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Posts Tagged ‘Financial services’

Live Insurance Scam: How To Steal A Trillion

February 15, 2013 Leave a comment

A fool and his money are soon parted. Better that fools handover money to a Sahara or an LIC – rather than these firangi types.

Even though there are no (significant?) depositor-complaints, Sahara is being forced to refund Rs.24,000 crores to various ‘depositors’. As though, Rs.24,000 crores amount was lying around. In some account somewhere.

Rs.24,000 crores – waiting for refund command from regulatory or judicial authorities.

Unspilling Milk

I am not sure where Sahara Parivaar gets its thousands of crores from – but surely we know where most of this money goes. I can quibble about the end-use of these funds – but can’t complain.

Wonder what is bothering RBI-SEBI-SC?

Phoren Maal

On the other hand, no one seems to be bothered about a similar scam being executed in the insurance industry. The Sahara scam is being executed by a back-of-beyond Bengali-huckster who appeals to the UP-bhaiyya – and that is not acceptable.

The insurance swindle is run by foreign-returned, slick-MBA types, with MNC connections. And that is is an ‘important’ part of our economy?

A fool and his money are soon parted. Better that fools handover money to a Sahara or an LIC – rather than these firangi types.

With Sahara-LIC we know where the money is going.

When one lives in a country of over a billion people, big numbers seldom come as a surprise. But when I looked at the number of Rs.1.5 trillion, I was astounded. That’s about 1.5% of the Indian gross domestic product, was the first thought. . Knowing that the industry will come after this number, as my colleague in this work so graphically put it, with their bazookas, we did the numbers again. And again. And several times again. Checked and re-checked the methodology with insurance industry experts, actuaries and academics. We used another, totally different method to see if we were way off the mark. But the final number refused to back down. Retail investors lost a minimum of Rs.1.5 trillion to the insurance industry and its agents over a period of seven years that ended in the financial year 2011-12. Mint on 6 February 2013 here: http://bit.ly/X3YJDY.

Not only did companies manufacture toxic products, sold them through very large incentives (remember, the Insurance Act specifies the maximum limit for commissions, not the minimum), but once the policyholder let the policy lapse on finding out that it was unsuitable, kept the money with themselves, again imposing the maximum possible cost on the policyholder, and then moved that money over to their profit account. Question them about it and they say that the rules allowed it. They were just following the Insurance Act that allows them to do so after a waiting period of two years.

What next? One view is that now that the insurance regulator has changed the rules of the game, we should all get on with life. But is that the correct approach? Let’s look at how the industry behaved once the Ulip rules were changed in 2010. It moved to producing and selling traditional plans which still had all the features that made Ulips toxic.

The regulator will now change these rules as well to take most of the toxicity out before the end of the current fiscal year. But what does this market behaviour say about the industry? It says that the industry will continue to find loopholes in the rules and will use them to the detriment of the investor. What will make them move from checking regulatory boxes to really looking after the policyholder? It could be the fear of big ticket penalties.

We’ve proved that policyholders have lost huge sums of money. We now need the finance minister to put in place a mechanism to get this money disgorged and returned to the policyholder. And a stiff penalty for doing what they did.

via How to steal a trillion – Livemint.

Bank Regulators Clash Over U.S. Stress-Tests Endgame (Update1) – Bloomberg.com

April 25, 2009 2 comments

Stress Test

The U.S. Treasury and financial regulators are clashing with each other over how to disclose results from the stress tests of 19 U.S. banks, with some officials concerned at potential damage to weaker institutions. (via Bank Regulators Clash Over U.S. Stress-Tests Endgame (Update1) – Bloomberg.com).

What are banking insiders saying?

Banking insiders think that all these banks are practically insolvent. How does Obama and his cohorts deal with? Mega mergers? More cash infusions. Or will the US banking also finally end up with the Big 3?

Did the stress crack them up?

Did the stress crack them up?

Public sector or oblivion

During the Great Depression, more than 19 auto companies (similar to the number of banks today) were folded into the Big 3. The Big 3 lived to fight for another 70 years. In their death throes, the US Big Auto is likely to go the way European auto sector has gone – public sector or oblivion.

Saddam lives (through his words)

The way it looks, it will mean the Mother Of All Mergers. At which point, there is no team of accountants in the world who can figure out what is where, or what condition what is in? And then the evasions, the lies the obfuscation can continue for some more decades?

Real low … real truth (seen an oxymoron like that?)

The real question – who will pay for it?

Not the Americans! No siree. Definitely not.

Will the Lilliputs manage a soft landing?

Will the Lilliputs manage a soft landing?

Neither the American super-rich or the American welfare-poor? Not the American tax payers or the American tax evaders? Not the American Whites or the American Blacks?

It is the Chinese, the Russians, Indians, Brazilians and above all the Africans will pay for this! They have done, what bankers call non-recourse lending! The Chinese, Russians, Indians, Brazilians and the Africans, have no recourse. Who will the Chinese go to, for redeeming their US$2 trillion?

The bankrupt US of A? Welcome to the real world.

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