I am a US Qualified Registered Microbiologist-Medical Technologist, operating my own Clinical Lab. I have been an activist advocating consumer, civic, citizen's rights for Thirty plus years & a Frequent contributor to the letters to Editor.

Tuesday, April 13, 2010


13Apr 2010,
The Editor
Times of India
I am writing this on behalf of thousands of worried insurance policy holders whose interests were supposed to be protected first by IRDA and secondly, the insurance companies- national or multinational.
The day's development with the government ordering status quo in the matter of ULIP fund utilization, IRDA or SEBI is only a stop gap
It just fuels apprehensions of the insurance policy holders that the longterm safety of these monies is inadequately protected by governmental regulators in the insurance companies.
And funds management in ULIPs is not all regulated or designed to protect the interests of the insured.
Infact, this is the tip of the iceberg pointing to IRDA's inability or lack of will and power to protect the insured from insurance
companies administration vagaries .
Such concerns have been raised by policy holders earlier with IRDA with no result.
This is very similar to the pension fund mismanagement in the USA where again the pensioners interests were auctioned off by deficient governmental control on fund managers.
More application had to be exercised before permitting the use of any part of insurance premia in the vagaries of stock market.
The small print warning on the nature of ULIP is neither explicit nor implicit consent in view of the seventy percent illiteracy in the country.
In other words, as we see it putting a large portion of the Rs15000 crore industry in Harshad Mehtas' hands.
or issuing a lottery ticket with policy holder's name on it before draw.

It is a telling fact that anomalies were of a noticeable level to attract SEBI attention.
This must have happened since there was minimal or no IRDA control on the insurance companies once their policy
plans were passed.
But it is obvious to a lay insured trying to ensure his interests,that
whatever be the eventual decision by courts at their own pace, the biggest price for all the fun (an)d games will be paid
by the insured.
The las vegas players- read fund managers at the insurance companies,
and IRDA will eventually escape scott free.
When that happens fundamental purpose of IRDA s total existence , namely protecting the insured will have
been defeated.
This is especially pathetic that this can be been allowed to happen to innocent population's hard earnings.
They were led all these years to believe that government was their big brother taking care of their interests.
They were entitled to more protection merely because of their innocence.
Under these conditions, the government's promise of IRDA will be an empty one.
and the purpose of SEBI futile.
These kinds of 15000 crore rupee games may be affordable to a risky economy like USA.
Definitely not for India barely on the verge of walking.

Sincerely yours
M B Nataraj
BSc,MS (Georgetown University,Wash DC)
MT(American Medical Technologists) USA
Govt orders status quo on ULIP plans
New Delhi: The government on Monday said the two regulators SEBI and IRDA had agreed to maintain the status quo that existed before market regulator’s ban on 14 life insurers from raising funds for unit-linked schemes. The status quo will be maintained till a court decides who can regulate ULIP schemes, finance minister Pranab Mukherjee told reporters here. ULIP is an insurance product in which a bulk of the premiums is invested in equities and bonds. “To resolve any ambiguity and to ensure smooth functioning in the market, the regulators have agreed to jointly seek a binding legal mandate from an appropriate court,” Mukherjee said. “Meanwhile, status quo ante is being restored,” he said. His comments came after meetings between finance ministry officials and IRDA chairman J Hari Narayan and SEBI chief C B Bhave.

Court was the only credible option
Mumbai: The feud between market regulator SEBI and insurance regulator IRDA got a temporary respite on Monday, as the finance minister intervened and both the regulators decided to approach the court over the matter. Experts specialising in securities laws said the two regulators were left with hardly any credible option but to approach the court. On Friday night, SEBI issued an order under sections 11, 11B and 12 (1B) of SEBI Act to bar 14 life insurance companies from selling or even servicing ULIPs till they got themselves registered with the market regulator. Interestingly, SEBI can at best correct the order if there is something wrong with the order or can stay its own order. But "no one has the power to withdraw the order'', pointed out Sandeep Parekh, a former ED at SEBI's legal department and now a faculty member at IIM Ahmedabad. "They cannot even modify the order,'' Parekh added. So the most likely course of action, even if the FM had not brokered a temporary truce between SEBI and IRDA, would have been approaching a high court, in this case the Bombay High Court. As matters stand now, both the regulators will approach appropriate courts to settle the matter. Interestingly, other than the issue of regulating ULIPs, what could also take the centre stage is the long-standing issue of mis-selling of ULIPs by insurance advisors, often with the tacit support of the insurance companies. "In every way, except for the name, ULIPs are investment products,'' said Jayant Thakur, a Mumbai-based chartered accountant specialising in securities-related issues. "At the core of the problem is the issue of mis-selling, mis-leading the insurance buyers with high commission to the sellers. The issue is about controlling misselling of ULIPs,'' Thakur added.


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