A collection of thoughts and findings while on a day trip to Salem.
Claim Settlement Ratio (CSR)
I am a lot like Melvin Udall from the movie, 'As good as it gets'. Before I travel, I make lists, set everything in order, list train stops etc.
I usually check the indiarailinfo.com to find out the average delay. This time it struck me that the average is meaningless.
The average would have been calculated with daily timings compiled over hundreds of days. Knowing that the average delay was 8 minutes was not of much use to me because the actual delay in my case was a good 30 minutes.
Although this individual value is much higher than the average, it will not affect the newly computed average by much because hundreds of data points are used to compute it.
So for a traveller who takes the train the next day, the average delay will pretty much be the same.
The same logic applies to insurance claims. At least for a behemoth like LIC. What matters it the claim settlement experience of your nominee. The claim settlement ratio will not change too much for LIC if a handful of claims are rejected. LIC's reputation will remain unchanged with respect to a new buyer who takes the ratio too seriously.
What if you are one of those of those handful whose claim was rejected? Your own experience ... that is all that matters.
This is what Subra means when he says do not compare CSRs when the numerators and denominators are very different (as is the case of LIC compared to privates).
Yesterday (or the day before?!) was World Savings Day or World Thrift Day. Saw an ad in the back of a newspaper released by the govt in this regard promoting post office schemes and PPF.
On the front page, amused to find a snippet about a couple who arrived by helicopter to their marriage reception!!
Later in the day I had a lot of time to kill before my train arrived so got hold of a copy of Outlook Money. Not a big fan of such magazines but I had to do something about my boredom.
Read a nice article by Aashish Somaiyaa, MD and CEO of Mostilal Oswal AMC. It said, 'you have voted for Modi, now make your vote count by investing in equity'. 'put your money where your vote is'.
"We are very bad at participating. We love to enrich other (FIIs) from Indias growth but we do not want to be rich ourselves".
Outlook Money on how to build a clutter-free portfolio!
In another article which urged readers to supplement EPF with equity, the magazine reporters state:
- Start with a SIP in an index fund
- once you are in the groove, save more. Pick 3-4 large cap funds!!
In the same issue, in the article listing OLM rated mutual funds, they say, "Many equity schemes comprise of similar stocks; so just don't buy them"!!
I suppose it is possible to pick 3-4 large cap funds without significant portfolio overlap!
How delightfully corroborative! Please be sure to subscribe or renew your subscription to such a wonderful magazine!
Blame thyself and not the LIC agent!!
In an interview, LIC chairman S K Roy was asked,
post new regulations, would there be less likelihood of mis-selling in ULIPS? Is LIC looking to add a ULIP?
A new Ulip is on the anvil.
Ulips have become more transparent. Whether new regulations would curb mis-selling or not is a separate question because, As a buyer I should also be making an informed choice that comes through disclosures.
Now how about that!
For the first time in my life I saw a financial plan without a single mention of the inflation and return assumed!!