Page 46 - Insurance Times August 2023

FEATURE

3 Pitfalls in Insurance

olicybazaar.com recently released an insurance triggers. Even within financial prudence, tax savings via
P consumer insights report based on a survey of health and life insurance is a leading trigger.
3,300 respondents across 27 cities. The report
However, the attitude seems to be changing. The survey
covers various aspects, including the reasons for
indicates that 33 per cent of 1830yearolds now show
buying or not buying insurance and parameters that
increasing preference for term insurance — a pure
influence purchase decisions. Here are three key survey
protection product — against 18 per cent in 2019.
findings and takeaways for policyholders:
With the new tax regime investments will no longer be
FINDING #1 necessary for those choosing the new regime. Often, at the
The survey indicates that while 96 per cent of respondents eleventh hour, illfitting insurance policies with hefty
were aware of health insurance, a lower 69 per cent have premiums are bought to save on taxes. ‘Push’ from sellers
considered it, an even lower 52 per cent owned it and only a who, in turn, earn
mere 43 per cent are current owners. The awareness to
good commissions on them plays a major role in this. These
ownership ‘funnel’ is even more discouraging for life insurance
customers can now exercise more prudence and choose a
where 85 per cent are aware but only 28 per cent own it.
suitable product.
Of the nonusers/nonowners in health or life insurance, cost
FINDING #3
and lack of funds was the leading reason, according to the
survey. Cost or lower cost for higher coverage in both health
(disease cover) and life (covered amount) is a leading
Another set of reasons for lack of policy ownership is related
parameter for filtering policies by customers, according to
to product confusion, paperwork involved and lack of
the survey. The survey points to cost as being a leading
understanding. According to the survey, an offline network
impediment. But on an overall basis, costing cannot improve
of family/friends and agents through that netwok, leads the
unless mass adoption of insurance is achieved. The report
information sources for research and channel of purchase
mentions mortality protection gap of 91 per cent and the
(agents). Google search, YouTube and comparison websites
health protection gap at 35 per cent.
also influence information, according to the survey.
Network of hospitals and nearby hospitals is also a parameter
Agents can do the ‘handholding’ to clear product confusion,
in choosing health insurance. However, with availability of
but the best way to shake off lack of understanding is to
cash reimbursement, ideally this should not be a barrier.
visit each insurer’s website and gain firsthand knowledge.
High claim settlement ratio, time taken for settlement and
An early start to insurance clears the cost hurdle as well
dedicated support rightly figure in life insurance parameters.
along with supertop ups and family floaters.
But the same reason, when used for buying health
FINDING #2
insurance, can produce mixed results. Claim settlement in
The survey shows that customers still treat insurance as a
health is undifferentiated at 9598 per cent claim settlement
financial product — which is why they cited investment in
rates for all leading insurers. The number also misses the
other assets with higher returns as a reason for letting their
extent of the actual claim serviced by the insurer which
life insurance policy lapse.
sometimes can be a lot. Interestingly, addons linked to OPD
The survey also points out that ‘Push’ is the largest trigger and shorter waiting times (for PED) also figure in parameters
for purchase of insurance, led by family and friends, agents for health insurance. However, customers should note that
and banks. Financial prudence, led by starting a family, job nondisclosure of PED is among the leading causes for claim
change or inadequacy of corporate cover, which should drive rejection and hence, they should be upfront and not cover
insurance purchase, ranks lower than push and fearbased it up because of higher wait times. (Source: Business Line)
The Insurance Times August 2023 39