All-in-one policy plan to spread insurance in India

If India’s insurance regulator’s plans fructify, households across the country could soon be able to get an affordable single policy that covers health, life, property and accident, get their claims settled within hours, and even secure value-added services such as gym or yoga memberships at the time of buying a policy.

In an ambitious bid to expand the poor insurance penetration in the country, the Insurance Regulatory and Development Authority (IRDA) is devising a new affordable bundled product to give citizens protection against multiple risks, and seeking to expedite claim settlements by linking death registries onto a common industry platform.

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These initiatives are part of a broader overhaul, including legislative amendments to attract more investments through differentiated licences for niche players similar to the banking sector, with an eye on making insurance “available, affordable and accessible” to citizens with a ‘Gram Sabha- to district- to State-level’ approach. The regulator believes these changes could double the number of jobs in the sector to 1.2 crore.

Huge protection gaps

Flagging “huge protection gaps” that exist “even today in almost all the lines of the insurance, be it life, health, motor, property or crops,” IRDA chief Debasish Panda said on Thursday that they are striving to create an “UPI-like moment” in insurance through a plan worked out with general and life insurance firms that he termed “Bima Trinity”.

A new Bima Sugam platform will integrate insurers and distributors on to one platform to make it a one-stop shop for customers, who at a later stage can pursue service requests and settlement of claims through the same portal.

The regulator is simultaneously developing a possible lynchpin product Bima Vistar that will be a bundled risk cover for life, health, property and casualties or accidents, with defined benefits for each risk that can be paid out faster than usual without the need for surveyors.

“We are trying to design it in a manner so that there are parametric triggers which don’t need a surveyor to assess the loss. If there is a loss, the defined benefit immediately goes to the bank account of the policyholder. We are trying to price it in a manner that it is affordable,” Mr. Panda said, adding that banks can possibly be given an auto-debit authority for the premium payments.

The third part of the trinity envisaged by the IRDA entails a women-centric workforce of Bima Vaahaks (carriers) in each Gram Sabha that will meet the women heads of each household to convince them that a composite insurance product like Bima Vistar can “come in handy if there is any distress”.

With many States digitising their birth and death registries, Mr. Panda said the IRDA platform, if integrated with those registries, could help settle claims as fast as six to eight hours or a day at the most.

The game changer

“All a policy holder needs to do is go to the platform, use his consent to pull their policy from insurers’ repository and the death certificate. The engine at the back-end will process the claim from the insurance company and put the money in the bank account within 6-8 hours or maximum, the next day, the claim settlement can be in your account. We believe that this is going to be a game changer,” he emphasised.

To meet the target of providing insurance cover for all by 2047, the IRDA is also looking to form State-level insurance committees similar to the ones prevalent in the banking sector, and rope in State governments to formulate district-level plans, he said at the Confederation of Indian Industry’s annual meeting.

Also read | Insurance sector needs ₹50,000 cr. capital per year to lift penetration: IRDAI

Separately, the IRDA has proposed amendments to the insurance laws that the government may take up soon, which will allow differentiated capital requirements for niche insurers so as to attract more investments, and permit players to add value-added services to the policies they sell.

“Currently, the statute doesn’t permit this. For example, if you are selling a health cover, and you give a yoga membership along with it, then I would believe a millennial girl or a boy would be keener to go for such a product, rather than a plain vanilla product. Or you can offer a nursing service for the parents of that person who could be living 1,000 km away,” Mr. Panda explained.

“The amendments will also enable the entry of new players in the form of micro, regional, small, captive players, specialised players, and even composite licences. By doing this kind of differentiation, we will be able to cater to different geographies and the different strata of the population,” he said.

To buttress the idea, he cited the developments on the banking front, where the central bank oversees several types of banks addressing the needs of different geographies and segments of the population, such as payment banks, small finance banks, co-operative banks, et al.