Page 36 - The Insurance Times October 2021

The insurance regulatory body maintains that introduction
of standard insurance plans will make it easier for consumers
to select services owing to the standardization of the process
and easy availability of offered services. Standardisation not
only improves consumer choice but also increases
competitive pressure on insurers to offer the best services
at relatively lower prices than other insurers. So a positive
side effect of the standardization has been the intensified
price competition that has further benefitted the
consumers. The year 2020 was, therefore, the year of
standardization and digitization in the life and non-life
insurance industry. It has paved the way for a more
developed and consumer-friendly market so that insurance
insurers would under-cut each other in a bid to gain market penetration in India increases over the coming years.
share. Already, there is a concern amongst re-insurers that
life insurance pricing in India is too low. With IRDAI increasingly pushing insurers towards
standardisation of terms and services, executives from larger
Standardisation of insurance products would not only create insurance firms are sensing that this model listing covers
based on cheapest to most expensive could dilute its
trust and confidence in the minds of the policy holders, but
competitive advantage. There is no denying the work done
will also enable insurers to market their product easily and
help reduce disputes during the claim settlement process. by aggregators like PolicyBazaar in expanding the size of
India's insurance market. But there is scope for a more
We have multiplicity of health insurance products. People
inclusive approach where disclosures on product types, age
are often confused which one to take because they don't groups and quality of claims service can be given more
have time or energy to go through bulky policy document.
prominence on the platform.
standard insurance products are akin to fixed deposit, while
other products are like specialised savings instruments, To be sure, the insurance industry of India has 57 insurance
which everyone may not understand. companies, of which 24 are life insurers, while 33 are non-life
insurers including standalone health firms. These companies
All the insurance companies should actively participate in can manufacture policies. There is a need to expand the
selling the standard products. It will not affect your revenue range of non-life insurance products currently available in the
but will only enhance it since competition will not be purely market. Thus, the Authority has formed a working group to
based on pricing but also claim settlements, grievance suggest, inter alia, product construct and policy wording for
redressal processes and how you interact with the new products in addition to the existing policies.
customers. The non-life insurance players are concerned
over their profitability in spite of a steady growth in their References:
1. https://indianexpress.com/article/business/how-
business in this fiscal.
standardisation-of-insurance-products-
The non-life insurance industry or general insurers reported 2. https://www.livemint.com/insurance/news/the-
incomplete-quest-to-reform-insurance
a 19.5 per cent growth in July with gross direct premium
underwritten at Rs 20,171 crore for the month compared 3. https://timesofindia.indiatimes.com/business/india-
business/irdai
with Rs 16,884 crore in July 2020. While insurance
penetration in India remains low, especially compared to 4. https://www.moneycontrol.com/investor-education/
insurance/classroom/the-new-saral-
advanced markets, the market is seen as having huge
potential for growth, even before the pandemic, due to its 5. https://www.business-standard.com/article/pf/irdai-to-
young population and growing middle class. The pandemic develop-standardised-products
revolutionized both the products and practices of the 6. https://www.globaldata.com/fdi-limit-hike-accelerate-
insurance industry. Whether it was life insurance or health insurance-growth-india
insurance, the industry witnessed standardization in 7. IRDAI Annual Report 2019-20
products and digitization of operations. 8. Newspapers & Journals. T

36 The Insurance Times, October 2021