Some years ago, during the course of a test match, a commentator--I think it was Sunil Gavaskar--made a scathing remark about the England cricket captain Nasser Hussain, "His idea of good captaincy is to put a fielder wherever the batsman hit the last shot.
Indian financial regulations' attempt to stamp out anti-customer tactics of insurers, banks and mutual funds closely resemble this phenomena. Here's one that is in the process of being enacted. The insurance amendment bill, which will now probably be promulgated as an ordinance first, has a measure that forbids insurance companies from rejecting a policy on any grounds--even deliberate fraud--once it is three years old. Earlier, this period was just two years but fraud was an exception. An insurer could repudiates a policy even after decades--generally when faced with a death claim--by saying that concealment of some information counted as fraud.
In recent years, with the rise of 'no medical check' policies (specially cheap online ones) this type of rejection has increased a lot. The new measure in the insurance bill will solve this problem because after three years, a policy cannot be rejected on any grounds. Right? Not really. Here's what I predict will happen. Insurance companies will become even more aggressive in selling policies whose selling conditions will be such that fraud can be claimed relatively easily. As far as possible, these policies will also be structured to extract as much premium as possible during the first three years. And then, instead of claiming fraud at the time of the insured' death, they will start doing so at towards the end of the third year.
There may be a way of cleaning up the behaviour of India's financial service providers, but plugging the last scam in a way that points to the next one is not it. If a captain is interested in winning the match, he has to anticipate the next shot the batsman will play.
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