Impact 
In its bid to provide due redress to policyholders' grievances over rejection of insurance claims on the grounds of delayed filing and intimation of documents, particularly if the delay was due to unavoidable circumstances, the Insurance Regulatory and Development Authority (IRDA) has asked the companies to incorporate additional wording in policy documents and terming the current clause for claims as "limited." IRDA directed the insurers to reject claims on the basis of sound logic and valid grounds.
Further the IRDA has directed insurers to treat such claims on "merit" and "good spirit" of the clause, with "utmost care" and "caution", without compromising on bad claims. The insurance regulator is of the view that merely rejecting claims on technical grounds and mechanical fashion of working would result in policy holders losing confidence in the insurance industry, thus giving rise to excessive litigation.
In its circular to the insurers the IRDA clarified that the current contractual obligation imposing the condition that claims shall be inti to the insurer with prescribed documents within a specified time period is necessary for insurers for effecting various post-claim activities like investigation, loss assessment, provisioning and claim settlement. However, this condition should not prevent settlement of various claims, particularly when the delay in intimation or submission of documents is due to unavoidable circumstances.
We believe that the directive issued by the insurance regulator strikes a good balance between its "regulation" as well as "development" role. Rejection of a claim on the grounds of being late (to submit the documents) due to unavoidable circumstance, elevates the trauma which the policyholder and his close family members suffer during nervous times. The directive would instil confidence in the minds of policyholder's towards the insurance industry and will enable genuine claims from getting their respective dues.
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Impact
After proposing to set up a Self-Regulatory Organisation (SRO) to regulate the independent financial advisors, banks, distributors, fund managers among others, the Securities and Exchange Board of India (SEBI) has now penned down certain level of qualification to be eligible as an investment advisors.
Individuals will now be required to have a professional qualification such as Chartered Accountancy (C.A.) or MBA in finance or at least 10 years of relevant experience to register themselves as investment advisors. Entities such as banks would have to maintain a minimum net worth which would be separate from the other activities they carry on. SEBI also proposed that investment advisors will have to do adequate risk profiling of the client before any investment service is provided to them. Besides, they will also have to maintain records of all forms of communication made with investors for at least five years.
In our opinion the demarcation between an agent / distributor and an advisor was very much required to prevent investors from falling prey to mis-selling. Also, financial products being intangible and conceptually difficult for a layman to understand, requires a qualified person to help you understand the nuances of the financial products.
Furthermore, a qualified individual or an investment advisor will help you understand what financial products will suit your risk profile thus helping you achieve your goals.
| | Impact
The global economy has been reeling under pressure to come out of the gloomy situation from quite some time. The European nations are finding it difficult to come to a consensus on the solution to their debt overhang and at the same time the United Sates is clueless as to how to keep its ballooning debt under control.
(Source :ACE MF, PersonalFN Research)
But amidst all this economic turmoil, Gold has turned out to be investors' best friend. The above graph clearly depicts how during the turbulence of the equity markets gold and equity have expressed an inverse relationship. Hence, as long as the equity markets all over the world bleed, the gold will continue to outshine equities as central banks across the world will continue to take refuge under the precious yellow metal.
We believe that the gold as an asset class will continue to outshine the equity asset class so long as the global economy is reeling under turmoil. Going forward one may see a little more volatility in the precious yellow metal as commodities may come under pressure due to slackening of demand from the developed nations.
But nonetheless you should continue to buy gold in a staggered way through gold ETFs or gold savings fund in order to take exposure to this classic asset class. Remember to hold 5% to 10% of your investment portfolio in gold and that to for long term period of 10 to 20 years. | | | | Weekly Facts |
| Close | Change | %Change | | BSE Sensex* | 16,453.76 | 291.7  | 1.80% | | Re/US$ | 48.75 | 0.8 | 1.59% | Gold /10g | 26,195.00 | (1,835.0) | -6.55% | | Crude ($/barrel) | 108.95 | (2.1) | -1.88% | | FD Rates (1-Yr) | 7.25% - 9.40% | Weekly change as on September 29, 2011
*BSE Sensex as on September 30, 2011 | | | | This Week's Poll !!!
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In an interview with the Economic Times, Mr. Jim Walker – Managing Director and Economist at Asianomics shared his views on monetary policy adopted by the United States and commodity prices.
Mr. Walker believes that since the past two years the problems in the United States and other developed markets have actually got worse as a direct impact of Government's policy and the central bank's policy. "Now there is no room to move at all, either for government expenditure or in the monetary policy. We are going to have to see how this plays out with some distortion of capital and, basically, a very, very slow growing global economy for at least the next two but probably the next five years," he said.
Mr. Walker is of the opinion that printing more money by the Fed is not a solution to every problem. "Print more money, print more money, get more inflation. The natural fight was that more money that was printed in the name of credit that was created in the run up to the crisis. That then created a capital structure in the US that was unsustainable. They haven't allowed that capital structure to adjust yet. What he (Mr. Ben Bernanke – Federal Reserve Chief) has got to do is get interest rates up rather than guaranteeing them at zero for next two years. And also, just making sure that it doesn't print any more money. That is the way that would start to re-adjust the economy."
On the prices of global commodities, Mr. Walker believes that as we move into a much more subdued outlook for global economic growth, we have got to assume that commodity prices are going to come off. "The problems in China, where economic activity is going to slow, has also printed far too much money in the last few years. The economic growth in China will falter and with that, commodity prices certainly have 30%, 40%, maybe 50% downside."
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Derivatives: A security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.
(Source: Investopedia) | | | QUOTE OF THE WEEK
"Value is not intrinsic; it is not in things. It is within us; it is the way in which man reacts to the conditions of his environment."
-Ludwig von Mises | | |