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With multiple reforms and consumer-friendly initiatives announced by IRDAI in 2020, customers are bound to benefit in 2021.
‘Necessity is the mother of invention,’ goes a popular saying. When the COVID-19 pandemic hit homes and industries hard last year, IRDAI (Insurance Regulatory Development Authority of India) announced several customer-friendly measures. The Regulator’s mandate to all insurance companies – adopt a customer-first approach by introducing easier-to-understand policies. One innovative step was its Sandbox initiative, keeping evolving needs in mind.
Innovations and Initiatives
Through this, insurers can launch pilot products offering innovative coverage benefits. If a specific idea finds favour with customers, insurers can then provide full-fledged plans with innovative features. Long story short, insurers can play around with tentative ideas on a pilot basis but without running up high financial costs. Thanks to this 2020 initiative, customers are poised to benefit in 2021.
IRDAI also asked insurers to come up with affordable plans covering coronavirus as well as the launch of standard products to boost consumer confidence. Thanks to its nudge, insurers offered Corona Kavach (providing indemnity coverage) and Corona Rakshak (fixed-benefit plan), covering coronavirus-related treatment costs.
As COVID-specific short-term plans providing immediate coverage via affordable premiums, both are without deductibles. The two plans also cover comorbid conditions, including pre-existing ones, with tenures from 3.5 to 9.5 months. No wonder three million-plus policies were sold within months to customers seeking to remain financially secure if COVID struck.
What’s more, IRDAI told insurers to speedily settle claims concerning COVID-linked hospitalisation and treatment. Besides this, it has instructed them to speed up all other claim settlement processes and stressed that no claim be turned down without crucial reasons for doing so.
In enhancing customer trust, the Regulator also introduced easier KYC (Know Your Customer) norms via the online mode. Towards this end, physical signatures on proposal forms have been temporarily suspended because of coronavirus concerns. Instead, IRDAI told insurance players to provide online KYC facilities. Customers can now check their details online via digital signatures, OTPs or personalised verification links sent to their email accounts. Online KYC is convenient and safer for both customers and insurance agents.
In April 2020, the Regulator introduced a standard health insurance policy, Arogya Sanjeevani. Offered as an Individual Plan and Family Floater Plan, the policy also covers COVID-related hospital expenses. IRDAI stressed that such standard insurance plans would be easier to choose for customers. No doubt, standardisation and easier KYC guidelines are aimed at making insurance available and affordable for all sections of society.
Transforming Insurance
All these efforts of the Regulator can lead to transformative change in the insurance industry. For instance, affordability, availability and convenience can turn insurance from a push to a pull product. Awareness about the criticality of insurance has risen considerably after the outbreak.
Another critical element that will boost and benefit both insured and insurers is the shift towards digitalisation. Be it marketing, policy issuance or claim clearance, all aspects will gain greater growth from digital processes. Digitalisation has especially helped life and health insurers to innovate, create and distribute simplified online solutions cost-effectively.
The Regulator’s proactivity after the outbreak has been commendable. As coronavirus cases and deaths kept rising, doubts arose if such fatalities would be covered by life insurance. IRDAI advised insurers to clarify to customers that COVID-19 deaths would be considered as a general death, with claims admissible if the infection was diagnosed after policy issuance. In addition, customers were provided cashless treatment too. Apart from comforting customers, such proactivity gave a fillip to insurance sales. Furthermore, mandatory physical medical tests were suspended and policies issued via telemedical means and e-KYC.
To further benefit customers and increase transparency, for all health insurance plans issued on an individual and floater basis, insurers have been told to disclose the benefit/premium illustration. This will highlight the distinction between individual coverage and under family floater vis-à-vis premiums payable. Insurers must disclose the premium/benefit illustration norms by 01 April 2021. Due to these rules, once-complex health insurance policies will become simple to understand.
Finally, IRDAI mandated that all life insurers offer a standard individual term life insurance plan from 01 January 2021 called ‘Saral Jeevan Bima’. Undoubtedly, affordable insurance plans will drive greater penetration in rural regions that are lagging. Such an approach from IRDAI and insurers across the country could turn out to be a game-changer, driving greater pan-India insurance penetration.
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