30 years of reform. Report card of the Indian financial sector

This article is part of the series 30 Years After: Review and Renew the Reforms Agenda.

Photo by Lucky Trips on Pexels.com

At the heart of the complex web of bits and bytes that is the modern financial system is the ability to exchange and transfer capital (money) between various participants in an economy. Borrowers, lenders, investors and entrepreneurs form the four corners of this very busy square. Traffic flow and participants can either be controlled and owned by the government as it was in India till 1991, or it can be regulated by a set of independent regulators appointed by the government, as it is today in 2021.

When we see the hectic activity in the Indian financial system today, we tend to forget what it was like just 30 years ago — in terms of scale, products, efficiency, cost and service. The sole job of a financial system is to trundle money around to find its optimal use in terms of returns at a low-cost and safety of transactions. But the centrally planned Indian economy used the state-owned financial institutions such as banks and insurance companies to gather household savings for its own use, hard coding this into the reserve ratios in banks and investment guidelines in insurance firms.

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Smart Money: CNBC TV 18 Show on life, health insurance during COVID-19

Insurance has been the buzz word ever since the COVID-19 pandemic. In the special show ‘Smart Money’, CNBC-TV18’s Sonia Shenoy spoke to Sumit Rai, MD and CEO at Edelweiss Tokio Life Insurance, and Monika Halan, Author of Let’s Talk Money, to understand what is the protection cover that one must have for one’s family. They also shared some hacks to buy life or health insurance.

Watch here

https://www.cnbctv18.com/videos/healthcare/smart-money-experts-discuss-need-for-life-health-insurance-during-covid-19-9545101.htm

India Development Debate: Covid and Health Insurance. ET Now

With health insurance becoming more important than ever amidst the harsh second wave of covid-19, data from states across the country suggests that only 51% of the covid-19 claims received from the beginning of the pandemic have been settled. Tamanna Inamdar breaks down how to make your health insurance policy work for you on the India Development Debate tonight with Monika Halan, Author, Let’s Talk Money, Tarun Mathur, Co-Founder, Policybazaar.com and Naval Goel, CEO & Founder, PolicyX.com

See the show here.

Read the story here.

https://www.timesnownews.com/business-economy/companies/article/insured-but-still-left-high-and-dry-customers-caught-between-insurance-firms-and-hospitals-on-covid-treatment/761708

On the India Development Debate, I spoke about the fact that insurance firms are not paying covid claims in full. The problem is only half with insurance contracts and firms. The other half has to do with hospitals padding costs. @TamannaInamdar@ETNOWlive

The problem with the insurance contracts are that they are mostly one-sided with the individual having very little bargaining power. Companies can refuse to pay or deduct the payout by interpreting the policy provisions in their own way. This is market failure. When there is market failure government needs to intervene to put down road rules. Insurance regulator needs an upgrade – that’s an easier part. India needs a regulator for hospitals urgently.

See the show here: India Development Debate https://www.timesnownews.com/videos/et-now/shows/deep-dive-covid-and-health-insurance-india-development-debate/97960

COVID-19 insurance complexity: Good time for regulator to set things right, says Monika Halan. CNBC

Insurance companies are in focus as the Insurance Regulatory and Development Authority of India (IRDAI) has received complaints about COVID policies not being offered and renewed. Atul Sahai, CMD of the New India Assurance Company and Monika Halan, Author of Let’s Talk Money shared their views.

“As far as New India Assurance is concerned, I don’t see this happening. This could be the approach adopted by some of the companies but in the wake of COVID, no new guidelines have been issued as far as we are concerned,” said Sahai.

“The need for health insurance has suddenly increased for most people. The new insurance buyer has got afraid that something may happen and is now running to buy insurance. Globally, insurance companies are struggling to understand this risk and to price this into premiums. So, different companies approach the cooling-off period differently. COVID-19 pandemic is a new event and everyone is struggling to find their balance with it and people seeking health insurance cover for the first time post COVID are in for a little bit of a rough ride unfortunately,” Halan added.

“This is a great time for the government and the regulator to set things right in terms of insurance,” Halan mentioned.

According to Halan, higher loading is expected for the new policy entrants.

“The companies will have to probably increase the premium for the entire age bucket. The price rise will be across the board and not specific to a person,” she mentioned.

Incurred Claim Ratio (ICR) is used to gauge whether this market is fair or not. The number is obtained by total claims paid divided by the total premium.

While explaining the current market condition, Halan shared, “If the net number is at 100 percent, then we are seeing a fair marketplace where after profit and cost, insurance companies are neutral.”

“According to data, the private insurance companies’ ICR is 53 percent, the standalone insurance companies’ number is 56 percent, and the PSUs are 92 percent, which means they are doing well. I think it is a complete regulatory failure because you are not being able to ensure that there is no gouging of the customer,” she further mentioned.

“We are not going to increase the premium till we tide over this crisis,” Sahai shared.

Watch: https://www.cnbctv18.com/personal-finance/covid-19-insurance-complexity-good-time-for-regulator-to-set-things-right-says-monika-halan-9353111.htm