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‘Insurance sector transforming, stakeholders must work together’
Feb 27, 2021
As the Indian insurance industry is in the midst of a transformation with changing customer preferences and growing digital adoption, it’s imperative now for all key stakeholders — insurers, Insurtechs and regulators — to work together to ensure the best experience for the end customers and thereby ensure success for the industry, says a report of Boston Consulting Group and India Insurtech Association.
The Indian Insurance industry has seen significant progress with life and non-life insurance growing at 17 per cent and 14 per cent CAGR respectively, in the past five years. The total number of lives covered almost doubled from 12 crore to 23 crore during this period and the non-life segment saw six new entrants, taking the total number of players to 34.
However, there is still scope for growth. The insurance market in India remains under-penetrated compared to global leaders. In the US, more than 90 per cent of lives are covered by life and health insurance, while in India the corresponding figures are only 28 per cent and 34 per cent, respectively. Other segments, including property and crop insurance, also have scope for more penetration.
The rapid adoption of digital in insurance and the changing customer behaviour along with the influx of new technologies have led to key shifts in the industry in terms of product innovations, emergence of ecosystems and data, and technology-driven innovations across the value chain.
Insurers have recognised these shifts and have effected rapid interventions to adapt. The companies that have invested in such change are already seeing impact on key metrics like profitability, productivity, NPS and turnaround time.
The fundamental shifts in consumer preferences have also accelerated innovation and the growth of Insurtechs. The Indian Insurtech landscape was dominated by multi-insurance players such as Policybazaar, Coverfox, and Renewbuy during 2014 to 2017. Since 2018, general insurance saw a higher share of funding due to the emergence of strong players like Acko and Digit Insurance. Funding to General Insurance focused Insurtechs has increased from a negligible share in 2014-16 to almost 75 per cent of the overall funding in 2020, it pointed out.
Insurtechs, both globally and in India, are driving innovation in the insurance industry, primarily by ushering new ideas, which the rest of the industry then builds on. A sizeable number of Insurtechs have been accelerating transformation across critical dimensions. In the current transformation phase, it is immaterial to ask, “Is the insurance industry about insurers leveraging technology or about tech companies offering insurance?” The answer should be coming together of insurers, Insurtechs and the regulator for the benefit of end consumers and industry growth.
Insurers on their part could identify right collaborative models and push for customer-centric innovations, while insuretechs could ensure a continuous pipeline of ideas and build scale with a digital-first mindset, leveraging data and analytics in addition to collaboration with insurers.
Regulators could facilitate collaboration between the two, allow insurers to buy some stake in start-ups, streamline product approval process and encourage the use of new data resources, said the report.
How to get a claim when a policy buyer goes missing
Jan 31, 2021
Life insurance provides financial security to the family in case the policyholder dies during the policy term. But what happen if the policyholder goes missing during the term and their whereabouts or death can’t be confirmed?
“A person can go missing through voluntary disappearance for some reason (for example, seeking to avoid creditors) or due to an accident, death or crime (such as abduction) at a location where they cannot be found. Typical situations where deaths cannot be confirmed include air crashes, accidents at sea, etc," said Chandan D.S. Dang, executive director, Securenow.in, a Delhi-based insurance broker.
In such cases what happens to the policy and the beneficiaries? Read on to know the answers to some pertinent questions.
When is the claim paid?
A claim is paid to the beneficiaries on the death of the policyholder or when he or she is presumed dead. In the case of a missing person, as per Section 108 of the Indian Evidence Act, 1872, the presumption of death can be made only if a person has not been heard of for seven years by those who would naturally have heard of him if he was alive, according to Rakesh Goyal, director, Probus Insurance. Accordingly, the beneficiaries will get the death claim only seven years after a person is found missing, except in certain circumstances.
In some cases, the insurers can curtail the seven years clause and pay the insurance claim amount to the beneficiary before that. “There are exceptions in case of missing people during natural calamities, plane crashes, terrorist acts etc. Under such cases, a list of missing people presumed dead is issued by the government. Most of the insurers take this list into consideration for the claim process," said Goyal.
In general, beneficiaries should file a missing report for the policyholder with the police. After seven years, the beneficiary must obtain a non-traceable report from the police. Next, they need to submit the FIR and the police non-traceable report to obtain a court order, presuming the person is dead. This process will help the beneficiary in getting the claim from the insurer.
Can the policy be continued? If the beneficiary or legal heirs inform the insurer that the policyholder has gone missing and they want to pay the premium on his or her behalf, some insurers may accept the payments.
“The premium can be paid by the beneficiary. But the maturity claim would only be paid to the beneficiary after a lapse of seven years, when the court decree for the missing person is submitted," said Dhirendra Mahyavanshi, co-founder of Turtlemint, an insurtech company.
How to file a claim?
Getting an insurance claim settled for a missing person isn’t simple.
The claim procedure of a missing person is not similar to the normal claim procedure, said Goyal. There is a long list of documents that the beneficiary has to submit to the insurer while making the claim. “The process is time-consuming and a bit more complex than the usual claim procedures," Goyal said.
“If a person goes missing, where there has been no natural calamity, the seven-year rule applies to get a claim. Till such time, all premiums would have to be duly paid. However, if the beneficiary can prove in the court of law that the missing person is dead, then the same can be accepted for a death claim along with an indemnity bond," said Mahyavanshi.
Generally, for death claim, the beneficiary has to submit some necessary documents like death certificate along with policy bond and the nominee’s know your customer (KYC) documents and bank details along with the claim form.
According to Mayank Mishra, partner, IndusLaw, a law firm, “Note that the presumption is only as to the fact of death, not as to the time of death. His death on any particular day will not be presumed and must be proved by evidence. Similarly, there is no presumption as to the facts and circumstances under which the person may have died," said Mishra.
In case of insurance claims for persons missing for seven years or more, the beneficiary would need to satisfy several requirements under the policy. A few examples are: 1) Time of death may be relevant if the policy has not been kept alive or premiums have not been paid on time. 2) The circumstances of death such as whether the person went missing while voluntarily engaging in life-threatening activities, said Mishra.
“In situations wherein the claim is paid to the beneficiary before seven years, the insurer might ask them to sign an issue protection bond. This is signed to state that if the missing person returns or is found alive later after the claim is paid, the nominee would have to return the claimed amount to the insurer," said Goyal.
Experts said the conditions are stringent to minimize the possibility of fraud.
How to make the most of free-look period in insurance
Jan 28, 2021
When an individual buys an insurance product, he or she is offered a free-look period at the inception of the policy. This period gives policyholders an option to do research even after they have taken a policy, and cross-check if the conditions mentioned in the policy documents are the same or not from what they had assumed.
According to the Insurance Regulatory and Development Authority of India (Irdai), the free-look period has to be provided for all life insurance policies, while in the case of health insurance, the policy term must be for at least three years. Depending on the insurance company and the state you reside in, the free look period can be between 15 and 30 days. Generally, the free-look period is of 30 days in the case of online policies.
“It is a good way for policyholders to completely check what the policy will cover and what it will not cover within this time, and if they feel they have a better policy from some other insurer, they can cancel the policy with minimal penalties," said Adarsh Agarwal, appointed actuary, Digit General Insurance Ltd.
After getting the policy document, the policyholder must specifically look for the coverage and exclusions in the policy mentioned in the documents to get a clear picture.
Once the policyholder is convinced that the policy terms do not match his or her expectations, the person has to communicate their intention to cancel the policy in writing.
“Some insurance companies prescribe a standard form for cancellation of policy during the free look period. Policy details, date of receipt of the policy document, the reason for cancellation, and agent details must be mentioned in the application," said Naval Goel, chief executive officer and founder, PolicyX.com, an online insurance marketplace.
Remember that the cancellation and return of the policy to the insurance company have to be done within the free look period to get a refund.
“If a person wants to make the most of the free-look period he or she should always fill in the right contact details in the form, make sure to save the delivery date and cancel the policy through the insurance company," said Goel.
On receiving the cancellation request, the insurance company will get in touch with the policyholder to know the reasons for the cancellation and try to provide solutions. However, if one still wishes to cancel the policy, the insurance company will have to process the request and issue a refund.
The percentage of the money the policyholder will get back varies from insurer to insurer.
As per Irdai’s regulations, if the insured has not made any claim during the free look period, he or she is entitled to a refund of the premium minus any expenses incurred by the insurer on medical examination and the stamp duty charges.
It is important to go through the policy document after buying the plan to avoid issues at the time of claim settlement.
The importance of network hospitals in health insurance
Dec 2, 2020
India’s COVID-19 count continues to rise with the total number rising above 9 million. The deadly virus has till now claimed over 1.3 lakh lives throughout the country, and the toll rises with each passing day. Considering the ongoing pandemic situation, it is imperative to have a comprehensive health insurance policy that can help you avail the best treatment possible at a hospital of your choice, without burning a hole in your pocket. Your comprehensive health insurance policy will not only provide you adequate coverage against the novel coronavirus (COVID-19), but will also cover you for all other illnesses and ailments such as cancer, stroke and diabetes. With your health insurance policy, you can not only avail quality healthcare, but also have the benefit of availing cashless treatment at your choice of network hospital. What this essentially means for the customer is that during hospitalisation, you can avail cashless treatment – without paying anything to the hospital – at your choice of network hospital.
What is a network hospital?
When you buy a comprehensive health insurance policy from your choice of insurer, you get a list of hospitals under the name of Network Hospitals. Apart from the policy documents, you can find this list on the website of the insurer as well. All hospitals mentioned in this list allow policyholders to avail cashless treatment at their centre. This means, the policyholder does not have to pay anything at the hospital for taking treatment, apart from nominal file charges. The biggest benefit of availing treatment at a network hospital is that the insured does has to run to different places in order to make financial arrangements and all expenses are borne by the insurer. The insurer directly settles the bill with the hospital without you paying any amount, provided the treatment is taken as per the policy terms and conditions.
Making a cashless claim in a network hospital
When you file for a cashless claim at a network hospital, there are usually three major entities involved – the insurance company, the hospital and the insured person. You can file an insurance claim under two categories – Planned Hospitalisation and Unplanned Hospitalisation (Emergency). In a planned hospitalisation, both the insurer and the network hospital are informed about the hospitalisation of the insured beforehand. As a process, before availing the treatment, the insured or the family members need to fill a pre-authorization form to get the person admitted. You can download the pre-authorization form from the insurer’s website; it may even be available at the hospital’s TPA counter. A TPA counter is a dedicated kiosk at the hospital premises where all the insurance-related queries and processes of the insurers are addressed.
Once the pre-authorisation form is submitted, the TPA desk will verify the submitted details and will inform your insurer regarding the claim. Once the insurer approves your claim request, an authorization letter is sent by the insurer/TPA to the hospital, stating the amount approved for the treatment. This amount is directly paid to the hospital by the insurance provider. The approximate Turn Around Time (TAT) for pre-authorized claims in the case of network hospitals is approximately 30 minutes to 2 hours. However, one must know that TAT varies from insurer to insurer.
Monthly health plan premiums a positive, but there’s a flip side
Dec 1, 2020
More and more first-time buyers in the younger age brackets are opting for the monthly premium option when going for health insurance policies, the recent buying pattern on Policybazaar.com, an online marketplace for insurance, shows.
The monthly premium option was introduced by the Insurance Regulatory and Development Authority of India (Irdai) in April to provide relief from steep one-time premium payouts after covid-19 struck. The regulator asked all health insurers to introduce the instalment facility immediately either on a permanent basis or as a temporary relief for a period of 12 months till 31 March 2021. The idea was first floated by Irdai in September 2019, when it asked insurers to file revamped policies, with the instalment option, from 1 October 2020.
Policyholders now have the option of paying premiums in monthly, quarterly or half-yearly instalments. However, only a few insurers are offering this facility as of now. Among the ones that are, most are sticking to the monthly option. “Instalment premium option is a good mechanism to help increase penetration of health insurance and encourage more people to get themselves insured, especially where affordability is a big challenge," said Prasun Sikdar, managing director and chief executive officer of ManipalCigna Health Insurance Co. Ltd.
As per the analysis done by Policybazaar.com, around 40% of individuals in the age group of 25-30 years bought health insurance through the monthly payment option against 30% for the annual payment mode from September to November. “Individuals in the top cities have much better adoption rate compared with people in tier-II or tier-III cities. It is an expected trend that younger people and those living in tier-I cities would be using this option, as they are most exposed to EMIs and personal loans," said Amit Chhabra, health, business head, Policybazaar.com.
The instalment option has given a boost to mediclaim policies this year, he added.
However, the instalment facility has certain fallouts. We tell you what these are and why all insurers are not offering it as of now.
Pricing: While the benefits are identical in the instalment option to the yearly payment mode, the pricing can vary from company to company.
According to Abhishek Bondia, managing director and principal officer, SecureNow.in, an insurance broker, the premiums under the instalment option can be marginally higher to account for the time value of money, which indicates that the value of money goes down over time.
Risk of lapsation and lack of coverage: Monthly option is convenient if you are in a cash crunch but remember to put a standing instruction in place for automatic periodic deductions. According to the Irdai circular in 2019, missing the instalment may result in lapsation of policy. In the case of monthly premium option, the grace period is around seven to 15 days against one month for the annual option, said Chhabra.
Moreover, late payment may mean absence of coverage for that period. During the grace period, the coverage of the policy will not be available from the due date of payment till the date of receipt of premium by the company, according to the Irdai circular.
The insurers also have the option to cancel the policy, in case the instalment is not received within the grace period.
Claims process: The instalment option may also impact the claims process. In the event of a claim, an insurer may deduct all the subsequent premium instalments from the claim amount, Irdai’s 2019 circular had said. For example, suppose the policy premium is ₹12,000, and you are paying ₹1,000 a month. If the claim is of ₹50,000 and you have paid just two EMIs, and ₹10,000 is pending. Then, the remaining premium amount of ₹10,000 will get deducted, and you will get a claim payment of only ₹40,000.
Still in the works
According to experts, not all companies have started rolling out this facility as they are still working on the technology part. Some of the large insurance companies that have rolled out this option are Star Health & Allied Insurance Co. Ltd, Care Health Insurance Ltd, HDFC ERGO General Insurance Co. and Cholamandalam MS General Insurance Co. Ltd.
“Monthly payment has been associated with lower persistency. So, insurers prefer annual payment modes to ensure high customer retention. Apart from the opportunity cost of investment income, insurer’s operating expenditure may go up, including changes in IT infrastructure, operational processes to track payments and accommodate change requests," said Bondia.
Health insurance has increasingly become a necessity, but it’s becoming unaffordable for some, given the rising premiums and the prevailing cash crunch situation. The instalment options thus works for a lot of people. The added advantage is that the policy benefits are the same. “Generally, for policies with the instalment premium payment option, the benefits do not vary. Only the premium frequency can be selected. Thus, it is an affordable option," said Sikdar.
However, keep in mind the fallouts of the instalment option. Moreover, it is not available for renewal of policies as of now.
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