Have you had a bad time with Indian banks when   you tried to open an account or buy property?   Did you get taken for a ride by
unscrupulous agents? Can you, as an NRI, bank   on Indian financial institutions? Here’s one   NRI’s take on it.

Do Indian banks ignore NRIs? The answer to   this question was most certainly a resounding yes   – till about a decade ago. About ten years ago   Indian banks were busy ignoring even people   living on the same street as the bank!

So has anything changed?Yes, plenty. Reforms have been slow and fitful, but the results are beginning to show. The rupee has stabilized, the Reserve Bank issues contemporary guidelines to attract your investment, banks have evolved a plethora of schemes for you and practically every major international bank has or will shortly have a footprint in India, giving you access to their facilities at home and in India.

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The All-India Insurance Employees’ Association (AIEA) has demanded merger of four public sector general insurance companies into a single corporation to protect business interest and also to effectively fulfill their social obligations.

A meeting of the association held here recently adopted a resolution, copies of which were distrbuted to the media today, seeking the merger of the United India Insurance, the New India Assurance and Oriental Company.

AIEA Standing Committee Secretary J Gurumoorthy told reporters that following the opening up of the insurance sector, nine private companies had forayed into the non-life insurance business.

Stating that all the four public sector companies had been generating profits despite the entry of the private sector, he questioned the need for four different PSU firms to carry on the same business in the era of mergers and acquisitions.

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Commoditisation of products is inevitable

Insurance is a product that is ‘sold’ rather than ‘bought’. Moreover, it deals with an intangible benefit of ‘making good the financial loss’ to your insured asset or health.

An insurance product, like any other financial service product, is prone to the hazard of easy replication and therefore loses the ‘exclusivity’ no sooner than it is introduced. Insurance products are mostly sold through large distribution channels, like individual and corporate agents, banks, motor dealers, direct selling–as a commodity, rather than as brands.

Before 2000, there were four PSUs having one owner, GIC, and nearly 70% of the products were under tariff-based pricing. The distribution channels were limited to agents and development officers. There was hardly any differentiator to build brand.

With the entry of new players in 2000, there was a paradigm shift in distribution and service mechanism though the pricing barriers remained. New channels like bancassurance, tie-ups with auto dealers and manufacturers and travel agents came into being.

The innovation in service mechanism led to POS policy issuance, SMS alerts, cashless claims settlements, et al. Products like liability, travel, health insurance, which saw products beyond a single hospitalisation reimbursement product, were sold with renewed vigour. It led to a scenario where products existed, though with dissimilar brand names, but with similar benefits.

The year 2005 was the defining year for the industry with catastrophic claims like earthquake and floods that struck major cities. Till that time, it was presumed that claims don’t occur and this event dramatically brought service to the forefront in the insurance sector. Service level, which was unheard of and which was earlier lost in a maze of products, emerged as the key differentiator in insurance purchase decision. The new players leveraged ‘service’ as a key differentiator.

With the dismantling of pricing barriers and increase in insurance awareness, branding is bound to come to the forefront. However, in an era where any financial product can be replicated without any hindrance, commoditisation of products is inevitable.

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The insurance landscape is shifting. The days of relying on policies to cover small-ticket items like parking lot fender dings or water damage to attic relics are over. Gone too, for the most part, is the era when patients could expect full medical coverage through insurance. Except for those in a group health insurance plan, claim filers often receive jumps in premiums or notifications of dropped coverage.If insurance has changed into a tool you hesitate to use, why should you bother? Three reasons: you, your family and everything you own. It’s a means to protect yourself against catastrophic damage to your finances. Most people will need all of these five insurance policies at some time in their lives.

1. Life insurance
2. Disability insurance
3. Health insurance
4. Homeowner/renters insurance
5. Auto insurance

1. Do you need life insurance?

Do you need it?
The primary purpose of life insurance is to replace the income that is lost when someone dies. No working person should consider it out of reach — a healthy 40-year-old female can get a half million dollars in term insurance coverage for less than a dollar a day. At the same time, if no one is relying on you financially, you might not need life insurance.

How much coverage?
Your life insurance requirement translates to how much income your family would need if you died. It’s determined by what the ongoing financial needs are or soon may be. The needs are greater if you have to factor in taking care of aging parents or a disabled child.
In single-income families, you should consider how much in costs you’ll need to offset if the nonsalaried spouse is a caregiver, says David F. Woods, president of Life & Health Foundation for Education, a nonprofit organization for public education focusing on life, health, disability and long-term care insurance. Even though the caregiver does not earn an income, in the event of untimely death, his or her work on child or elder care, housekeeping and cooking may need to be replaced by paid help.

A lot of variables must be considered when determining the amount of life insurance to get, including your financial assets, spouse’s income plus any expected inheritance. Bankrate’s insurance calculator can help you determine the amount of life insurance you need.

Which policy?
There are two main choices when it comes to life insurance: term insurance (temporary) or whole life (also called cash value or permanent). Talk to your agent or adviser about which makes the most sense for you.
Once people hit their late 50s, they may drop term insurance because it gets more expensive, but that doesn’t mean they don’t need it, says Woods. The cost of cash-value insurance doesn’t go up as you get older, though premiums are much higher from the start. And although a payment lapse in term insurance means the end of your coverage, with permanent insurance, a portion of your investment, called the cash surrender value, is returned to you. That money can be used to keep coverage in force during times of unemployment or financial difficulty.

Conventional wisdom says that as your dependents become self-sufficient and your mortgage gets paid off, your need for life insurance decreases, but Woods has another take. “Even though the reasons you need it might change, the amount you need might even go up,” he says. “What you buy at 35 might fit your needs then, but as you get older your standard of living increases. And even though the mortgage is paid and the kids are through college, inflation and standard of living changes mean that you’ll want to make sure you leave enough for your spouse.”

Find out how to get the best price.

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Have you ever been hesitant to tell your car insurer about minor damage to your car because you were afraid your rate would go up? The Insurance Information Institute reports that the average expenditure for car insurance has steadily increased each year since 1999. If no other party is involved, you may be tempted to keep quiet about a minor claim. But why have insurance if you can’t use it when you need it?

“People are often too petrified to file a claim because they think they won’t be able to afford a premium increase,” says Eric Tyson, the author of “Personal Finance for Dummies.” We all want to be accident-free, but “it’s important to remember that filing an insurance claim isn’t necessarily bad,” he says. “Insurance is there to protect you, and it makes good financial sense to use it when necessary.”

* What to do after a car accident

The first part of the claims process is pretty straightforward.

“In an accident, an adjuster will be assigned, and, based on the specific factors of the claim, they may talk to you and they may work with the other driver involved. They also might look at police reports, take a look at your car and look at the car of the other individual involved in the accident,” says Mike Siemienas, a spokesman for Allstate in Northbrook, Ill. Then, the adjuster will work with you to ensure any necessary repairs are paid for and completed.

What happens after the claims process varies. If it is determined that you are at fault, your rates could go up or you could lose coverage altogether. Here are six things you need to know about car insurance both before and after you file a claim:

1. Know the difference between cancellation and nonrenewal.

There’s an important distinction between an insurance company choosing not to renew a policy versus canceling one. According to the Insurance Information Institute, a company can’t cancel a policy that’s been in force for more than 60 days unless one of the following has occurred:

* The premium has not been paid.

* The insured person fraudulently filled out the insurance application.

* The policyholder’s driver’s license has been revoked or suspended.

However, insurance companies can decide not to renew a policy once the existing term ends.

“Companies generally write policies that are renewed every six months or one year,” says Mike McCartin, an insurance agent with Joseph W. McCartin Insurance in College Park, Md. “If you have an accident where you are at fault, and you’ve had previous claims in the last three years, your insurer might decide not to renew your policy.”

That’s a general guideline, but McCartin says there are no firm rules about when a company can choose not to renew.

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The insurance industry, calling itself Consumers Against Higher Insurance Rates, has raised more than $650,000 to repeal a new state insurance law. A referendum to ask voters if they want to retain the law was filed last month with the Secretary of State’s office. The industry wants Ref. 67 on the ballot, then it will campaign against it. If the referendum is defeated, the law would be repealed.
According to the most recent reports at the Public Disclosure Commission, 13 insurance companies — most from outside the state — donated a total of $651,511 since mid May. The campaign has until July 21 to collect 112,4440 signatures to qualify the referendum for the ballot.
On the other side, the Washington Trial Lawyers donated $100,000 earlier this month.
I hadn’t realized the referendum was going ahead until I saw a press release today from Rep. Steve Kirby, D-Tacoma. Kirby is chairman of the House Insurance, Financial Services and Consumer Protection Committee and was a strong backer of the insurance bill, ESSB 5726.
The bill, among other things, allows a court to approve triple damages if an insurance company is found to have violated the so-called Insurance Fair Conduct Act and unreasonably denied coverage or payment. You can read a good explanation of the bill in the final bill report.
Kirby’s release says, “Citizens should beware that signature gatherers for a new referendum are working to overturn a new consumer protection law.”:
“The law we passed simply says the insurance industry must treat consumers fairly. If you paid your premium and file a legitimate claim, the insurance company must honor its commitment.”
The bill was a hot topic during the legislative session. It was a priority for Democrats and trial attorneys, but was at the top of the list Republicans and the insurance industry wanted to stop. In the House, the tension exploded when Rep. Dan Roach complained the bill was a favor to House Majority Leader Lynn Kessler’s husband. Her husband, Keith, is an attorney but had no involvement with the bill and Roach later apologized for his remarks.

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