decency and fairness in addition to the efficiency of reconstruction. The dilemmas that Christchurch City faces require constant balancing between rebuilding faster, rebuilding cheaper, rebuilding safer, and rebuilding back better. In order to achieve the right ends there will be a need for the government to deal with many of the elements of local and private enterprises who have been and still are placing profits ahead of community interests – including having the all-important conversations with insurance providers and addressing their stalling of claims settlement and the dubious processes employed to minimize the cost of valid claims. All these are examples of potential failures of central government to assume responsibility and control of regulation and enforcement in the long-term planning process, which is arguably motivated by an entrenched culture of corporatism which favors corrupt dealings and the pursuit of occluded agendas. Markets have no inherent moral character therefore it is government’s role to decide how to manage them.

Declaring a disaster a ‘national emergency’ has profound political implications. In the follow-on from managing the emergency and the rescue efforts it is practically unavoidable that a further politicisation of the event increases as the affected community moves from the emergency response through to the recovery and the reconstruction phases. The immediate emergency response by any government is fairly predictable, as it should be, but, from a political point of view, the aftermath has proven to be uncharted territory, highly susceptible to the opportunities of the circumstances and the political values and agendas of the day. The way a Government perceives its political mandate, or is given opportunity to define it, is never more critical than in a recovery phase.

Markets have no inherent moral character and it is therefore arguable that it is the government’s role to decide how to manage them. In particular, after a major disaster markets must be regulated ‘under emergency’ to ensure that they are working for the benefit of the recovery of the majority of citizens. A political system of non-interference only serves to amplify the voice of wealthy corporates and fails to protect the ordinary citizen against corporate abuse. Money speaks in politics as it does in the market place. Any system of recovery must have rules and regulations operating within a legal framework. In a modern economy, the government has the responsibility on behalf of its population to set and enforce the rules of the game in the market place. This is especially true in the case of a major disaster where government takes the decision to be involved in the recovery process. In the absence of genuine government support, the extent to which a population can recover post-disaster is likely to be severely challenged. What has characterized the recovery in Christchurch is that political decision making has been in favour of the corporate and government stakeholders – the insurance industry and the construction industry. The policy of non-interference in the marketplace has been the cause of slow, painful recovery. The consequences of this approach have been sorely and visibly felt by the affected population.

The Insurance Aftershock:The Christchurch Fiasco Post-Earthquakes 2010-2016. See [] This is a book about the management of catastrophe at a National level.

The aftermath of the 2010-2012 Christchurch earthquakes in New Zealand offered the author a rare opportunity to examine the national policies and effectiveness of Government funding and management of catastrophe on a national scale. Her findings are both surprising and disturbing.

This is not a book about idealistic sociological concepts, but a revelation of actual Government administrative failure and financial risk-taking, in concert with corporate malfeasance. It is a book every policy-maker, politician, local-government official, Treasury official and economist, should read.

The book discloses the failures and fallacies of current disaster management strategies, not only in terms of the huge financial implications but also the management of the ‘recovery’ phase.

The Author examines international experiences of catastrophe from the viewpoint of government policies and funding strategies. She points to a fundamental conflict of interest between corporatism and the need for rapid recovery in the interests of both the affected public, business interests and the economy. She discusses the tensions between National and Local government objectives and the unheard voice of the local population. She makes comment on the limited efficacy of Civil Law and associated means of redress as protection against systematic corporate breach-of-contract and bad-faith, both in New Zealand and overseas.

A need for fundamental change in disaster management is obvious from the findings of this work and the Author proposes a viable, efficient revision of the means to achieve that objective – one which eliminates the current state of financial risk and susceptibility to Corporate subversion.

Why a Bipartisan Approach to Disaster Recovery Does Not Work

Christchurch, New Zealand 2016. I still live in a city where truths so often do not make it through the gridlocked gauntlet of publishing. I live in a city where so much of what should be being discussed is not being discussed. I live in a city where the politicians who are supposed to be speaking for the people seem to have lost their voices. I live in a city where many are still suffering while most sit back and watch. I still feel anger, disappointment and frustration that after five years the government is silent, the media is silent, the regulators are silent and in the main so is the affected population.

I watch and wait as ‘Christchurch’ has become the on-going saga about an unprecedented catastrophe, with an affected population largely left to wallow in its own misery. After years of being involved in Christchurch what emerges is a story of a very sorry state of affairs, a story of incompetence, dishonesty, professional vested interests, cynical corporate greed and government complicity and self-service.

On top of that we have an insurance industry left to its own devices, an industry in dire need of reform. The industry has done and continues to do all it can to maximise its profits by delaying settlement of claims, causing policyholder abuse in the process. While insurance companies are in the business of making money, they cannot be considered ‘just normal businesses’.

They have special fiduciary duties requiring them to protect their customers both in statute and case law.

Paramount amongst those duties are the duties to act fairly and in good faith. The regulators in New Zealand have chosen to be blind to the events taking place here. And simply because the government entered into an agreement as part of its negotiations with insurers it should not be the population of Canterbury that pays the price for its own failures.

There are those who would have us believe that political collaboration is a necessary foundation for dealing with a natural disaster, but the experience over the last five and a half years has shown that a ‘bipartisan’ approach does not work!

Labour leader, Mr Shearer pledged that Labour would “… do everything in our power to bring the issues to the attention of Parliament. But I do believe we need to look at a way we can have a bipartisan approach on this.

We do need a government/opposition united approach.” And “as a result of that, I think we do need to be sitting down with the Government and looking at a bipartisan approach to the rebuild in Christchurch and its recovery.” ( See ).

What is a Bipartisan approach? Wikipedia defines it as “a political situation, usually in the context of a two party system, in which opposing political parties find common ground through compromise, in theory.” So in the context of the Christchurch earthquakes this would mean that Labour would essentially leave National to its decision making process in relation to matters appertaining to the recent earthquakes and the Christchurch ‘recovery’.

On the face of it, it is not hard to understand the appeal of bipartisanship. It sounds very mature and enlightened with a suggestion of the harmonious pursuit of quick and beneficial solutions to a set of difficult circumstances. It seems an obvious choice in the case of external threat, such as war, yet there is little evidence that solutions to big internal problems are to be found through bipartisanship, and there are plenty of examples throughout history that would suggest that they are not. When it comes to ‘crisis’ events, this is particularly so.

Democracy actually depends on partisanship – strong, critical advocacy that opens public debate- forcing the parties to explain their ideas which in turn clarifies choices for voters. Partisan causes are often bold ideas and though these ideas can be divisive, they can offer citizens a genuinely new path forward.

By contrast, bipartisanship has the ability to ‘cloak corruption, obscure chasms between politicians and the people they serve’, agree to invest single individuals with absurd powers, or simply indicate that the leadership of both parties has become a closed club, (often with an agenda). In principle and in practice, a serious partisan political structure is fundamental to a healthy democracy and partisan ideas are crucial for liberty. Bipartisanship, by contrast, has enabled some of the most shameful episodes in history such as American slavery, the Iraq war, and others. I note with interest that in the USA there is also a bipartisan approach to ‘climate change’.

Yet is it not the case that a good political leader is not the individual who rises above partisan concerns, but the person who is able to clearly articulate and defend the interests of one party? Able to put forward another view point, propose other solutions – widen the choice spectrum for the affected population? People living in a democracy should get the government they choose based on clear choices. Clear choices produce better results. Decisions by the political parties to ‘demote’ political representatives who raise questions of ‘punishment for not towing the bipartisan line’ are worrying.

I understand that disaster mitigation, preparedness, response, and recovery are the end products of complex political and administrative interactions, and the results cannot be easily controlled or anticipated. But there have to be alternative solutions and those solutions should be presented by the other political voices. End bipartisan approaches in post-disaster affected cities in order to ensure real democracy in action and perhaps some assistance and answers for those in need. If we do not like bipartisan approaches and can see the danger in their subtle application, those affected must express their concerns.

Read more at The Insurance Aftershock: The Christchurch Fiasco Post Earthquake 2010-2016. []

Most factions within our society are not equipped to negotiate with authorities and large corporations and those of us who are able, are left shocked at the treatment we receive and the underhandedness with which we are treated. This begs the question: what part does central and local government play in the recovery of a city and the welfare of a population? Isn’t emergency management a quintessential government role? Even fewer policyholders are aware of the difficulties they encounter in an attempt to assert their rights. Research into the legislative and regulatory framework of the industry quickly reveals that there are few options open to the desperate policyholder.

The Three Most Common Types of Insurance

There are many insurance plans available to offer coverage for various sorts of damage or accidents. All families should have at least one of these three.

Types of Homeowners Policies

Homeowner’s insurance falls under one of six categories. HO-1 and HO-2, as they are more commonly known, cover only the property against specifically listed damage. These policies vary as to what damage is covered, and neither protects belongings located on the property. HO-2 forms offer more coverage than an HO-1.

HO-3 protects against all types of damage, not just specifically listed damage. It also protects a select list of belongings located within the structure from specific damage.

HO-4 and HO-6 cover only belongings. Renters use these policies as the landlord or management company holds coverage on the dwelling. As with HO-1 and HO-2, HO-6 offers greater protection than HO-4 and is more expensive.

HO-5 is similar to HO-3 in that it covers the property as well as personal belongings. The difference is that HO-5 covers all belongings, not just a set few. It is also more costly than some of the others, but it is worth it.

Types of Medical Options

Medical is another common form of insurance, and as with homeowners, there are different kinds for you or your employer to choose.

Health Maintenance Organization, or HMO, is one of the most used types. This plan allows you to choose from a network of providers, and it also includes preventative care. However, you must be referred by your primary care physician in order to see a specialist. There is also a small copay you must pay at each appointment.

The Preferred Provider Organization, or PPO, also has a network of doctors available. Unlike an HMO, you do not have to choose a primary care provider. You can see any physician, or even a specialist, as long as he is in network. Also, you do not have to have a referral to change doctors. As with other plans, each visit requires a copay.

Exclusive Provider Organization, or EPO, works very similar to HMOs and PPOs. These cost less and have a network of providers available. However, unlike a PPO, where an out of network doctor visit is covered up to a point, there is no out of network coverage for these plans.

The Point of Service Plan, or POS, is a hybrid between an HMO and PPO. POS requires a primary care provider assignment, but you can see out-of-network doctors if you are willing to pay a higher copay.

Different Auto Coverage

Auto insurance is also widely used. Depending on your loan terms and state requirements, some options may be unavailable to you.

Liability plans cover damage and medical bills in the event the accident was deemed your fault. It only covers the damage done to the other person’s property as well as any of their medical bills. Most states require this as minimal coverage. It is also the most inexpensive option available.

Collision coverage will pay for repairs to your vehicle in the event of an accident. This type of insurance is worth having, in addition to liability coverage, even if you have an older vehicle that has no lien. In the event that your vehicle is totaled, your plan covers the value of your car. This policy is required for those with lienholders.

Comprehensive coverage covers anything unrelated to an accident like if your vehicle is stolen or you hit a deer. For most lienholders, this is a requirement.

Uninsured motorist is something that everyone should consider. While most states require at least liability coverage, some drivers don’t keep the plans much past getting their license or tags. This policy protects you in case someone else causes damage and doesn’t have a plan in place to pay for repairs.

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