Page 8 - Life Insurance Today January 2018

Product Innovation: Claim Settlement:
While several products were add-ons to the existing Motor and health, which constitutes 65-70% of the
policies, most new policies were in crop insurance and industry, has always been the Achilles heel for the general
motor insurance. In the current financial year, about 70 insurance industry. It is beset with losses in the third party
new products, including add-ons, have been launched in motor segment, which is 35% of the industry losses. Many
the general insurance segment, according to the IRDAI. customers only realise at the time of making a claim that
While several products were add-ons to the existing their health insurance policy does not cover certain
policies, most new policies were in crop insurance and medical conditions or ailment. Policyholders usually
motor insurance. General insurance sector have already depend on what has been told to them by their insurance
received Rs 10,000-12,000 crore from crop insurance and agents, who sometimes overstate the coverage. To prevent
premiums is likely to touch Rs 18,000-20,000 crore by the such cases, the IRDAI have asked insurers to group
end of current financial year. together all policy exclusions upfront in the policy
document.
In the first year itself, industry is expecting to get Rs 20,000
crore through crop insurance and premiums are likely to Another change with the new regulation is the
grow in the coming year. It's one of the new segments that introduction of penal interest. If the customer is not paid
general insurance industry is focusing on. Even long term the claim within 90 days of reporting, the insurer has to
two wheeler policies were filed by various insurers. This pay the bank rate + 2 per cent interest for every day of
segment has seen premium in the range of Rs 300-500 further delay. Often, there is a delay in the settlement of
crore. Industry as, of 1.72 lakh complaints in 2016-17, claims. It could be a three month or six month delay, or
about 50 per cent related to unfair business practices, more. And the insurer's lethargy over the claim would be
according to IRDAI's consumer booklet 2016-17. made known to the public only when IRDAI publishes its
annual report. Multiple indemnity policies having identical
Many a time, exclusions are lost in a maze of fine print. coverage does not benefit the policyholder, ideally
But the IRDAI has now said that the terms and conditions coverage in multiple policies should be mutually exclusive.
for claims, renewals have to be bifurcated. So that
customers exactly know the coverage limits of their policy. When buying multiple benefit policies it is important that
An important addition pertinent to policyholders is the the second insurer is made aware of the existence of the
regulator's insistence that the insurer mentions service first policy as that forms a crucial part of underwriting. The
parameters or turnaround time. Now the regulator is health insurance policies such as Mediclaim are indemnity
trying to increase accountability by insisting they put up covers i.e. only the hospital bills get reimbursed up to the
on their website the average servicing time taken for sum insured of a policy. The other variant of health
services -as approved by their board. The spread of general insurance policies are the defined-benefit policies i.e. the
insurance business in 2015-16 was as follow: entire sum insured gets paid on the occurrence of the
defined ailment irrespective of the
hospital bills.

For the past couple of years, insurance
companies have been sharing data to
detect frauds in the system. They have
tied up with LexisNexis and Experian to
collate database on frauds. Accordingly,
they are training claims assessors to
document claims decisions and have
proper evidence on record to repudiate

“We don’t see things the way they are. We see them the way we are”

8 January 2018 Life Insurance Today

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