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Improving insurance penetration through common service centers

Jun 6, 2016

An army of digitally trained individuals are leading a silent entrepreneurship revolution in the heart of Indian villages. Through common service centers (CSC) or Jan Seva Kendras, many young people (some even teenagers) have enrolled to become Rural Authorised Persons (RAP) to solicit business. These individuals need to undergo training and examination as specified by the Insurance Regulatory and Development Authority of India (Irdai), in the subject of insurance products and other necessary topics. The online examination for RAPs is conducted by the National Institute of Electronics and Information Technology or any other institute as approved by Itdai from time to time in their center spread across India. Through RAPs, the sale and procurement of general insurance products are extended among the vicinity of the village or town that they reside in.

But before we go into how CSCs can be used to increase insurance penetration, here is a background on the workings of a CSC.

A CSC is a low-cost setup and distribution center for government institutions to deliver e-governance services to the rural population. The CSC-SPV (special purpose vehicle) has been established by the Indian government under the National e-Governance Plan. To monitor and supervise the progression of CSC-SPVs, a State Designated Agency (SDA) acts as a nodal agency, and the Service Centre Agency (SCA) becomes the implementing agency which provides the required investment budget and the functional specification of the CSC as identified by the SDA.

Keeping in mind the eligibility norms to operate a CSC, the principal officer, a person employed by the CSC-SPV, should have a clean history without involvement in financial forgery or criminal acts, and should have the requisite qualifications and experience.

Insurance companies enter into an agreement with CSC-SPVs for distribution of its products through these centers. The timeline for such an agreement is fixed for three years. Insurance companies at their end, amalgamate their technology portals with the interface used by CSC-SPVs. A RAP within the contours of the village is authorised to solicit insurance business on completion of the necessary training and examination as specified by the authority. A RAP sells and procures general insurance products. The essential paper work and identification of the insured are seamlessly carried out at the CSC with the help of technology tools.

Premiums are collected by CSC-SPV centers in cash, which is later remitted to the insurer. The policy contract, too, is submitted to the prospect through the RAPs.

Such personal touch points through RAPs have given those in villages access to simple-to-understand products to mitigate the risk to life, motor, agriculture pump sets, personal accident insurance and farmers’ package policies. By limiting the sum insured of these products to Rs.2 lakh (other than for motor insurance), insurers are able to extend such micro-covers and obviate the risk emerging from such groups. Further, insurers have consciously decided to keep away complex products which require specialised knowledge on premium computation for RAPs’ to solicit and service products.

The freshly-created category of over-the-counter products are not only easy to comprehend for the village-level entrepreneur, but also the right entry-level product for the rural population.

A new channel of marketing and distribution of insurance products has been created through these digitally-equipped CSCs. The might of 157,000 technology-driven access points, which is growing each day, lies in the unexplored locally available talent across age groups. Today, Anganwadi workers, young local talent and even specially-abled people have joined the CSC movement, thus improving their skill sets and possibilities of a better livelihood.

These entrepreneurs on the ground level have the power to connect with local communities, which no outsider with the strongest branding campaign can create. The prowess of understanding the needs and speaking the same dialect as the local communities are creating a win-win situation. Task of expanding rural insurance penetration would no longer need tremendous efforts in creating the on-ground infrastructure. A cost-effective and efficient network is ready to be harnessed.

By imparting knowledge and training on curbing frauds, companies can embark on such progressive initiatives to arrest future fraudulent activities. Usually, frauds such as misrepresentation of underwriting data is being passed by the RAPs to the insurance company and non-integrity of complaint handling, claim assistance and settlement is envisaged while operating from such centers. If any of the entities are found guilty of fraud, necessary termination or suspension of the CSC-SPV, and cancellation of certificate of the RAP is immediately acted upon.

Wearing the mantle of inclusive development is not the responsibility of the government alone. By handholding village-level entrepreneurs and honing the skills of rural India through the CSC movement, insurance companies can play a crucial role in improving social and financial development.


Wellness features in health insurance make sense

Jun 1, 2016

Insurance companies have started offering additional benefits with their policies. Cigna TTK Health Insurance recently launched a ProHealth Plan that helps individuals deal with problems such as stress, overweight, smoking and irregular sleeping.

It also offers an optional ‘health coach’ programme for those with pre-existing diabetes and hypertension. A qualified dietician sets goals for the insured, such as keeping sugar levels in check, weight loss and maintaining blood pressure. “On achieving each goal, an individual accumulates points that can be used to reduce premiums or enroll in other health-related programme,” says Jyoti Punja, chief distribution officer.

Similarly, Apollo Munich Health Insurance offers an Optima Restore plan, wherein policyholders can get many benefits, such as customised diet and exercise plan and online health assessment. Bajaj Allianz General Insurance has tied up with about 40 service providers to provide a chat with doctor, chat with specialists for second opinion, personalised diet charts and discounts on gym membership with all its health products, according to Abhijeet Ghosh, head — health administration team.

“Insurance companies have been looking at different ways to reduce risks in their portfolios, as the insurance regulator no longer allows them to terminate a policy mid-way. They are introducing wellness and disease management features to ensure that their policyholders are healthy and claims reduce in the long term,” says Ramani Vaidyanathan, vice-president — health insurance at

In fact, after the regulation change, insurance companies have been very cautious of individuals with pre-existing chronic diseases, and it’s very difficult for such patients to get a regular health insurance. Some insurers have started launching plans exclusively for such individuals and incentivise them to keep their disease in check.

Companies offering wellness and disease management have also kept their premiums competitive. For a 40-year-old man opting for a Rs 5 lakh cover, the premium for Apollo Munich’s Optima Restore comes to Rs 8,415. The same cover from other insurers, which don’t offer a wellness programme, ranges between Rs 7,800 and Rs 8,400. Cigna TTK, on the other hand, charges a premium of Rs 7,924 for a 40-year-old opting for Rs 5.5 lakh insurance under ProHealth Protect Plan. If someone with the same profile has diabetes, he will need to shell out Rs 9,112 for premiums.

It’s worth opting for an insurance cover from someone offering disease management for a pre-existing ailment. “If you go for disease management on your own, it can cost around Rs 7,000-Rs 8,000 for a three months. These companies offer it at no extra cost. In addition, if a person maintains good health, he also gets discount on premium for the next year,” says Mahavir Chopra, director health, life and strategic initiatives at

Experts say before opting for a plan with wellness benefits or disease management, do go through the features on offer. Opt for them only if there’s real benefit. Many insurers only provide a discount and nothing more. Don’t fall for such gimmicks.

Source: Business Standard

For diabetes, insurers are becoming risk managers too

May 26, 2016

On April 7, earmarked as World Health Day, the World Health Organization (WHO) focused on the theme ‘Prevent. Treat. Beat Diabetes’, highlighting the importance of fighting the global epidemic. The first WHO global report on diabetes stated that the number of adults living with diabetes has almost quadrupled to 422 million in 2014 from 180 million in 1980. While China has the largest number of cases, India has moved to the second spot with 69.1 million people living with this health issue.

Our internal analysis of health insurance claims shows that claims with diabetes hovered around 20% during 2012-15. In a clear case of concern, claims with diabetes in the age group of 26–45 years contributed to 20–22% of the claims.

Uncontrolled diabetes increases the risk of ailments affecting multiple organs. Delay in detection and control of ailments as well as conditions such as hypertension, can lead to co-morbidity, which can aggravate other life threatening critical diseases. Adults with diabetes have a 2-3 fold increased risk of heart attacks and strokes. The overall risk of premature death among people with diabetes is at least double the risk of their non-diabetic counterparts.

Due to its chronic nature and the severity of complications, diabetes is a costly disease. Studies in India estimate that for a low-income Indian family with an adult diabetes patient, as much as 25% of the family income may be devoted to diabetes care. Apart from the financial burden, it curtails one’s ability to work effectively. Intangible costs (pain, anxiety, inconvenience and generally lower quality of life) also impact the lives of patients and their families.

But diabetes can be prevented or the complications can be delayed through daily exercise and healthy diet. Early diagnosis through regular blood sugar testing and timely intervention in terms of blood glucose control can enable one to live well, even if diagnosed with diabetes. In countries such as the UK and China, governments and their agencies are working towards preventing diabetes and reducing its consequences by creating a weight control programme. The approach involves multiple elements, including creating awareness about a healthy lifestyle, working with food industry towards making healthier foods, screening for diabetes and providing counselling on diet, exercise and medications, and patient management.

In India, policymakers are working towards diabetes control by introducing interventions as well as focusing on awareness and behavioural changes by promoting screening and early diagnosis of people with high risk followed by treatment. The recent discussions pertaining to imposing a cess on sugar sweetened beverages is in line with the WHO recommendation to governments to levy taxes on sugar-sweetened beverages to reduce childhood obesity. Several countries, including the US, France, Hungary, Mexico and Finland, have already taken measures on this front and early indicators point to the desired behavioural change in terms of consumption.

For India, it makes sense to take faster steps in this direction, considering that the annual per capita consumption of sugar sweetened beverages has increased significantly from 2 litres a person to 11 litres a person between 1998 and 2014. Further, there are added benefits to this in terms of water conservation when production of such beverages is brought down.

Insurance companies, too, are taking multiple initiatives to reduce incidence rates. Insurers are moving beyond their role of being risk financers to become risk managers by offering wellness solutions covering diet and nutrition consultation, fitness therapy and more. Insurers are also introducing indemnity-based outpatient department (OPD) products that enable customers to avail insurance benefits for consultation, diagnosis as well as pharmacy. These initiatives should motivate customers to become more responsive towards maintaining their health.

While diverse stakeholders work towards addressing the diabetes issue, it is ultimately in the hands of each one of us to take charge of our health. No incentive or penalty can substitute one’s resolve to lead a healthy life. Further, as medical treatments become expensive, it is important to stay protected against financial impact of medical expenses by availing of a comprehensive health insurance policy at an early age. As a society, we need to collaborate and ensure that we successfully prevent, treat and beat diabetes.


Revised IPO guidelines soon for insurance firms: IRDAI

May 23, 2016

Revised IPO guidelines will be issued soon for insurers as some of them are keep to tap this route, regulator IRDAI Chairman T S Vijayan said today while pegging the total foreign investment in sector at Rs 15,000 crore in the last one year due to increase in FDI limit.

Vijayan said the total investment of of more than Rs 15,000 crore has come to India in various forms -- mostly equity -- since the passage of the Insurance Laws (Amendment) Bill last year.

The bill, passed in March 2015, raised the foreign investment cap in the sector from 26 per cent to 49 per cent.

Addressing a press conference here, Vijayan said there may be some more investments in the pipeline.

On the insurance sector business last fiscal, Vijayan said there was 12 per cent growth in life insurance and 14 per cent growth in non-life insurance, while the health insurance sector grew by 40 per cent.

"Business has been good for all insurance companies in April. If this trend continues, we can expect higher growth in financial year 2016-17 also in life, non-life and health," he aded.

Vijayan said health insurance penetration is very low in India and there is potential for higher growth.

On regulations for IPOs by insurance companies, he said the Insurance Regulatory and Development Authority of India (IRDAI) may bring in some changes in the guidelines for the companies wanting to dilute equity.

"I am not very sure. I think there are one or two companies wanting to go for IPO. I do not know whether they have applied for clearance I do not know," Vijayan said when asked about the names of the companies that are planning to go for equity dilution.

"We started working on some changes in the existing norms for IPO. In a month or so we will come out with those norms," he explained.

HDFC Standard Life recently announced plans to launch its Initial Public Offer (IPO) wherein parent HDFC Ltd would sell 10 per cent stake. Besides, ICICI Prudential also plans to launch an IPO.

Meanwhile, Insurance Information Bureau of India said it is hosting 'IIRFA-2016', the Annual Conclave of Insurance Information and Ratemaking Forum of Asia here on May 26-27.

R Raghavan, CEO of IIB said IIRFA is a pan-Asian body of Insurance analytics and rate-making bodies and its annual conclave is held in a different member country each year. This year, it is being held in India, hosted by IIB.

Source: The Economic Times

Insurance ombudsman upping its act, disposes 92% cases in 2015-16

May 19, 2016

The Insurance Ombudsman of India has seen more success in disposing the grievances of the public when it comes to non-settlement of insurance claims, with the quasi-judicial body seeing a 92% clearance of cases as compared to 78% the previous year.

The drive to increase awareness — at its 17 centres in India — has picked up with faster disposal, larger settlements and no backlogs, said the insurance ombudsman's office, which handles claims in personal lines of life, motor, health, housing and personal accident insurance. The Tamil Nadu and Pondicherry office, in particular, has seen a 100% settlement of cases in last two years with 1,170 cases being disposed for the 2015-16 fiscal and 1,527 cases for 2014-15.

Outgoing Insurance Ombudsman, Chennai, Virander Kumar said that his office has awarded settlements for 972 cases amounting to about 507.61 lakh in the last three years. Decisions were overwhelmingly in favour of policyholders with ruling in 69% cases in favour of complainants and only 31% in favour of the insurance company.

Kumar said that in life insurance they were seeing a majority of complaints from mis-selling or over-representation of the benefits of a policy. "We had a case of a fraudulent broker in the city . We were constantly receiving complaints , but we were able to bring them to book only after we got hold of a single receipt for 3 lakh, when they actually had sold two policies from two different insurers for 1.5 lakh each . Another deviation was that they sold it via an agent's license instead of using their own broker license - and such things can happen only with the connivance of insurance companies. We brought it to the attention of the IRDA and we awarded relief for 35 of the 40 cases brought to us," Kumar added.

When it came to time taken for claims disposal the insurance ombudsman was able to review 87% cases within three months for 2014-15. Only 13% of cases took over three months for disposal. When it came to the number of complaints, life insurance sector saw a higher number of cases being registered. For 2014-15, as many as 995 life insurance complaints were disposed off versus 532 general insurance complaints.

In most cases, the insurance ombudsman was successful in convincing both parties to settle; with 902 cases being withdrawn or settled of 995 life insurance cases in total for 2014-15. Only for 93 cases did the ombudsman give awards. In general insurance also a majority of 333 cases were settled or withdrawn and 199 received awards.

The Insurance Ombudsman has been created to settle cases out of courts, so that policyholders have their grievances addressed in a timely and efficient manner and by experts without hiring lawyers and running into expenses. The quasi-judicial body is under the purview of the Governing Body of Insurance Council (GBIC), established under Redressal of Public Grievances Rules 1998.

Source: The Times of India

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