Feb

7

Awarding compensation for an unborn baby

February 7, 2010 | Leave a Comment





In the US, there is a huge controversy about the status of unborn babies or fetuses. Abortion (both for and against it) is a big deal, with every election, every judge appointment, all such having to pass the litmus test about which side they are on. However, in India, there is not such a big deal about it.
A recent decision by the Delhi High Court has acknowledged that the death of an unborn child can result in damages being awarded, something that we don’t see too often. In a decision over a death in an accident, where the fetus died in an accident, the High Court rules that the fetus can be considered on par with a minor child, and ordered the insurance company to pay compensation (not however, comparing the fetus with a major child). Read more about this judgment in this article:

HC allowed an appeal filed by one Prakash seeking compensation for his unborn child as his plea was ignored by the Motor Accident Claim Tribunal (MACT). The court, however, made it clear that the dead foetus cannot be compared with a grown-up child, because by then a child’s presence in the life of his or her parents has created enough memories for them to feel greater pain at the loss of their child. This pain will be lesser were an unborn child to die as in that case there will be no memories to cherish.
“This court holds that an unborn child — aged five months onwards in mother’s womb till its birth — is treated as equal to a child… the foetus is another life in a woman and loss of foetus is actually loss of child in the offing,” HC reasoned, while allowing the appeal and the compensation of Rs 2.5 lakh along with an interest rate of 7.5 per annum to Prakash.

Jan

27

Learn more about Fixed Maturity Plans – Article on Economic Times

January 27, 2010 | Leave a Comment





Fixed Maturity Plans were all the hot thing a couple of years back, especially in the year 2007. They were advertised as plans that offered ‘guaranteed’ returns, even though the regulator did not allow fund companies to announce guaranteed returns, only advertise the returns as indicated returns. FMP’s are actually similar to fixed deposits in banks, where the money is invested in fixed-income securities, the equivalent of almost investing in debt funds. The maturities offered were varied, going from one months to three years. The FMP’s were closed ended in nature, and would not ask for fresh funds after the opening. The idea was that they exposed the customer to a much lower level of risk than equities. Interest payments would ensure that the customer got money at regular intervals.
However, in the crash that started in January 2008, FMP’s also suffered huge pressures, and performance really got clobbered, with people no longer feeling the charm that they used to feel earlier. Further, the huge pressure of redemptions meant that some Mutual Funds actually made it more difficult for investors to redeem their money. However, FMP’s are now making a comeback, given that many MF’s have announced a range of new schemes. The indicated returns are lower than were being offered earlier, and with more stringent controls put in by SEBI to ensure that funds did not invest in highly risky debt schemes. However, there is still not too much liquidity in FMP’s, with very low trading on the exchange.
Read more about Fixed Maturity Plans in this article (link)

But investors have to be careful about their investments in such products. After some investors burned their fingers in some FMP offerings in 2008, the product was not as safe as it seemed. “Poor credit quality of papers and illiquidity of instruments were chief reasons behind the problems faced by FMP investors,” says Devendra Nevgi, founder of Delta Global Partners, a Mumbai-based investment advisory firm. As regulators have banned mutual funds from giving out indicative yields and portfolios that induced the investors in the past, it is difficult to judge the offerings in the market. “A fund manager may end up chasing higher yield at the cost of the quality of paper. This is a big risk an FMP investor faces,” says Nandkumar Surti, CIO of JP Morgan AMC.
So if you are sure you do not require the money for say, 12-15 months, you can consider an FMP. Given the abundant liquidity in the market, this may not be the best time to invest. “Short-term rates up to one year are expected to go up by 100 basis points. In February and March, investors may come across better opportunities, given the traditional withdrawal of liquidity owing to year end,” opines Mr Nevgi.

Dec

31

Family members of victims of medical negligence get compensation of Rs. 5 lakh

December 31, 2009 | 1 Comment





When people go to hospitals for treatment, they suffer from 2 major problems:
- They do not know what exactly the problem they have, and have to depend on the doctor for explaining to them what the problem is
- When undergoing surgery or other treatment, they are leaving their lives in the hands of the doctor and have no way to figure out whether things have gone right or not. It could be that that the doctor is very busy, or something may go wrong in the setup in the operation theatre, or the anesthetic used was not administered properly; in all such cases, they have to depend on the doctor and his team.
In the past, it used to be that in most of the cases, everything went fine, but in some of the cases where the result was not so good, the treatment was faulty in a smaller percentage of such cases (in some cases, the operation not turning out successful was something that could not be avoided, but in other cases, there were certain specific avoidable reasons that led to the operation not being successful). The patient and relatives had no way of figuring out whether something went right or not, or if they were being told the truth.
Nowadays, things are becoming easier for patients – they can get second opinions from other doctors about the advisability of medical treatments, and are also able to ensure that they can ask for compensation in cases where they feel that they have been wronged; consider this case (link to article):

The Delhi Consumer Commission has upheld a lower forum order, directing a city-based hospital and its doctor to pay Rs five lakh compensation to the family of a victim of medical negligence. The commission noted that the neck movement and blood pressure of the patient was found to be normal before the operation but developed complications soon after the surgery.
The appellants contended that the family members were told about the risk associated with the operation and there were no negligence on their part as she died due to cardiac arrest. The commission said that from the medical tests of the deceased before the operation, it was clear that the patient was not suffering from any heart-related disease.

Dec

15

Insurer to pay after order by High Court

December 15, 2009 | Leave a Comment





One of the biggest issues in cases involving insurers is when the insurance company refuses to pay up and the person is depending on the money from insurance; typically the insurance company will either plead that the person was responsible for the situation in which there was need for insurance, or that there was something malafide that happened, and the insurance company is not liable. In most cases, such matters go onto either consumer courts, or higher courts which then decide – and in a number of cases, such courts criticize the insurance company and find for the citizens. Consider this case in which a girl got crippled by an accident and it is taking the strict admonishment of a High Court to get the insurance company to pay up (link to article):

The high court bench of Justices Sharad Bobde and S J Kathawala on Monday dismissed as withdrawn an appeal filed by the company challenging an order of the Motor Accident Claims Tribunal. And, in response to an appeal filed by accident victim, Shweta Mehta, seeking an enhanced compensation from New India Assurance, the HC castigated the company for its “miserly” attitude and directed it to pay her the Rs 21.23 lakh that the tribunal had ordered in 2007 along with interest. “Pay the difference in amount already paid out of Rs 21.23 lakh at the rate of 12% from date of filing the petition till December 2002 and then at 7.5% between 2003 to 2006 and then again at the rate of 10% between January 2007 till the final amount is paid up.”

We take insurance in order that the money can help us in bad times, or at the loss of the money earner of the household; however, when the insurance company refuses to help us, it can be really problematic. In the case of accidents, it is the responsibility of the insurance company that has insured the vehicle to pay out compensation to the accident victims.

Nov

27

Airline charges extra for child, told to compensate

November 27, 2009 | Leave a Comment





Quite a few times, consumers get stuck in the dispute around being promised something when they are placing the order; and when they go for delivery, at that time, they do not get what was promised. This can cause them great inconvenience, and also expense; and it is at such times that consumer forums help hapless consumers get justice. For example, in this case, this family was promised that their child will be given an infant ticket even for a journey where the child would no longer be an infant as per age, but since the round trip was started earlier, such a concession would be available. However, at the time of the trip, the airline refused to allow such a concession causing additional expense and lots of inconvenience (link to article):

District consumer forum penalized Air Canada on Wednesday for deficiency in service and causing mental harassment to Sector-43 resident Inderpreet Kaur. The airline was directed to refund Canadian dollars 632.98 to the complainant and pay Rs 5,000 as damages along with Rs 2,000 as cost of litigation as it overcharged for the ticket of her minor son Jaideep.
Their two children were to accompany them. She stated that Jaideep was less than two years old at the time and they paid the fair for ‘infant’ category in his case. As Jaideep’s birthday fell on June 17, he was to become ineligible for the low-price ticket during the trip. Kaur said the travel agency was told about this and the staff there informed her that Jaideep would be allowed to travel on the ticket even after he attained the age of two as the round trip was to begin when he was an infant.

Nov

23

Companies filing suit over other companies advertising

November 23, 2009 | Leave a Comment





Companies advertise the earth and make outstanding claims in these ads, some of which do end up converting people. So claims that a food item will make you friends in school, or that a shampoo will end up killing all your dandruff quickly, or that a brand of biscuit or milk additive will make your child grow taller and smarter are more often not true, to be taken with a pinch of salt. Even in some case, when there is a probability of the claim being true in some cases, the company will make you understand that it is true in all cases.
Consumers have challenged such claims in the past, but now the poor state of the economy has caused companies to join this fight, and challenge the claims of other companies in this regard. Such actions are of course even more beneficial to customers, since such actions help them from getting hoodwinked by the false claims of companies (link to article):

Companies that were once content to fight in grocery-store aisles and on television commercials are now choosing a different route – filing lawsuits and other formal grievances challenging their competitors’ claims. Longtime foes like Pantene and Dove, Science Diet and Iams, AT&T and Verizon Wireless, and Campbell Soup and Progresso have all wrestled over advertisements recently.
Dueling advertisers, however, argue that these claims can mislead consumers and cause a pronounced drop in sales. Because advertisers are required by law to have a reasonable factual basis for their commercials, their competitors are essentially demanding that they show their hand. The goal is usually not money but market share. Companies file complaints to get competitors’ ads withdrawn or amended. The increase in these actions may be a reflection of the dismal economy: during recessions, when overall spending lags, marketers must fight harder for customers.

Nov

21

Number portability to cost only Rs. 19

November 21, 2009 | Leave a Comment





For some time now, the TRAI has announced that India will have a system that allows number portability, just that the date by which the system has to come into operation keeps on getting delayed. Number portability is a process by which a consumer can get to keep their number while changing their service provider; something that allows a lot more freedom to consumers. After all, one of the biggest problems currently with changing your service provider is that you have to take a new number, one that you need to send to all your friends, family and colleagues, and the longer you have had your current number, the more difficult it can be. Number portability means that if you find plans from a different service provider to be more useful, or if the service level of your current provider is not satisfactory, you can change and yet get to keep your number (I remember when I had to change my number since the previous provider did not have a good tower network nearby and call dropping was rampant, and the number changing was a nuisance).
After it was announced that number portability would need to be implemented, many service providers were talking about the cost of maintaining the infrastructure for number portability, how it would need to be passed onto their customers, and many were wondering whether, with this cost, number portability would be useful ? However, the Telecom Regulatory Authority of India (Trai) has scotched all these reports by announcing that the cost of portability should not be more than Rs. 19, as well as the implementation would need to be done in 4 days (link to article):

The country is set to introduce mobile number portability (MNP) on December 31. MNP allows the subscribers to retain their existing mobile telephone number even as they move from one access provider to another. This move is irrespective of the mobile technology or from one cellular mobile technology to another of the same access provider, in a licensed service area. In other words, the consumer can switch from CDMA to GSM.
The move is expected to increase competition among operators and act as a catalyst to improve their quality of service. Operators are free to levy any amount less than or equal to Rs 19, the regulator has said in a statement.

In the beginning, there was opposition to the concept of number portability since established telecom operators felt that the newer operators, in order to gain volumes, would launch price wars and number portability would make it easier for consumers to shift. However, with TRAI insisting on number portability, it is now set to be introduced at the end of this year.

Nov

21

Determine if your cellphone is fake – phones with fake IMEI to be banned from 1 December

November 21, 2009 | 1 Comment





The Indian cellphone market was inundated with a huge number of fake cellphones. These cellphones, made in China, met a need of the market since they were much cheaper than the large brand cellphones, and yet provided facilities that were only available in the much more expensive cellphones. However, there was a major problem with these cellphones in the sense that they did not have a genuine International Mobile Equipment Identity (IMEI) (which is a 15 digit code that can uniquely identify a mobile, and which is important to have from a security point of view). In the case of a terror threat or other criminal activity, a phone with IMEI can help security agencies track down the mobile phone much easier, something that is not possible if the phone has a fake IMEI, or if the phone does not have a IMEI at all.
As a result, the security agencies have ensured that fake IMEI’s are banned from the market, and this will come into effect from 1 December. Now, there is a campaign on to ensure that dealers no longer are selling these mobile phones with fake IMEI, and all purchasers should ensure that they are aware of this concept and ban (link to article):

As per estimates of the Indian Cellular Association, around 25 million unbranded mobile handsets, sans genuine International Mobile Equipment Identity (IMEI), would be disconnected by next month. With the nearing of the deadline announced by the department of telecommunication (DoT) to ban fake mobile phones on December 1 this year, the Indian Cellular Association (ICA) has appealed to both consumers and traders to desist from purchasing and indulging in transaction of such devices.
IMEI is a unique 15-digit code that identifies a mobile. It prevents the use of stolen handsets for making calls and allows security agencies to track down a specific user.

Nov

14

Site / Link about child insurance policies

November 14, 2009 | Leave a Comment





Why would you consider an insurance policy for your children ? After all, children are not likely to earn an income for some time, so why would you want to have insurance for your children ? However, consider the insurance policy as an investment scheme that will provide for them as they grow up, and the money that they need for education, for travel, and for marriage purposes. Taking out an insurance policy in their name ensures that you will invest the regular sums of money required for this purposes, and brings in the discipline required for this investment. Now, there are a number of different schemes available for this purpose, and when I was looking at some resources on how to learn more for this purpose, I came across this site called Child Insurance India (link).

Q. Why one should go for child life insurance policies?
- You may not have adequate funding at the time of futue events which are indispensable for any child, viz., admission fees for the child’s higher education, fees for tuition and coaching, child’s etc. In these situations if you have taken a child life insurance policy in advance can solve all your financial problems.
Q. What happens if the proposer passes passes away?
- Child life plans provide cover for the child’s parent/legal guardian/grandparent for a specified term. That is, if the parent, guardian, or grandparent were to pass on, the child’s future is not put in jeopardy. In the event of such an occurrence, the child receives the Sum Assured in the policy plus bonus / participating profit/ guaranteed addition, if any, or the value of the investments, at a pre-determined age.

Oct

12

Banks setting limit on withdrawal from other bank ATM’s

October 12, 2009 | Leave a Comment





On April 1, 2009, the RBI brought in a move that was supposed to remove the restrictions on using the ATM’s of other banks. Before this move, if you wanted to use the ATM of some other bank, then it would cost. These would include a direct to the customer for checking account balance, or for withdrawing cash, and could have gone upto Rs. 50 in direct charges. Removal of this limit was a major benefit to customers, since you could now go and access any other ATM. So, if you are out shopping, and run out of money, you would not have to search for the ATM of your bank, instead all you have to do is to find the nearest bank and use the ATM, and all this free of charge. Banks were not too comfortable with this measure, but given that this was an RBI Directive, they went ahead. However, this was free only for customers, the banks still had to clear expenses among themselves. So, if you were an ICICI customer, and wanted to use an ATM of SBI, there were some expenses that the banks would have to bear.
Also, banks that that had huge customer bases and were finding that their ATM’s used to remain busy were obliged to keep on expanding the number of their ATM’s; which is why banks such as SBI and ICICI have a large number of ATM’s, while smaller banks such as Yes Bank, Deutsche Bank, and many others have a much smaller number of ATM’s. By allow customers of these smaller banks to access the larger networks had 2 associated problems:
- It would have some negative effect on the load of the ATM’s of the larger banks
- It would remove the competitive advantage of the larger banks in terms of a much wider and easy availability of the ATM network compared to smaller banks
As a result, there was a push by the Indian Banks Association to add some constraints to this availability of ATM’s, and from October 15, there would be some restrictions on this service (link to news article):

From October 15, a customer can take out a maximum of Rs 10,000 per withdrawal from ATMs not owned by the bank in which he has an account, and the number of such transactions would be limited to five a month.
Going by the IBA guidelines, a savings account holder may get five free third-party transactions a month and could be charged from sixth onwards. However, current account holders might not get any free third-party usage.

For customers of banks with a much wider ATM network, this may not make much of a difference, but for people having accounts with smaller banks and who have got used to being able to use other ATM’s, this restriction may bite (for example, somebody who has got an ATM of another bank right next door). Personally, I have never had chance to use the ATM of another bank, so may not matter much to me.