Category: General Interest

Items of general interest – for mass consumption

Real meaning of “Insurance is the Subject Matter of Solicitation” or how everyone on the web can be wrong

In which, I try to understand what the phrase “Insurance is the Subject Matter of Solicitation” means, and why every ad has it, and I discover how the blogs of 20 different finance websites (written by marketing types by doing a Google search followed by a copy-paste-in-your-own-words) can be wrong.

Summary: Most Indian finance websites give a ridiculous explanation for this phrase. This phrase, which is found in all insurance advertisements in India, was mandated by IRDA, and it means basically that: “insurance is the product that is being sold by this advertisement, and not any thing else.” The intention is to prevent advertisements from being misleading, and trying to trick consumers into buying insurance while advertising something else (like investment). As of November 4th, 2015, this requirement has been removed by IRDA.

Background

I’ve always wondered why every insurance ad states, “Insurance is the Subject Matter of Solicitation,” and what exactly does this statement mean. Clearly, many other people have had the same question. Because a Google search revealed that many, many websites claim to explain this.

However, I found that all the explanations seemed a little silly. Here is an example:

The Insurance Regulatory and Development Authority has made it mandatory for insurance companies, agents and brokers to announce clearly in all their communication that insurance is the subject matter of solicitation. Translation: insurance isn’t a ready-made standard product like say, a bar of chocolate, that can be sold outright, it has to be discussed, understood. The right offering suited to your specific needs and requirements has to be considered taking into accounts, the terms, conditions and exclusions. Companies can only “offer to sell” it. And what changes with the addition of this simple word?

By way of including this small line, insurance becomes a product that you-the-customer must evaluate carefully after you have understood all its features, rules, conditions and exclusions. The onus of buying an insurance policy with its terms lies with the customer solely.

Or, to quote this Quora answer:

So the meaning of Insurance is a subject matter of solicitation is that Insurance is a financial product which buyer has to ASK FOR, it cant be sold.

Similar answers exist on many other websites. In fact, you could search the internet for hours and find articles and articles that give this same explanation.

Doesn’t anyone else see that the “translation” makes no sense – grammatically or legally? Words have meanings – especially in legal contexts. You can’t just make a sentence mean anything you want it to mean. How does “insurance is the subject matter of solicitation” end up meaning “insurance cannot be sold, the customer must ask for it”?? And even if the sentence did mean that, doesn’t anyone find this totally ridiculous? Have you ever “asked for” insurance, or have you mostly just bought one of the products that the insurance company has in their portfolio? Are our lawmakers really this stupid? And if they are, how come nobody is pointing to any proof (a law or a regulation) which mandates this?

It just bothered me so much that I decided to start digging until I found out where this phrase originated, and what was the intended meaning. I just don’t believe that our regulators are idiots who make up bizarre regulations just to mess with us.

Going to the Source – IRDA Regulations

Being a big fan of going to original sources, I tracked down this phrase to the “IRDA (Insurance Advertisements and Disclosure) Regulations, 2000” notification. (Here’s a pdf that I got off the IRDA website.) This is a document that regulates what advertisements related to insurance can and cannot contain. An important purpose of these regulations is to ensure that advertisements should not be “unfair or misleading.”

Here is what regulation 9 says:

  1. Identity of advertiser — Every advertisement for insurance shall:

  2. (i) state clearly and unequivocally that insurance is the subject matter of solicitation; and

  3. (ii) state the full registered name of the insurer/ intermediary/ insurance agent.

I should note that this entire document is about the rules governing who can advertise insurance, and how. Nowhere does it say anything ridiculous like “insurance cannot be sold; customer must ask for it.” In fact the whole document is mainly about how to sell insurance without misleading customers. It’s clear to anyone reading this document that selling and advertising the sale of insurance is perfectly legal.

In fact, reading the whole document in context (especially when read in conjunction with regulation 2(d)) it is quite clear that:

  • “solicitation” in this case means the advertisement itself, and
  • the purpose of this line is to ensure that the advertisement makes it clear that insurance is being advertised and not something else.

The second point here makes a lot of sense when you see an actual life insurance ad – a lot of it is focused on the returns you will get if you don’t die. Without this disclaimer, you would think the product being sold is an investment scheme, right? And that is precisely what this warning is supposed to prevent.

“We make it sound like the primary purpose of this scheme is the the returns you will get if you don’t die, but please don’t forget that the real product being sold here is the insurance cover you’re getting – the money you will get if you do die. But we’re going to say it in such opaque jargon that even websites that claim to give you expert financial advice don’t understand the warning.”

In any case, on November 4th, IRDA published an amendment which removed 9(i) from these regulations, so future advertisements are no longer required to have this phrase.

Moral of the Story

So, here are the morals of this story:

  • Don’t believe everything you read on the internet. Even if lots of websites agree with each other. Especially if lots of websites agree with each other – that usually means (these days) that they all pretty much copied from each other.
  • Going to the original source is a powerful way of getting the real story. I do this every once in a while – I read the original wording of laws (e.g. defamation laws), or court cases, or other legal documents (e.g. India-US tax treaty) – and I always find the results quite instructive.
  • The government/bureaucracy is not filled with idiots. They don’t just make up random things. There is always a reason, if you just look at things from the correct angle. So, if something seems idiotic, chances are that you did not understand it properly.
  • Note to finance startups/companies – I know that your articles and blogs just exist for SEO purposes and as far as Google juice is concerned, quantity is king, but could you please at least have some sensible finance person take a look at your content and sign off on it to check that you’re not repeating incorrect information?

How To Read More

Yesterday, I bought Rs. 1000 worth of books, and also spent Rs. 1000 on a family movie night. Somehow, my psychology is weird enough that the money spent on books seemed like an extravagance to me, whereas the dinner was no big deal – something I do regularly. But, when I think about it, I’ll spend weeks reading the books, then my wife will read them, and later I’ll lend those books to other people. In terms of value/entertainment-per-person-per-hour, books are easily 10 to 100x cheaper than any other thing I spend money on.

In other words, I should be spending much more on books.

Buying, Borrowing, and Lending Books

  • Maybe buying: So, I’ve started buying books. And, I often buy even those books where there is only a small chance of me reading it. Because if I buy 10 books, and end up reading only 1 of them, that’s still a good investment. My mother comes from the generation where buying a book is a big decision – she reads reviews in newspapers, asks her friends if any of them have read the book, goes to the store and spends 10 minutes browsing the book, and only then considers buying it. I am slowly converting her to the philosophy that if she even thought “maybe I should check out this book” I will go ahead and buy it on Flipkart/Amazon.
  • Indiscriminate Lending: One of the biggest problems with lending books, is the fear that they’ll not get returned. Trying to keep track of who borrowed which book, and asking for it back is too much work. I stopped worrying about this long ago. I lend books indiscriminately, and don’t worry about whether it will come back. There have been 2 or 3 cases where I ended up buying a second copy of a book because I needed the book, and couldn’t figure out whom I’d lent it to. This is a small price to pay for being able to spread good books.
    • The one thing I do to increase chances of getting books back, is that on the book, I write “KABRA” in really large block letters using a thick marker pen. This ensures that the borrower never forgets whom they borrowed a book from, and eventually they return it.
  • Buying Second Hand Books: There’s a raddi-paper shop on Baner Road that keeps a stack of second hand books, and sells them at really low prices – Rs. 10 or 20 or 30 depending on the size of the book. I go there once every few months, and end up buying 5 to 10 books on each visit. Being able to buy books so cheaply really helps with making it easier to do the maybe buying and the indiscriminate lending described above.

How my reading increased in the last few years

I used to read a lot in my childhood. And this significantly reduced after I started working. Only in the last few years, I’ve managed to again pick up a habit of reading regularly. I think this is because of 3 major things I did: setting up the Kindle app on my smartphone, subscribing to an online library which delivers physical books to my door with just a click of the mouse, and setting up reading queues as described below.

  • Reading Queues: One of the problems I used to have earlier is that when I heard about a book, I was usually too busy to even think about reading, and later when I was less busy, I wouldn’t have appropriate books handy. This might be a problem specific to my and how I function, but I’ve managed to get around it by having reading queues.
    • Reading Queue #1: The online library that I use, BigBooks, allows me to create a queue of books that I want to someday borrow from the library. Whenever I hear about some book that I want to read (usually through social media, or my friends), I check if BigBooks has a copy of that book, and add it to my queue. So, when I am done with the current book, I simply go to the BigBooks website, and ask them to deliver the next book. They randomly pick one book from my queue and send it across.
      Note the important thing here: A book get added to the queue when I hear about it; and I get it in my hand when I have time to read it. This separation has significantly increased my reading.
    • Reading Queue #2: For books that are not available with the library, I usually buy a kindle version and have it delivered to my phone. This book now sits on my phone, ready for me whenever I have some free time – this can be while commuting, while waiting for a meeting to start, while standing in some line somewhere. I read in small chunks of time. It’s amazing how much reading you can get done this way. I finished all of Crime and Punishment by just reading it during the interstitial gaps in my days.
    • Reading Queue #3: Whenever I find an article online that seems interesting, but is too long for me to read right away, I use Amazon’s “Send to Kindle” feature to send that article to my Kindle App on my smartphone. This article now sits on my Kindle app until I read it – either in the next few days, or even weeks later, depending upon how busy I am. In this age of 140-character updates, being able to read long, well thought out articles is a superpower.

Books and Children

  • Reading is one of the most important habits you can inculcate in a child.
  • Many parents have strong feelings that children should read good books, or useful books, for some definition of good/useful. I don’t agree with this thinking. It doesn’t matter what the child reads. Anything is fine. Even if the parents think it is trash. Juvenile stuff like Captain Underpants, shallow romances like Twilight Series or Mills and Boon, is all fine. Any kind of reading helps the child in the long run.
  • It’s not easy to get a child to take up reading. With TV and computer games competing for their attention, books suffer, and parents exhortations don’t really work. In the last few years, I’ve seen that the more I and meetu read in their presence, the more the kids have started reading. And of course, limiting the amount of “screen” based activities they’re allowed in a day.
  • Buy and keep appropriate books around the house. You never know when a child will get interested in which book. I’ve had cases of my kids suddenly pick up and read a book years after I bought it and asked them to read it.

Will antibiotics stop working and will medicine be flung back to the 19th century?

Antibiotics have literally changed the world. Before antibiotics were invented, it was pretty routine for people to die of minor infections, like being scratched by a rose bush, or during childbirth. But antibiotics changed the world of medicine in ways that could only be described as miraculous.

Unfortunately, there is a possibility, that at some time in the near future, antibiotics will stop working as more and more antibiotic resistant strains of bacteria are emerging, and faster.

I first came across this article earlier this year, and was sufficiently alarmed, but on second thoughts, I wasn’t sure whether the author was simply overhyping the whole thing. However, a few weeks ago, WHO has come out with a report on this issue, which pretty much sounds a general worldwide alarm:

“Without urgent, coordinated action by many stakeholders, the world is headed for a post-antibiotic era, in which common infections and minor injuries which have been treatable for decades can once again kill,” says Dr Keiji Fukuda, WHO’s Assistant Director-General for Health Security. “Effective antibiotics have been one of the pillars allowing us to live longer, live healthier, and benefit from modern medicine. Unless we take significant actions to improve efforts to prevent infections and also change how we produce, prescribe and use antibiotics, the world will lose more and more of these global public health goods and the implications will be devastating.”

Where are “antibiotic-resistant” bacteria coming from? This works in pretty much the same way as vaccinations work. Basically, when bacteria are exposed to less than a full dose of antibiotics (i.e. when you discontinue antibiotics before the full course is over), they develop an immunity to that antibiotic. Basically, literally, what doesn’t kill them, makes them stronger. Now this strain of bacteria starts spreading… This process repeats with all the different antibiotics we have. And sooner or later we end up with strains of bacteria that are immune to all antibiotics known to man.

And this problem is getting worse. For example:

Tetracycline was introduced in 1950, and tetracycline-resistant Shigella emerged in 1959; erythromycin came on the market in 1953, and erythromycin-resistant strep appeared in 1968. As antibiotics became more affordable and their use increased, bacteria developed defenses more quickly. Methicillin arrived in 1960 and methicillin resistance in 1962; levofloxacin in 1996 and the first resistant cases the same year; linezolid in 2000 and resistance to it in 2001; daptomycin in 2003 and the first signs of resistance in 2004.

Source

What is the meaning of all this? A hundred years ago, people used to die of minor infections. We, who’ve been lucky enough to be born in the age of antibiotics don’t know what that feels like. But maybe we’ll get to experience that soon enough:

The chief medical officer of the United Kinigdom, Dame Sally Davies — who calls antibiotic resistance as serious a threat as terrorism — recently published a book in which she imagines what might come next. She sketches a world where infection is so dangerous that anyone with even minor symptoms would be locked in confinement until they recover or die. It is a dark vision, meant to disturb. But it may actually underplay what the loss of antibiotics would mean.

This is not just a problem for people who get injured. A lot of modern medicine depends upon antibiotics. Most surgery would become potentially lethal if antibiotics don’t work:

Many treatments require suppressing the immune system, to help destroy cancer or to keep a transplanted organ viable. That suppression makes people unusually vulnerable to infection. Antibiotics reduce the threat; without them, chemotherapy or radiation treatment would be as dangerous as the cancers they seek to cure. Dr. Michael Bell, who leads an infection-prevention division at the CDC, told me: “We deal with that risk now by loading people up with broad-spectrum antibiotics, sometimes for weeks at a stretch. But if you can’t do that, the decision to treat somebody takes on a different ethical tone. Similarly with transplantation. And severe burns are hugely susceptible to infection. Burn units would have a very, very difficult task keeping people alive.”

Forget surgery. Something as simple as childbirth will become dangerous once again:

Before antibiotics, five women died out of every 1,000 who gave birth. One out of nine people who got a skin infection died, even from something as simple as a scrape or an insect bite. Three out of ten people who contracted pneumonia died from it. Ear infections caused deafness; sore throats were followed by heart failure. In a post-antibiotic era, would you mess around with power tools? Let your kid climb a tree? Have another child?

Update: I was reminded by Farhat (see his comment below) of a few things that I left out of this post:

  • This is already happening. In the last one year, I know of at least two cases in my friends’ circle, where an elderly person, who was otherwise healthy, and was admitted to a hospital for a non-life-threatening condition, and was cured, but contracted a “hospital infection” just before getting a discharge, and then died less than 2 weeks later because the “hospital infection” did not respond to any antibiotics.

What should we do about this?

  • First and foremost, STOP ABUSING ANTIBIOTICS. Do not take antibiotics unless it is really necessary. And if you do take antibiotics, do not discontinue midway. Discontinuing antibiotics midway is one of the main sources of antibiotic resistant strains.
  • Stay away from hospitals unless it is life-threatening.

Should we be afraid? Very afraid?

References: