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Credit in Your Bank Account- is it insured?

Bank deposits of Rs 38 lakh crore, accounting for 67 per cent of the total deposits, do not have cover from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as of September 2011. The figure was Rs 32 lakh crore a year ago. This is based on data from the Reserve Bank of India. The falling insurance cover is due to the rising proportion of high-value deposits. Bank depositors enjoy insurance cover on deposits up to Rs 1 lakh. This means that if a bank goes belly up, each account will still recover up to Rs 1 lakh from the Corporation. Some experts feel that the situation calls for a revision in the insurance cover offered. The insurance limit of Rs 1 lakh per account was set way back in 1993. With inflation averaging 6.5 per cent in the last two decades, a Rs 1 lakh deposit then would equal Rs 3.3 lakh at today’s prices Bankers, however, counter that this may not pose much of a risk to small investors, as most are likely to have deposits of less than Rs 1 lakh. In fact, banks have deposit accounts (savings and time deposits) numbering 107 crore. Of these, 99.6 crore deposit accounts, or 93 per cent, have less than Rs 1 lakh as balance. The DICGC’s deposit insurance fund, which is supposed to meet these liabilities, had a Rs 30,000-crore balance by March 2012. While it added Rs 5,300 crore by way of inflows for the year, it met demands of Rs 287 crore towards insurance claims. This fund’s balances amount to 1.6 per cent of the underlying deposits insured. Regional Rural Banks have the highest proportion of insured deposits at 74 per cent followed by co-operative banks with 62 per cent of the deposit value insured. Commercial banks, on the other hand, have only 30 per cent of the deposit value insured. State Bank of India and its associate banks have 35 per cent of their deposits insured (in terms of value) making it highest among the commercial banking group. Private banks and foreign banks, on the other hand, have 23 per cent and 8.4 per cent, respectively, of their deposits insured because of a larger proportion of high-value deposits on their books. The average deposit per account as of September 2011 has risen to Rs 53,000 per account up from Rs 7,700 when the Corporation increased the limit to Rs 1 lakh in 1993. Among individual accounts, while public sector banks’ depositors have around Rs 40,000 per account, private banks have deposit per account in excess of Rs 51,000. Foreign banks’ deposit per account is more than Rs 2 lakh. Info here
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A Guide To Making A Flood Insurance Claim

For affected home-owners, organising an insurance claim will be the top priority. Find out who to call, what to ask and what to do next with our flood insurance claim guide: My home has flooded – what do I do now? - If you own your own home contact your insurance company straight away. Many have emergency contact centres working 24 hours a day. Note: you may have one insurance policy to cover damage to the structure of your home, like walls, ceilings and floors, and another to cover its contents. If you have policies with two different insurance companies, you should phone them both. - If you live in rented accommodation contact your landlord to make sure they have contacted the company that insures your home. You’ll need to contact your insurance company if you have contents insurance. What questions should I ask my insurer? - If flooding has caused damage to large parts of the country, you may have to wait for a loss adjuster to visit you. Ask how long it will be before the loss adjuster visits to survey the damage. Note: immediate emergency pumping and repair work to protect the property from further damage can be undertaken without insurer approval, but remember to get receipts. - Ask if you are to clean your property or if they will get a company to do it for you. Check whether they’ll pay for redecorating also. - Ask if they will help pay for repairs that will reduce potential flood damage and therefore reduce the costs if it happens again. - Ask who will be your contact for your insurance claim at the company. What next? - Be sure to mark the water levels on the walls for reference using a permanent ink pen, and photograph or video all flood damage. - List the damage to your property and belongings. - If your insurance policy covers you for loss of perishable goods, make a list of all the foods you throw away. Include any food touched by flood water and anything in your fridge or freezer ruined by loss of power. - Keep a record of all correspondence with insurers after the flood. Make a note of all telephone calls: record the date, the name of the person you spoke to and what was agreed, and keep copies of all letters, emails and faxes you send and receive. Keep receipts too. - Don’t rush to throw away damaged items – unless they are a danger to health – as these may be able to be repaired or restored. Your insurer will advise. What if I need to organise emergency repairs? - You can arrange for emergency repairs to be carried out to stop any damage getting worse. However, you must keep receipts, as these will be needed for your insurance claim. You should also tell your insurer about the emergency repairs. Get advice where detailed, lengthy repairs are needed. Beware bogus tradesmen and always check references. Your insurer can give advice on reputable tradesmen, or you can check out Which? Local for recommendations. It may be worth using a builder recommended by your insurer from their “approved list”. As the standard of work from an approved builder will have been monitored, it will be acceptable to your insurer. And if any problems do arise it will be easier for you to deal with these with the help of your insurer. - Keep all receipts of any emergency repair work you have done, like fixing electric fittings, so you can claim back the money. Also keep a detailed record of phone calls to anyone cleaning or repairing your home. How do I organise alternative accommodation? - If you need to move out of your home while it is being repaired, check with your insurers – most policies will cover the cost of alternative accommodation up to a specified limit. - Ask your insurance company or landlord if they will provide you with temporary accommodation, such as a nearby bed and breakfast or a rented house. You don’t have to accept the first place you are offered, but if flooding has affected many people, the choice of accommodation may be limited. - If you are out of your home for only a short period, ‘reasonable costs’ in respect of hotel accommodation are usually acceptable. Such costs will usually be reimbursed as soon as it is practical. However, if you require long-term accommodation, the loss adjuster may locate a property. Some insurers may arrange to pay these bills directly. - Make sure your family, neighbours and insurance company knows where to contact you if you have to move out of your home. - Consider what valuables and essential items you may be able to take with you. - Lock your doors and windows if possible. - Take emergency contact details with you, including mobile phone numbers and email addresses. I don’t know the name of my insurance company – what should I do? Speak to your broker, insurance adviser, mortgage lender or bank – direct debit/standing order payments can be used by them to identify your insurer – who may be able to provide details. If you’re in rented accommodation, speak to your landlord or local authority. Help – I know the name of my insurance company but I can’t find my policy Call directory enquiries or look on the internet for your insurer. When you call your insurer, give them as many details as you can. They are likely to be able to find your policy details from your personal information and your postcode. I want to make a complaint If you have a complaint about the way your claim is being handled by your insurance company and/or loss adjuster you should telephone or write to your insurer, keeping a note of what you have said. Your policy will contain details of your insurer’s full complaints procedure. If the problem is not resolved to your satisfaction you can contact the Financial Ombudsman Service, who will investigate the complaint within their terms of reference. If you have a complaint about the builder appointed by your insurance company to undertake repair work, call the claims department of your insurer as soon as possible. Keep a note of what the problems are. If they are not resolved to your satisfaction, write to the claims manager of your insurance company. I don’t have insurance – what help is available? If you don’t have insurance, your local council should be able to provide information on hardship grants or charities that may be able to help you. Who can I contact for help and advice? For insurance advice: Association of British Insurers www.abi.org.uk Tel 020 7600 3333 For information about loss adjusters: The Chartered Institute of Loss Adjusters www.cila.co.uk Tel 020 7216 7580 – loss adjusters should be members Dependant on the property contract, you or another party may be responsible for repairs and/or re-accommodation . You should consult your contract. The Citizens Advice Bureau may be able to advise www.citizensadvice.org.uk Tel 08444 111 444 For flood warnings and information on flood defences: Environment Agency Floodline www.environment-agency.gov.uk Tel 0845 988 1188 (open 24hrs)
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Flood Insurance Talks Hit Roadblock

Hundreds of thousands of flood victims face steep increases in their home insurance costs or risk losing it altogether, following a breakdown in talks between the government and the insurance industry. The collapse in talks was branded “outrageous” by charity the National Flood Forum (NFF), which said being refused insurance “could spell financial ruin for thousands”. Insurers agreed a statement of principles with the government in 2008 to renew cover for flood victims, usually at a very high premium and with an even higher excess. But this agreement runs out on 30 June 2013, when householders face being refused cover unless the government and the industry come to a new agreement. The Association of British Insurers (ABI) recently proposed a scheme to make sure 200,000 households affected by flooding will be able to renew their policies next year. It meant any house that would normally incur a much higher premium because of flood risk would have the extra paid out of a levy on every home policy in the UK. While the industry is not asking the government for funding for the scheme, its proposal does require it to provide a temporary overdraft facility that would be used to pay claims if there were heavy floods in the early years of the scheme before it had built up its reserves – but the government has not agreed to this. The ABI has now called for the government to commit to a joint solution to ensure affordable flood insurance for high-risk households, describing the current state of talks as being “at an impasse”. Nick Starling, director of general insurance at the ABI, said talks had reached a crisis point: “The government has indicated it will not provide any temporary overdraft facility for the insurance industry’s not-for-profit scheme, which makes it very difficult for it to go ahead. “As a result negotiations have hit an impasse. Insurers know their customers are increasingly worried about flood cover and we will therefore continue talks with government to try and find a way forward. David Cameron’s official spokesman said the government met the ABI last week to discuss flood insurance. “We put a proposal to the ABI and it is considering that proposal,” the spokesman said. Speaking at a regular media briefing in Westminster, the spokesman declined to discuss the details of the proposal, saying only: “We want to ensure people are able to get insurance at an affordable price. There is a negotiation ongoing.” He added that teams from the Environment Agency are on the ground checking flood defences and keeping a close eye on developments. Meetings are taking place twice daily within Defra to monitor the situation, he added. Environment minister Richard Benyon blasted the insurance industry for a “rather demeaning” attempt to highlight negotiations over the future for flooding cover at the same time as households were besieged by flood water. Speaking on Radio 4′s Today programme, Benyon said: “It is rather a shame that it has been raised at this particular moment when there are a lot of distressed people with flooded homes. We are just concentrating flat out with dealing with this situation. What we are talking about on insurance is an absolute priority for our department, but at the moment we are dealing with flooded properties and I really want to concentrate on that.” Rain has caused severe flooding in Cornwall, Devon, Gloucestershire and Worcestershire, with 265 flood warnings and 288 alerts in place covering all regions in England and Wales. More than 800 homes have already been flooded in the latest bout of bad weather. The NFF hit out at both parties. Chairman Charles Tucker said: “This is kicking people when they are down. These negotiations have been going on for over two years; for them to break down at this stage is outrageous. It’s now time for action. We need to see exactly what is being proposed by both sides and knock heads together – and fast. “Being hit with a four-figure insurance premium adds insult to injury, and being refused insurance could spell financial ruin for thousands. Every household and community hit by flooding is relying on them to ensure that flood risk insurance is available to all, is affordable, and is based on social justice.” Starling added that no country in the world has a free market for flood insurance with high levels of affordable cover without some form of government involvement.
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What Really Happened At Comet- A Different Perspective

A quick look at what happened to high street electronics retailer Comet when its credit insurers slammed their wallets shut should be enough to get any IT business interested in cash-flow, insurance and credit lines. But while credit and cash-flow are often seen as stale subjects, they can be the lifeblood of business – almost as important as the products and services themselves. It’s not just offering too little credit that destroys a business – too much can do just as much damage. Some 95 per cent of business-to-business deals are transacted on “open credit” terms. This means the products or services are supplied on the premise that payment will be made at a future date – basically getting goods on tick. Open credit fuels the IT industry, not just simply in the provision of much-needed channel finance, but also in oiling the wheels of business, allowing for growth and increased market reach. Provision of a credit “line”, as opposed to the more commonly referred to “limit” is always generally subject to status checks or pre-determined scorecards. It is then continuously reviewed and monitored during a business trading cycle to ensure the level set meets the requirement of risk appetite measured against growth. A business is therefore unlikely to have a credit line for life or one that remains at a constant level (or it shouldn’t, anyway). A credit line is flexible and will move up or down based on reviews and trading history. A credit limit, on the other hand, is obviously a rigid fixed value. There’s gold in them thar credit databases When you sell your goods on credit to customers, agreeing to receive payment in future, they become “trade receivables” or “trade debtors”. These “trade debtors” are actually a substantial liquid current asset that frequently accounts for more than 60 per cent of a company’s total assets. What many businesses overlook, though, is that a byproduct of giving out credit is the way it creates an invaluable, frequently underused resource: a massive database of clients – past and present – with incredible volumes of data attached to each client. A criticism I often levy is that business leaders rarely use these two significant assets (despite zealously guarding them) to the extent they should – and all too often know very little about them. Managing, controlling and securing these assets is crucial and yet too many do not afford the area the degree of importance it deserves. The credit department too often languishes in the bowels of finance, incorrectly viewed as a back office function … while many on the sales floor like to call it the “sales prevention” unit. But used correctly, credit provision is a proven profit centre and business driver. The channel has experienced highs and lows in terms of credit – from the boom times of the early noughties to the low of the past few years, when the “credit crunch” and the lack of credit insurance cover put some pressure on availability – but even then, it was mostly at the top end of the scale. Mid-market clients were left relatively unscathed because of the varying types of credit insurance held by suppliers. A number of major distributors – such as Ingram Micro, Westcoast and Tech Data – market similar initiatives to accelerate a credit line, generally to small businesses. These are designed to offer an increased credit line to match growth and satisfactory payment (often by direct debit) and are marketed as special offers or “credit limit accelerators”. Offered at lower levels and capped, they do offer some assistance for SME resellers. But in truth, these simply replicate a standard credit process for review in the general course of business trade, which is always closely linked with other risk factors. Consider the risks One concern about distributor accelerator plans is that they insist that a specified percentage of the increased limit be used each month in order to remain part of the programme. This has the effect of forcing the reseller to place more and more of their purchase requirements through the plan provider – a route perhaps to increase a distributor’s market share of what is termed “total available market” (TAM). This is loosely worked on judging how much product a client buys annually, its constitution and how much share a supplier holds or can strive for. This is common practice in many business and industry sectors and yet it is so often flawed from a commitment and risk perspective. There is no guarantee, of course, that having built your credit line from £5K to £200K it will remain unchanged should you not pay on time, file negative financial results or provide interim management accounts that suggest the risk is too high to justify the £200K line. Give a business too much credit too quickly and there is a risk you may force it into difficulty. It’s a bit like giving an 18-year-old a credit card with a limit of 2K guaranteeing increases subject to percentage use and payment on time. While they might abide by the rule for a few months, there will come a point where they cannot pay a debt that may now have risen to 10K. Go on, take the credit… or should you? In recent months, there has been much surprise expressed over resellers declining to take advantage of the now increased amount of credit offered by distribution. Computer 2000 for example, says only £350m to £400m out of £1bn worth of available channel credit was used by resellers. The business therefore had existing credit lines to clients totalling well in excess of the sum owed by those clients. This is a common feature in distribution where clients are in their thousands. Experience tells me management and constant review of your client base allows you to manage the level of credit you provide to match the level of growth you are achieving or hope to achieve. If one has several thousand accounts with credit lines that do not trade or do not fully use the level of credit provided, then this suggests poor management of credit, diminishing or static sales or a lack of database research by credit/sales/marketing. Credit lines of £1bn on average credit terms of even 60 days offer annual sales scope of £6bn – clearly well in excess of anything recorded and more than the combined sales of seven of the top UK distributors on the basis of last filed accounts at Companies House (£4.9bn). The total amount owed by resellers across these seven was in the region of £670m. Excess or unused credit does not therefore necessarily signify a level of growth potential. Credit availability and use changes; account managers and buyers move on, vendor profiles change, relationships break down, online accounts are granted credit and not progressed and resellers (not unsurprisingly) modify their business practice and offerings continuously without being followed. A growing number that were predominantly hardware/software resellers have placed greater emphasis on managed services, negating the need for historically high credit lines.
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Banks fined for failing to credit insurance premiums

The Delhi State Consumer Disputes Redressal Commission has ordered the Punjab National Bank to pay Rs 4.5 lakh as damages, for wrongly deducting money from a company’s account. The commission also ordered PNB to pay Rs 4,295, the original amount that was deducted from the account of M/S Bhoop Singh and Sons. The bank had reportedly deducted the amount for payment of premium for the firm’s insurance policy, but it did not credit it to the insurance company. Somvir Singh had demanded a compensation of Rs 17 lakh because a fire damaged goods at his shop and the insurance firm rejected his claim. The insurance firm said Singh had not renewed the policy. Singh had alleged that it was the bank’s responsibility to renew the insurance policy. The commission, however, noted that Singh had entered into a contract with the bank, which said renewal of insurance was Singh’s responsibility.
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