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A standard product for different insurance categories is need of the hour

Feb 23, 2019

The moment you log on to an insurance company’s website, you somehow get lost in a maze of products and their technical features.

In a bid to simplify the process, the insurance regulator has proposed a mandatory standard health product that will have same features across insurers. The real need in the industry is to replicate this model across insurance products.

Insurance is still sold and not bought. Considering that insurance penetration is merely 3.69 percent of the country’s gross domestic product (GDP) as per the Swiss Re sigma report, it is imperative that a push is given to insurance sales. A general perception is that the legalese in the policy documents are a deterrent.

In a standard health insurance product, for example, a simple list of inclusions and exclusions have been put in so that a policyholder is able to understand the features before buying the product. A common ruse with health insurance products is that the actual exclusions only come to light when a claim is filed.

Getting a similar product for segments like term insurance, home insurance and motor insurance would be a good start. While it is essential for customers to get a choice when they buy a product, those looking for only a basic cover can opt for a standard policy.

Take term insurance for instance. A standard term product could be for Rs 20 lakh with a basic premise of sum assured only payable in the event of death of a policyholder during the policy term. This will not only simplify the process but will also enable even those who do not understand financial products to be able to buy the product.

Though, this means that a customer cannot differentiate between insurers on the basis of products, but they can differentiate based on the claims settlement and servicing aspect. Considering that the features of a standard policy will be similar, it is likely that the pricing of such a product would be similar.

For customers who want multiple options and add-ons while buying insurance, adequate choices are already available in the sector. Both the regulator and insurers need to turn their attention who do not want any options.


IRDAI asks insurers to make provisions for IL and FS exposure

Feb 02, 2019

Insurance companies will have to make provisions for their exposure to the crippled infra lender IL&FS, industry regulator IRDAI said Thursday.

The IL&FS group with a debt of over Rs 94,000 crore, has been defaulting on its financial obligations since August and has also borrowed from insurance companies, even though the exact exposure of the industry is not immediately known.

Exposure to IL&FS cannot be written off; they will have to make provisions, IRDAI chief Subhash Chandra Khuntia told reporters on the sidelines of an event organised by the Insurance Brokers Association without offering any specifics.

Khuntia also went public with the watchdogs' concerns on the motor insurance service providers, wherein the quantum of commissions given by insurers is higher than the one set by the regulator.

Whenever it is coming to our notice, we are taking action. We have also done some focused inspection of some of the service providers, we are watching the market very carefully for some violations, he said.

Replying to a question, Khuntia said the regulator is speaking with the GST Council to lower tax on property insurance in vulnerable areas.

In the speech, he asked the insurance industry intermediaries to ensure that their conduct is ethical and pitched for self-regulation in this aspect.

He said mis-selling continues to be rampant in the industry and also called for a shift in practices to ensure that claims get settled quickly and more time is taken for underwriting and selling.

Khuntia said cybersecurity insurance will be a big opportunity going forward and asked the industry to hone their skills on underwriting and claim settlement, saying this is a niche area which needs specialisation.

He said the position of a broker is very crucial as he/she has to take care of both the needs of the customers as well as that of the company.

It only gets complicated because the broker is paid by the insurance company, he said, underlining that a customers position should also be considered important.

Source: Business Today

Insurers a worried lot with no takers for title insurance, inherent defects policy

Feb 01, 2019

High pricing of title insurance, lack of proper mechanism key pain points

Title insurance and inherent defects policy, which were touted to provide much-needed relief to homebuyers, have no takers.

These products address the requirements of the Real Estate Regulation and Development Act 2016 (RERA), but have failed to break ground among the developer community.

Title insurance provides indemnity to property developers and homeowners against defects in land title that arise out of third-party challenges.

The inherent defects policy provides cover to new buildings for damages caused due to structural defects.

Insurers disappointed

Apart from HDFC ERGO, which sold two policies in July, not many companies have been able to push their offerings, sources told BusinessLine.

Insurance companies, which were anticipating easy take-off for these products, are a disappointed lot. “There was a lot of buzz as the need for title insurance was felt as part of RERA Act. We went out of our way and developed the product, created capacity and expertise, but the take-off rate has belied expectations,” said Sanjay Datta, Chief – Underwriting and Claims, ICICI Lombard General Insurance.

According to Tajinder Mukherjee, Chairman and Managing Director, National Insurance Company (NIC), “not even a single buyer” has come forth to purchase it since the launch five to six months ago.

Bajaj Allianz General Insurance, too, is pushing for the sale of the product, and has quoted it to developers. But conversions are yet to happen, says Sasikumar Adidamu, its Chief Technical Officer.

Insurance broking company Marsh India has been getting a number of enquiries across stakeholders such as housing finance companies, lenders, private equity real estate players, and retail buyers.

“Some of the (enquiries) are at an advanced stage and conversions will happen over the next few months,” said Sanjay Kedia, Country Head and CEO, Marsh India Insurance Brokers.

Builders unhappy, too

Builders, on their part, blame ‘poor structuring’ and ‘high pricing’ for the lukewarm response for title insurance.

“The policies are insuring the land and its title. But against this, the premium so levied is charged on every apartment sold. This is not right. It makes the policy unviable and expensive,” a CREDAI member said, requesting anonymity.

The other point that developers raise are the high number of exceptions that may actually lead to claims being rejected. For instance, issues such as definition of “due diligence” – research that the developer does at the time of buying land – is not clearly defined. Again, developers are worried about subjective points such as “new information” leading to claim denials.

“Title insurance policies have too many exceptions,” said Rishi Jain, MD of Jain Group.

Moreover, builders get their insurance done in different ways. In most cases, they get their title insurance done by the land owner.

“In many cases of joint development, it is the land owner who does title insurance, while suppliers and contractors get construction material quality and labourers insured,” said Mayank Saksena, Managing Director, Anarock. Saksena maintains insurance companies should give more time for sales to pick up. But insurers say that lack of proper mechanism is the actual deterrent.

Since taking title insurance is still not mandatory, insurers feel making it enforceable will help push sales. According to Anurag Rastogi, Member of Executive Management, HDFC ERGO, uptake for title insurance policies will improve once Section 16 of the RERA Act is enforced and made mandatory.

“The Inherent Defect Insurance Policy is not mandatory under RERA. But a few States have done it. But further clarity is required,” he said.

Kedia of Marsh India, too, feels that “the Indian insurance market is ready” and “enough capacity has already been arranged”.

“But uptake will happen when taking such policies are made mandatory.”

Source: The Hindu Business Line

Huge majority say they should buy health cover before age of 30

Jan 18, 2019

A high percentage, 85%, of respondents to a health and insurance survey believe they should get health insurance before the age of 30. Despite this, 20% of the respondents still don't have a health insurance policy, says GOQi which provides health and lifestyle solutions.

According to the 5th edition of the GOQii India Fit Report 2019, 90% of people believe healthier people should pay lower premiums on their insurance policies. 70% are willing to share health data with insurance companies to get a discount on premiums.

The common notion that continues to prevail is that insurance is confusing to understand, a prime reason that discourages people from buying a policy. The high cost of insurance also deters them.

What consumers want

Cashless hospitalisation (87.9%) is the most sought-after health insurance benefit followed by medical bill reimbursement facility (67.7%) and better treatment in the best hospitals (59.0%), the survey findings show.

Respondents at large feel that ideal health insurance should cover medical check-ups, cost of medicines, ambulance charges, dental treatment, post-surgery follow-up charges and preventive medicines. The other benefits they look for include accident coverage, good afterlife benefits, benefits for nominees, complete coverage / maximum cover, easy claim settlement, sum assured benefits and term insurance benefits.

Source: Asia Insurance Review

Startup offers bicycle insurance

Jan 14, 2019

Toffee Insurance, an all-digital InsurTech startup, is offering bicycle insurance across the country. The policy covers both the rider and the bicycle in a tiered pricing format, reported The Times of India. The cyclist insurance is modelled after auto insurance and covers both theft and accidental damage.

Toffee Insurance has spread its pan-India footprint to reach over 150 cities ranging from metropolises to Tier 4 & 5 cities. The product is sold at point of sale by 1,000 of the country’s top bicycle dealers.

Onboarded dealers use Toffee Insurance’s web app for real time policy issuance, servicing, and claims management. The pricing of the product is approximately 3%-5% of the bicycle cost. Details include:

* Theft is covered up to the cost of the bicycle
* Accidental damage to the bicycle is covered up to the cost of the bicycle (cashless payments)
* Accidental cover for the cyclist is up to INR200,000 ($2,840).

Toffee Insurance has tied up with Tata AIG General Insurance to provide cover for “Hero” brand bicycles, and with another general insurer for “TI” bicycles.

Toffee Insurance is a digital insurance intermediary founded in 2017.

State-owned insurers such as New India Assurance and Oriental Insurance already have market insurance policies targeted at bicycles. But the awareness of these products is still limited.

Source: Asia Insurance Review

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