BS BFSI Summit: Insurers hope amendment Bill will drive customer engagement

Insurers expect the proposed Insurance Amendment Bill to boost growth of the sector and customer engagement as it will open the market to a large extent.

 

The industry leaders were discussing the future of the sector at Business Standard’s BFSI Summit 2024 on Friday.

 

At a panel discussion themed Quarter of a century since liberalisation … What Next?, panelists said that currently relations with customers are purely transactional.

 

However, going forward, post the amendment Bill, customer engagement will become more than that. It will be on the back of value-added services, which will be included in the Bill, they said.

 

“In the initial concept (of Insurance Amendment Bill), value-added services are included. I think that can be a big shift if it happens. And, that way, you can present your option to consumers. Today, you can only sell pure insurance products. With value-added services, you can then sell other related services to the poor category,” said Mayank Bathwal, chief executive officer (CEO), Aditya Birla Health Insurance.

 

He also added, “So, for health insurance, there are related health services. For retirement, you can offer lots of other retirement services. These don't necessarily have that core component of insurance. But it is clearly related to the core offering, and the whole offering as a combination becomes much more attractive. One of the problems with insurance is that it's a very episodal engagement. But if these services start coming in, the customer will feel that I'm getting something back for what I've paid. I think that's the big one that we are seeing.”

 

Similarly, Alok Rungta, managing director (MD) & CEO, Future Generali India Life Insurance, also said that customer engagement needs to be more than transactional.

 

“The engagement has to be higher rather than making a transaction. Today, it is a transaction, not an engagement and that is where the customer experience also changes. See, there are only four steps, if you ask me about the lifestyle of a customer. I buy, I renew, or I cancel. So, these are the transactions which happen,” Rungta said.

 

According to a Swiss Re Sigma Report, the overall insurance penetration stood at 4.2 per cent in FY23 from 4 per cent in FY22. The non-life insurance sector stood at 1 per cent for both years.

 

Bathwal said that out of this, the retail health insurance penetration stood at 4 per cent and it can be further boosted by reducing health care and distribution costs.

 

Moreover, the ‘missing middle’ in the country find health insurance unaffordable and value-added services can make a big difference for them. This is because they cannot afford higher sum-insured products.

 

Meanwhile, Sharad Mathur, MD & CEO, Universal Sompo General Insurance, said that introducing variants in health insurance products will solve problems of affordability in regions beyond the metro cities.

 

Mathur said, “Affordability is especially felt among the underprivileged people of far locations of metros, Tier II, III and IV cities. To achieve this, we have seen variants of health insurance low-sum insured, high benefit health products. We have seen in Tier III and IV locations off-take of health insurance products rising and some insured is very low. So, it makes sense for insurers to reach out to them and the locations as this helps us in achieving two objectives — insurance inclusion and making sure that loss ratios remain low and products are tailor-made in such a way that they remain affordable. I do not see affordability issues in high-end markets. So, variants of health insurance products are able to address the situation of affordability in rural areas.”

 

However, health insurance faces several challenges, including grievance during claim settlement and fraudulent claims. 

 

However, Bathwal said, “Health insurance is not necessarily about misselling. Most of the times, it is not the intent of the distributor. Health insurance has the element of medical complexity. My only plea to everyone involved in the sales process is that all stakeholders should ensure that the customers understand what is being sold to them. This will solve most of the grievances.”

 

“With the use of technology, frauds have definitely come down. Maximum claims take place in the health segment. Some people also manufacture claims, leading to frauds. What we have experienced in our businesses is that such frauds have come down over a period of time because of the use of technology,” said Sumit Bohra, president, Insurance Brokers Association of India (IBAI).

 

He also spoke about the importance of getting perpetual licence for insurance distributors.

 

He added, “In our case, the licence has to be renewed every three years. So, that's the process and probably business continuity is being hampered because of the lack of process and all that. So, probably if this goes through, the distribution will get a new flip. There's a lot of investment, which will come into the broker's segment.”