Embracing regulatory transformation and innovation, the year 2023 was nothing short of a milestone for the insurance industry. The dynamic customer needs served as a catalyst of change and the industry rose to the occasion with several customer-centric policy changes. The regulatory authority is already steering the sector toward Insurance 2.0 with initiatives like Bima Trinity, bringing about better accessibility and inclusivity to the insurance industry.
From the adoption of modern technologies for creating seamless customer experiences to transforming claim settlements, the year saw many successful endeavors to redefine the insurance landscape. The IRDAI’s inspiring objective has every stakeholder united in the mission of a fully insured India by 2047, the efforts of which are already visible.
Let’s delve into some of these standout initiatives that defined the industry’s trajectory this year.
Amendments to EOM and deregulation of commission
IRDAI has indeed shifted from a rule-based approach to a principle-based approach and it is reflected through several changes that have been recently introduced. One such example is the amendment to EOM (Expenses of Management) which provides far greater flexibility and autonomy to the industry players. This is an enabling provision for the industry in ways more than one.
The insurance players can decide how to manage their fixed cost and commission as per the model that best suits them. As the stakeholders get a better grip on managing their expenses and reduce the cost of distribution, this will lead to a better pricing structure and ultimately benefit the end consumer. This will synergise the multi-directional efforts of the industry towards the holistic objective of bridging India’s protection gap.
The integration of Account Aggregator framework
Albeit introduced a few years back, another important initiative that has gained traction this year has been the “Account Aggregator Framework” wherein an entity regulated by the RBI can share consensual data from individuals among financial institutions. This initiative not only offers enhanced security but also holds long-term convenience for the end consumer. The framework collects consent to access an individual’s financial information with their existing financial institution and transfers it to the financial institution providing them the service in a secured manner.
Insurtechs getting the nod to integrate this consent-based framework translates to ease of data transactions in the same manner as UPI had eased payment transactions. The need for safe and secure data exchangecannot be stressed enough and this RBI-regulated framework facilitates the same. This also makes the entire process a lot more seamless and hassle-free. With safe and seamless access to digital data, the account aggregator framework has made the policy issuance process much simpler and tamper-proof for the consumer. The reduced drop-off rate and faster policy issuance would also translate to higher penetration of term insurance in India.
Fastracking innovation with Use & File procedure
This year, IRDAI also expanded the scope of Use & File procedure for life insurance industry, which was earlier introduced only for general insurance products. With this modification, insurers are now allowed to use and file individual and group-linked products. This promotes new launches in the market with a quicker turnaround time and less procedural formalities. This fosters a positive environment for product innovation and widens the scope of insurance in a holistic manner.
Comprehensive Policies, Simple Wordings
Gone are the days when policyholders would need to decipher long, complicated documents to understand the insurance policies they are buying or even considering to buy. As per the latest IRDAI mandate issued in October this year, the insurance companies would have to release a revised customer information sheet (CIS) from January 1.
This sheet would declare in simple language “as a snapshot” the details of the insurance policy. This would include key details in simple words like coverage extent, exclusion, mandates, waiting periods, etc. Also, it would detail out finer concepts like migration, guidance on claims submission, portability or free look cancellation.
Not just that, all insurance companies would be required to ensure that the policyholders have reviewed this information sheet and signed on it. Earlier, the regulator had also formed a 12-member committee to find ways to simplify the complex insurance policy wordings.
Essentially, this means informed policyholders, which would lead to more trust in the insurance sector and a lower number of disputes. And of course, a seamless experience for the policyholders.
Cashless Health Insurance – Anytime, Anywhere
In one of the most innovative solutions ever brought into the insurance industry in the country, we saw the emergence of ‘Anywhere Cashless’ health insurance. The entire health insurance ecosystem is working together to bring 100% cashless settlements to life soon. This potentially can break all walls when it comes to claim settlement challenges faced by policyholders. Now they can avail cashless treatment at any hospital in the country irrespective of whether that hospital falls in the network hospital category of that insurance company.
One can say goodbye to the cumbersome reimbursement processes and complex paperwork, because their preferred hospital is not part of the insurance provider’s network. It won’t be unjust to call this a revolutionary feature which will help policyholders concentrate on their recovery rather than worrying about the bills.
Easier and quicker claim settlement to the rescue during distress
The ‘Anywhere Cashless’ claims feature is not the only initiative transforming the claims experience. In certain exceptional events, there are also instances where claims have been processed even before being filed by the policyholders or their nominees.
Recently, IRDAI asked the insurance companies to “suomotu” settle the insurance claims of the Odisha train tragedy victims. The insurers were directed to simplify and expedite the claim settlement process if the insured was identified in the injured/deceased and travelling in the same train. There were special camps and helplines set up as well to ease the process for those affected.
This was done for policyholders affected by Cyclone Biparjoy and the most recent Cyclone Michaung as well. The insurers were asked to expeditiously settle claims by promptly activating their resources for surveying and investigating the extensive damage on human lives, property and infrastructure across multiple states. This lays the groundwork for making it a standard practice without any external intervention.
It is fair to say that 2023 sets the stage for further evolution of the Indian insurance industry. As the industry embraces digitalisation and streamlines processes to enhance customer experiences, it may turn out to be a watershed year in this journey of transformation.
Views are personal. The author is Joint Group CEO, PB Fintech