Page 24 - Insurance Times June 2021

things continue to remain under control in the next few define the severity of an illness which can lead to claims
days, we might see lesser number of Covid-19 claims going rejection if the customer does not understand the nuances
forward. Globally, 42 vaccines are undergoing human trials which is often the case.
right now, with another 151 in the pre-clinical stage.
For instance, critical illness plans that cover cancer specify
In India, three vaccines-by Serum Institute of India, Bharat the severity of the ailment and usually exclude early-stage
Biotech International and Zydus Cadila-are in human trials, cancer. Although defined benefit plans may not form a huge
and half a dozen more are in pre-clinical stage. Serum proportion of an insurer's health portfolio, segregating this
Institute's candidate is in phase 3 trial, while the other two bucket from indemnity will make the data sharper. Higher
are in phase 2. At least one candidate is expected to get rejection rate in the pure retail indemnity bucket, for
nod by December-end or early next year, and instance, sheds light on the sales practices of the company,
commercialization may begin by June 2021. While vaccines among other things. Also, within the retail bucket, it would
take at least five years to develop, Covid candidates are help if claims are further segregated for the insurer's own
going through all three phases of trials in a year. India has plans and Regulator's mandated standard offering Arogya
become the second-most affected country in the world after Sanjeevani.
the US, in terms of Covid-19 cases.
The pace of Motor Insurance business:
Need to slice health insurance claims The motor insurance business of insurance firms declined by
data for more clarity: 15.73 per cent during the period April-August 2020 amid
relaxation announced by the state governments in the
The moment of truth for a health insurance product is when
Motor Vehicle Act and the slowdown in the business due to
a policyholder raises a claim. So in rating insurance policies
the Covid pandemic. According to IRDAI data, total motor
for customers, claims data becomes an important
business premium fell to Rs 22,253 crore in the five months
parameter by which to assess an insurer. Policyholders' rates
ended August 31, 2020 from Rs 26,406 crore in the year-
insurers on the basis of their performance on claims
settlement, time taken to settle claims and complaints ago period. About Rs 1,850 crore declines was reported by
related to claims. four PSU general insurers only.
The overall degrowth (in motor) is the result of drop in
While this helps in ascertaining the performance of an
insurance company on a macro level, it may not give a clear premium mobilization in commercial vehicles where the fall
picture to the end consumers for two reasons: the numbers in sales of new vehicles has been steep. In September 2019,
are adulterated with group claims and claims settlement we saw a huge increase in motor business which was
rate does not give customers an idea about the out-of- primarily fuelled by the two wheeler and standalone TP
policies for private cars due to the Motor Vehicle Act. Most
pocket expenses they may have to bear despite having
of the cases were break-in insurances and were due for
insurance. Claims data needs to be cleaner and sharper. Now
that the pandemic has popularized health insurance, renewals. At Digit, we had seen a 500 per cent growth in
customers, advisers and even policymakers need to look at policy issuance especially in the two wheeler segment.
claims more carefully.
GI Council, which is a representative body of insurance
companies formed by Insurance Act 1938, said motor
Public disclosure documents, therefore, need to dedicate
more space to claims and distil the usual entries of claims insurance policies have to be renewed at the earliest. The
reported, settled, rejected and outstanding for the retail Council said the, The MoRTH letter on August 24, 2020
bucket and also capture the leakages (or the out-of-pocket advising state governments over the validity of vehicle
papers only extends to fitness certificates, permits, driving
expenses) from the claims filed. Slicing the data for retail is
licenses, and registration certificates. Here are the new
only one step and may still not reflect the true picture, if
rules:
the retail bucket comprises defined benefit health plans,
which pay the entire sum assured. The other type of health 1. Carrying vehicle license, registration certificate,
plan is indemnity policy that pays for hospitalization up to insurance documents etc., will not be required from
the sum insured. Critical illness plans come under the defined October if these documents are validated through
government portal.
benefit category as they pay the sum assured if the
policyholder contracts a defined illness. But such policies 2. The documents can be uploaded on Digi-locker or m-

24 The Insurance Times, June 2021