Mandating insurance not the way forward to boost penetration: Irdai member

T L Alamelu says health insurers need to address trust deficit; regulator has tried to standardise areas of concern such as definitions, pre-existing diseases, among others

Despite the fact that there is massive under-penetration in the county as far insurance is concerned, the regulator is of the view that the solution to this does not lie in mandating insurance because a stage has been reached where insurance should be a product on “demand”. It cannot be forced upon consumers by the industry or other stakeholders.

“There has generally been a feedback that either the regulator or the government should mandate certain types of insurance, but ideally the solution does not lie in mandating insurance,” said T L Alamelu, Member (Non-Life) Irdai.

“There has been a demand for mandating title insurance, drone insurance, and household insurance. The example before us is motor third party insurance, which is mandated by law, but still there are huge issues of under insurance,” she said at National Insurance Academy’s 16th Annual Insurance Summit. The regulator is now encouraging states to share the details of un-insured vehicles so that reminders and messages can be sent to vehicle owners.

Speaking on health insurance, Alamelu said the health insurance industry needs to address the underlying concern of trust deficit. It is in this context that the regulator has tried to standardise most of the areas of concern in health insurance, especially definitions, pre-existing diseases, widening the norms of portability and migration.

Furthermore, the regulator has brought in many standardised health products such as Arogya Sanjeevani, two covid specific products – Corona Kavach and Corona Rakshak. It has put out draft regulations for a standard product for vector borne diseases. Also, a standard term product – Saral Jeevan Bima – is also in the works. The regulator is also working on some other standard term products.

While the Irdai is trying to better consumer experience by bringing in standard products, it is also cognizant of the issues insurers are facing from service providers. “There is a lack of clarity on charges for treatment. During this period, we had numerous claims of non-acceptance of cashless claims and sometimes of huge charges which are completely disproportionate to the treatment”, Alamelu said.

“All stakeholders should work together and start with some degree of standardization of charges atleast for common procedures. We have been telling the industry and the service providers that they should towards standardization which will give immense boost to the health insurance industry”, she added.

Covid-19 has had serious implications on the insurance sector, especially life, given that it entailed human interaction and building trust. In the absence of physical intervention, the insurance suffered a great deal due to loss of premiums. But, M R Kumar, Chairman, Life Insurance Corporation (LIC) feels, due to the pandemic increased customer awareness is something that will push the traditional life business such as term and endowment positively.

While customer expectation itself may turn out to be a risk for insurers because of the kind of products the customer is looking at, the kind of service standards they are looking at, particularly the millennial customers.

“So, insurers have to offer convenience, simplicity, greater transparency ensuring that the insurance experience of the customer matches their lifestyle and needs,” Kumar said speaking at the same event.