Would you like to ‘port’ your insurance policy?

It was reported earlier this week in this newspaper that the insurance regulator is considering allowing portability in life insurance products. You can read the story here. I’m going to unpack what this means and whether it is possible to ‘port’ an insurance product. First, what is portability? When we think of a telecom service, then switching service providers from say, Airtel to Jio, is portability. Your number and basic services remain the same, but you switch your service provider. S.S. Mudra, deputy governor at the Reserve Bank of India (RBI), had suggested last year that bank account numbers become fully portable. You can read the story here. While bank account number portability is yet to happen, the logic is clear—our phone numbers and bank accounts are linked to multiple services we use. Often we stay with the service providers or banks out of inertia.

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Finding evidence of banks mis-selling

Mystery shopping working paper

Misled and Mis-sold: Financial misbehaviour in retail banks?

http://ifrogs.org/PDF/Misled-and-Mis-sold-Financial-misbehaviour-in-retail-banks.pdf

My Mint column: Here is proof that banks mis-sell

Anybody who has walked into a bank branch in a metropolitan city would have been pushed towards a financial product that he or she didn’t want. Worse, they may have been forced, cheated into or otherwise pushed towards buying life insurance policies. I documented my own search for a Public Provident Fund account two years ago: http://bit.ly/1sye5F8 . A question asked very often by readers of this column is this: why don’t the regulators or government stop this coercion? The banking regulator, for a long time, took the view that mis-selling of third-party products was not their problem, but rested with the product regulators. The capital market regulator said that it could not tread on the Reserve Bank of India’s (RBI’s) toes. The insurance regulator put down these instances to the overactive imagination of some illiterate journalists.

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My Mint policy column: Yes, banks mis-sell. Now what?

I wrote last week about the results of the research that household finance economist Renuka Sane and I did, which showed how banks mis-sell third-party financial products in India. You can read the column here and hear a podcast in which Mint editor R. Sukumar talks about the research here. I received a lot of emails from people who wrote in with their individual stories on bank mis-selling. Many of them have stories that follow our findings to the letter. The story is this: your bank knows how much money sits in your account and will contact you when you go to make a fixed deposit (or a public provident fund or a locker or a loan) to hard-sell a life insurance policy.

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A Mint edit: The cost of mis-selling financial products. Mint edit, August 24, 2016.

Most of economics can be summarized in four words. ‘People respond to incentives.’ The rest is commentary,” claimed economist Steven E. Landsburg in his best-selling book The Armchair Economist: Economics and Everyday Life. The problem in real life arises when incentives are not properly structured.

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A Blog: Banks are unfair in their role as financial advisors / distributors

A major weak link in financial regulation in India is the lack of emphasis on consumer protection. An academic literature on this subject has been building up. The policy discourse has also shifted considerably, and the contours of the policy research and action program are now visible.

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A policy blog: How can financial regulators combat mis-selling? Five solutions

In a previous article (Banks are unfair in their role as financial advisors / distributors), we described our audit study on the sale of financial products across 400 bank branches in Delhi, India (Halan and Sane, 2016). In this paper, we found three things:

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A podcast: Mint editor R Sukumar on the bank mis-selling paper.

Hear it here