lessons for the indian life insurance industry

I recently wrote on what lessons behold for the life insurance industry players in India on account for a recent rush in market-linked policies surrenders in an editorial contribution in the newspaper I present work for.

Here is what I wrote:

Insurance lessons

The surrender rush in ulips is not a problem. It is a symptom of an old problem

The means to an end is as important as the end itself. The life insurance industry, as this paper reported in Monday's front page, is in the throes of high surrenders taking place in unit-linked insurance policies (ulips). This is evidently on the back of rising net asset values of the equity-oriented ulips which has activated investors' ability to surrender nothwithing the high surrender charges of about three per cent.

 

Some of the insurance companies appear to be cribbing that this is having a crippling effect on their business. But, really, there is a need for honest introspection by the big players in the insurance industry. Surrenders taking place at a very high rate is the creation of the insurance companies and their agents in their attempts to get new business by any means even if it meant mis-leading the non-savvy investors.

 

Mis-selling was the norm in the life insurance industry till at least 2010 when the insurance regulator, Irda, stepped in to reign in exorbitant commission charges and unfair surrender terms and charges. But this applied to new policies sold therefrom and so old policyholders were still tied up with the dreadful old regime.

The exact details of which ulip investors are surrendering their policies are not known but it is possible a big chunk of them may be from the pre-2010 period. The front-loading of fund management and other charges in them meant any investor wanting to surrender in the first 3-4 years of the policy would get even less than the value of their investments. With four years behind and stock market indices touching higher and higher peaks every week the hit to investors who would want to surrender is not that high as it was till a year ago.

But the issue is not that the stock market conditions have been conducive for such a happening in insurance ulips or other traditional policies. The real question to ask is why so many investors are motivated to surrender their policies.

 

It is clearly the large amount of mis-selling by insurance companies and their agents which took place in the past, with no real accountability or regulatory desire to take action, which is forcing to investors to get out when they can. Instead of blaming the policyholders for the redemption pressure, the insurance companies need to see the pain undergone by these very policyholders as they, once stuck with a mis-sold policy involving a high annual premium, were forced to renew for a few years in order to get back a significant portion of what was their due.

Many investors in ulip and other traditional life policy have. in the past, even lost their entire investments by not renewing their policies since they could not even afford to pay the high premium amounts at the time of yearly renewal. In each and every such case the insurance industry gleefully pocketed the premiums already paid by those investors and it was like a free money for them.

But the chickens are now coming home to roost. Those investors who had the ability to renew and wait for a few years have now decided 'no more' and are getting out. It does not mean they are naive in their timing of exit. A lot of them could very well to re-invest their redeemed money back in equities through non-insurance channels such as equity mutual fund schemes. 

 

This hopefully will sensitise the insurance industry to the real needs of investors and not get blinded by the competitive fervour to show high growth rates in premium collections.

motivate the honest taxpayers

Below is an Editorial I contributed for the newspaper I work for presently:

Motivate the honest taxpayer

The honest taxpayer in India, whether an individual or a corporate, needs to be encouraged further and incentivised by the government of India and its finance ministry if more revenues are to be raised.

The news that the current government is thinking of starting a scheme to settle pending income tax tax disputes between the corporate/individual taxpayer and the Income Tax Department through a one-time settlement offer. Disputes between corporate or individual taxpayers and the IT Dept arises primarily because IT Dept raises demands of a tax liability much higher than the tax already paid by the corporate/individual taxpayer. The tax payer contests such a demand and the cases go on for years due to heavy backlog in the IT tribunals. 

Realistically speaking to get the corporate taxpayer to settle such a demand will mean asking it to pay only a fraction of the demand amount. If higher amounts were to be asked for in the settlement then the companies and other tax payers will prefer to continue contesting the cases in the tribunals.

Proposals such as this or the tax amnesty one floated by the previous government are not in the best interests of the honest tax payer. A dispute settlement or a tax amnesty scheme may rake in some revenues but it will also lose the confidence of the honest taxpayers who will see merit in evading tax or contesting tax demands.  

If the government of India thinks the IT Department has raised more tax demand from taxpayers than it should have then the correct thing to do would be to drop the earlier demand notices and raise new ones with accurate demand amounts. Else, the IT Department should not be forced to settle off-court under a government scheme.

making sense of russian invasion of crimea in ukraine

Too much of power makes the person holding it not only blind to the long-term boomeranging ill-effects but also a slave to competing with a rival powerful person whose interests clash with yours.
 
This is why Russia's president Putin has invaded the Crimean region of Ukraine and the rival powerful entitiy in his case is the US and US' allies.

My American friend, Sean-Paul Kelley, whose blog agonist.org is among the most reasonably authentic blogs I refer to from time to time, has articulated the Russia-Crimea-Ukraine-US issue very well in his blog posts in the past one week. I share a couple of his blog posts below in chronologoical order.

Ray McGovern, an ex-CIA official, provides a brilliant historical perspective to the same issue. One can read it here. I am also sharing his write-up at the very end below.


1]
agonist.org

Here Come the Russians
By Sean Paul Kelley, on February 28th, 2014

Apparently the Russians have sent 2,000 extra troops to one of their bases in the Crimea.

Let me spell a few things out for you.

The United States, the EU and NATO will not lift a finger for the Ukraine.

The United States, the EU and NATO will, if push comes to shove, acquiesce in the partitioning of the Ukraine.

The United States, the EU and NATO will not offer the Ukraine any serious amounts of cash. They have not done so up to this point. They offered the Ukraine $700 million. In contrast the Russians offered $15 billion.

That being said, I’m pretty sure the US/EU/NATO would offer the Ukraine loans at usurious rates backed by Goldman Sachs and Morgan Stanley and Deutsche Bank

The media is now calling Russia a bully.

Yeah, and the United States just waged aggressive war against Iraq because we’re nice people, right?

The rhetoric will only get more infantilizing. Why? Because Russia doesn’t need the West and this absolutely infuriates DC policy elites. They cannot handle the fact that the US cannot push everyone around. They cannot stomach the fact that someone is pushing back.

And they are going to scream, and cry, and piss and moan and meanwhile, the people of the Ukraine will suffer. The good news is this: they’ll suffer less than if the US got involved. If we got involved, the suffering and death and chaos would be much greater.



2]
agonist.org

The View From DC on Russia, Putin and the Ukraine
By Sean Paul Kelley, on March 3rd, 2014

So, below the fold is tonight’s Nelson Report. Honestly, I just don’t know where to begin, what to say, what I could possible add. We’re clearly at a point in the West, including Merkel, where no one, not a single leader, has the power of imagining themselves in another leader’s shoes. Seriously, Merkel’s leak, as reported by Nelson, means this: “fuck it, I’m out. Y’all handle Putin.” This kind of behavior bodes extremely ill for the successful and prudent conduct of foreign policy, not to mention Western civilization.

Further, please, don’t get me started on the whole “Putin’s lost his sanity” thing. That to me is a clear indication that no one is even remotely ready to consider the full spectrum of reality. Calling a leader crazy is a political cop-out. It’s intellectually lazy. It’s an easy way of telling the home crowd: “I can’t deal with this dude, he cray-cray,” and then you get a free pass. That’s bullshit. That isn’t statesmanship. It’s not responsible. It’s cowardly. It’s also a sign you are ethically bankrupt, not to mention strategically incompetent. You engage with the people you must, not the people whom you wish you could. The world is not Burger King, you cannot always have it your way. It simply does not work that way.

I read this stuff and all I see and hear are rationales and excuses for bad Western behavior. There is literally zero ability or willingness to see this from any other perspective. Now, do I need to add that Putin’s a profoundly evil man? Do I need to add that Yanukovich was a deeply odious and flawed leader of the Ukraine? Maybe I should. Apparently all these caveats and conditions are necessary before you can have a “serious” discussion. But, I think you all know that. I don’t think Agonist readers are stupid at all. (Your leaders think you are fools, however.)

And you know what? That’s all beside the point. What concerns me most here is the danger of miscalculation. This is a real crisis now, people. Three weeks ago everyone said nothing like this would happen. Guess what?

It did.

So, how do we manage the climb-down from this crisis? How do our leaders (God help us!) do this? Can they? Can a group of people who are so fundamentally in intellectual lock-step with each other find a negotiated solution to this crisis with someone with whom they believe they are morally superior? Wow, do I need to mention how dangerous a position it is to be morally superior when your interlocutor has nukes.

Why is that important? Well, if the West is to get this done peacefully, the West is going to have to give Putin something in return. They are going to have to give someone they believe they are fundamentally morally superior to what is in essence, from their perspective, a bribe. You see where this is headed? Deadlock. I don’t see any leader in the West capable of making an intellectual leap like that. I don’t know a single one who has the courage to do what must be done, as opposed to flinging cheap rhetorical boogers from the cheap seats. Can Obama? Cameron? Harper? Merkel? Hollande? Are you kidding me?

And you know what’s most important and lost in all this? This crisis could have been avoided. But because it wasn’t innocent people are going to die. I’m really sick of that happening.

So, go ahead, read tonight’s Nelson Report and just weep for the Baby Jesus; then go read this interview of Dmitry Simes.

Who you think is more rational? Or in tune with reality?



3]
Ray McGovern -- ex-CIA official

http://truth-out.org/news/item/22212-ukraine-one-regime-change-too-many
Ukraine: One "Regime Change" Too Many?

Monday, 03 March 2014 10:46 By Ray McGovern, Consortium News | News Analysis

Is “regime change” in Ukraine the bridge too far for the neoconservative “regime changers” of Official Washington and their sophomoric “responsibility-to-protect” (R2P) allies in the Obama administration? Have they dangerously over-reached by pushing the putsch that removed duly-elected Ukrainian President Viktor Yanukovych?

Russian President Vladimir Putin has given an unmistakable “yes” to those questions – in deeds, not words. His message is clear: “Back off our near-frontier!”

Moscow announced on Saturday that Russia’s parliament has approved Putin’s request for permission to use Russia’s armed forces “on the territory of the Ukraine pending the normalization of the socio-political situation in that country.”
Putin described this move as necessary to protect ethnic Russians and military personnel stationed in Crimea in southern Ukraine, where the Russian Black Sea Fleet and other key military installations are located. But there is no indication that the Russian parliament has restricted the use of Russian armed forces to the Crimea.







Unless Obama is completely bereft of advisers who know something about Russia, it should have been a “known-known” (pardon the Rumsfeldian mal mot) that the Russians would react this way to a putsch removing Yanukovich. It would have been a no-brainer that Russia would use military force, if necessary, to counter attempts to use economic enticement and subversive incitement to slide Ukraine into the orbit of the West and eventually NATO.

This was all the more predictable in the case of Ukraine, where Putin – although the bête noire in corporate Western media – holds very high strategic cards geographically, militarily, economically and politically.

Unlike ‘Prague Spring’ 1968

Moscow’s advantage was not nearly as clear during the short-lived “Prague Spring” of 1968 when knee-jerk, non-thinking euphoria reigned in Washington and West European capitals. The cognoscenti were, by and large, smugly convinced that reformer Alexander Dubcek could break Czechoslovakia away from the U.S.S.R.’s embrace and still keep the Russian bear at bay.

My CIA analyst portfolio at the time included Soviet policy toward Eastern Europe, and I was amazed to see analysts of Eastern Europe caught up in the euphoria that typically ended with, “And the Soviets can’t do a damned thing about it!”

That summer a new posting found me advising Radio Free Europe Director Ralph Walter who, virtually alone among his similarly euphoric colleagues, shared my view that Russian tanks would inevitably roll onto Prague’s Wenceslaus Square, which they did in late August.

Past is not always prologue. But it is easy for me to imagine the Russian Army cartographic agency busily preparing maps of the best routes for tanks into Independence Square in Kiev, and that before too many months have gone by, Russian tank commanders may be given orders to invade, if those stoking the fires of violent dissent in the western parts of Ukraine keep pushing too far.

That said, Putin has many other cards to play and time to play them. These include sitting back and doing nothing, cutting off Russia’s subsidies to Ukraine, making it ever more difficult for Yanukovich’s successors to cope with the harsh realities. And Moscow has ways to remind the rest of Europe of its dependence on Russian oil and gas.

Another Interference

There is one huge difference between Prague in 1968 and Kiev 2014. The “Prague Spring” revolution led by Dubcek enjoyed such widespread spontaneous popular support that it was difficult for Russian leaders Leonid Brezhnev and Aleksey Kosygin to argue plausibly that it was spurred by subversion from the West.

Not so 45-plus years later. In early February, as violent protests raged in the Ukrainian capital of Kiev and the White House professed neutrality, U.S. State Department officials were, in the words of NYU professor emeritus of Russian studies Stephen Cohen, “plotting a coup d’état against the elected president of Ukraine.”

We know that thanks to neocon prima donna Victoria Nuland, now Assistant Secretary of State for European Affairs, who seemed intent on giving new dimension to the “cookie-pushing” role of U.S. diplomats. Recall the photo showing Nuland in a metaphor of over-reach, as she reached deep into a large plastic bag to give each anti-government demonstrator on the square a cookie before the putsch.

More important, recall her amateurish, boorish use of an open telephone to plot regime change in Ukraine with a fellow neocon, U.S. Ambassador Geoffrey Pyatt. Crass U.S. interference in Ukrainian affairs can be seen (actually, better, heard) in an intercepted conversation posted on YouTube on Feb. 4.

Yikes! It’s Yats!

Nuland was recorded as saying: “Yats is the guy. He’s got the economic experience, the governing experience. He’s the guy you know. … Yats will need all the help he can get to stave off collapse in the ex-Soviet state. He has warned there is an urgent need for unpopular cutting of subsidies and social payments before Ukraine can improve.”

And guess what. The stopgap government formed after the coup designated Nuland’s guy Yats, Arseniy Yatsenyuk, prime minister! What luck! Yats is 39 and has served as head of the central bank, foreign minister and economic minister. And, as designated pinch-hitter-prime-minister, he has already talked about the overriding need for “responsible government,” one willing to commit “political suicide,” as he put it, by taking unpopular social measures.

U.S. meddling has been so obvious that at President Barack Obama’s hastily scheduled Friday press conference on Ukraine, Yats’s name seemed to get stuck in Obama’s throat. Toward the end of his scripted remarks, which he read verbatim, the President said: “Vice President Biden just spoke with Prime Minister [pause] – the prime minister of Ukraine to assure him that in this difficult moment the United States supports his government’s efforts and stands for the sovereignty, territorial integrity and democratic future of Ukraine.”

Obama doesn’t usually stumble like that – especially when reading a text, and is normally quite good at pronouncing foreign names. Perhaps he worried that one of the White House stenographic corps might shout out, “You mean our man, Yats?” Obama departed right after reading his prepared remarks, leaving no opportunity for such an outburst.

Western media was abuzz with the big question: Will the Russians apply military force? The answer came quickly, though President Obama chose the subjunctive mood in addressing the question on Friday.

Throwing Down a Hanky

There was a surreal quality to President Obama’s remarks, several hours after Russian (or pro-Russian) troops took control of key airports and other key installations in the Crimea, which is part of Ukraine, and home to a large Russian naval base and other key Russian military installations.

Obama referred merely to “reports of military movements taken by the Russian Federation inside of Ukraine” and warned piously that “any violation of Ukraine’s sovereignty and territorial integrity would be deeply destabilizing.”

That Obama chose the subjunctive mood – when the indicative was, well, indicated – will not be lost on the Russians. Here was Obama, in his typically lawyerly way, trying to square the circle, giving a sop to his administration’s neocon holdovers and R2P courtiers, with a Milquetoasty expression of support for the new-Nuland-approved government (citing Biden’s assurances to old whatshisname/yatshisname).

While Obama stuck to the subjunctive tense, Prime Minister Yatsenyuk appealed to Russia to recall its forces and “stop provoking civil and military resistance in Ukraine.”

Obama’s comments seemed almost designed to sound condescending – paternalistic, even – to the Russians. Already into his second paragraph of his scripted remarks, the President took a line larded with words likely to be regarded as a gratuitous insult by Moscow, post-putsch.

“We’ve made clear that they [Russian officials] can be part of an international community’s effort to support the stability of a united Ukraine going forward, which is not only in the interest of the people of Ukraine and the international community, but also in Russia’s interest.”

By now, Russian President Vladimir Putin is accustomed to Obama, Secretary of State John Kerry, National Security Adviser Susan Rice, et al. telling the Kremlin where its interests lie, and I am sure he is appropriately grateful. Putin is likely to read more significance into these words of Obama:

“The United States will stand with the international community in affirming that there will be costs for any military intervention in Ukraine … and we will continue to coordinate closely with our European allies.”

Fissures in Atlantic Alliance

There are bound to be fissures in the international community and in the Western alliance on whether further provocation in Ukraine is advisable. Many countries have much to lose if Moscow uses its considerable economic leverage over natural gas supplies, for example.

And, aspiring diplomat though she may be, Victoria Nuland presumably has not endeared herself to the EC by her expressed “Fuck the EC” attitude.

Aside from the most servile allies of the U.S. there may be a growing caucus of Europeans who would like to return the compliment to Nuland. After all does anyone other than the most extreme neocon ideologue think that instigating a civil war on the border of nuclear-armed Russia is a good idea? Or that it makes sense to dump another economic basket case, which Ukraine surely is, on the EU’s doorstep while it’s still struggling to get its own economic house in order?

Europe has other reasons to feel annoyed about the overreach of U.S. power and arrogance. The NSA spying revelations – that continue, just like the eavesdropping itself does – seem to have done some permanent damage to transatlantic relationships.

In any case, Obama presumably knows by now that he pleased no one on Friday by reading that flaccid statement on Ukraine. And, more generally, the sooner he realizes that – without doing dumb and costly things – he can placate neither the neocons nor the R2P folks (naively well meaning though the latter may be), the better for everyone.

In sum, the Nulands of this world have bit off far more than they can chew; they need to be reined in before they cause even more dangerous harm. Broader issues than Ukraine are at stake. Like it or not, the United States can benefit from a cooperative relationship with Putin’s Russia – the kind of relationship that caused Putin to see merit last summer in pulling Obama’s chestnuts out of the fire on Syria, for example, and in helping address thorny issues with Iran.

aap's means to the right end was wrong

The real wrong of Somnath Bharti ((Delhi government's law minister from Aam Admi Party) is in having biased and ugly impressions of Africans and black-coloured people in general. This definitely makes him racist.

For the illegal treatment of the Ugandan women in their home and then being illegally confined in a vehicle Somnath Bharti is responsible directly (if he did this himself along with others) or indirectly (with his supporters getting the courage to do this because of Bharti's presence).

The AAP is wrong on the count of going by the logic that the police should have followed the directions of the state government Minister. This is very wrong.

But Bharti is not wrong in following up on the complaints of Khirki residents that there was a dangerous situation being created on the streets of their locality due to the fact that several outsider men (mostly hoodlums) were coming to their locality because of the open solicitation by some prostitutes (who happened to be Africans) on the streets of their locality. Other female residents of the locality were facing very ugly forms of harassment by outsiders visiting their locality for the prostitutes (including heightened risks of being forced into a moving vehicle and being raped). Is it their fault that they should suffer because of the prostitution going on openly on the streets? Is it not the police's constitutional job to ensure their rights and dignity? Are they children of a lesser God?

The prostitutes are, of course, not doing soliciting out of their own volition but being forced to do so by the pimps who control them. The pimps may or may not be staying in the same locality but the local police would know who they are. These pimps are paying off the police heavily (large proportions of which go directly to the home ministry and the ruling party). The mid-night timing of the action by Bharti and local residents was due to the fact that solicitation goes on heavily at that time and is clearly visible to anyone who can see with their eyes.

It is very important to understand the Delhi police's refusal to listen to Bharti   Were they doing so out of concern of human rights? A vast majority of the prostitutes are victims of a serious crime -- that of illegal trafficking. In all cases of trafficking, the sex is forced upon the woman whether or not the woman is objecting to the act at that point in time or not. I hope those who abhor coerced sex have the sensitivity to see this ugly reality in prostitution.

Has any one in the Delhi police or has any significant portion of BJP-Congress critics of AAP ever helped in freeing the prostitutes from their prisons? Is it not the constitutional duty of Delhi police and the central government to ensure justice to victims of human trafficking? If they haven't done this already so far, do we have to blindly believe that the police SHO did not listen to Bharti's orders because he was concerned about violation of human rights of the prostitutes? Of course, Bharti and local residents should have also seen the difference between prostitutes and pimps and acted accordingly and it is extremely unfortunate that they did not do so. But we must remember that neither the local residents, nor Bharti, have the necessary wherewithal to go after the pimps who are backed by powerful and dangerous political elements. They tried taking a short-cut approach which was wrong because it was victimising the victims further. In fact the residents and the prostitues, are jointly the victims of the fallout of the same problem of human trafficking.

In all of the above, add the second deadly element of drugs. Are we absolutely certain that only harmless marijuana was being sold and consumed by the pimps/peddlars on the streets over there? Were there no other deadly drugs being sold over there? And if deadly drugs were being sold are we blind to the devastating effects drug addiction is having on youth of this country and all other countries in the world?

The AAP was wrong in defending Bharti's thinking and in demanding that police listed to its Ministers. But AAP is not wrong in saying Delhi police is completely sold to the drug and trafficking mafia backed by central government politicians. In December 2012 when Sheila Dikshit also pointed out to the fact that Delhi police was under state government control, Kejriwal still went hammer and tongs on her over the issue of women safety. But should he therefore now not do anything about it? Is it wrong to demand now that Delhi police should be under state government control? Not that state governments do not manipulate the state police, but still why should Delhi be different? If the central government is concerned about the safety of Parliament and other central government buldings and residences of central ministers then let there be a separate police force governing and policing only those areas.

The AAP should remove Bharti from the law minister's post. This should have done it on day one itself and still gone on dharna over the issue of women safety, human trafficking and peddling of dangerous drugs.