Insurance sales to see reforms in 2016

One of the solutions has come up in the form of simple over-the-counter products, which could be sold in rural as well as urban areas

Insurance sales might undergo changes in 2016. With more number of telematics devices hitting the market and simple over-the-counter (OTC) products being sold by companies, it would be a win-win situation for policyholders.

Low insurance penetration (below five per cent of the gross domestic product) has been a cause of concern for the sector as well as the regulator, Insurance Regulatory Authority of India (Irdai). One of the solutions has come up in the form of simple OTC products, which could be sold in rural as well as urban areas. Irdai Chairman T S Vijayan had also said the regulator was looking at allowing such products in life and general insurance.

These products would have a standard structure of features with standard pricing. These products are expected to be low-ticket basic insurance coverage in the areas of life insurance, health insurance, motor insurance, and cattle insurance.

Similarly, a universal health insurance scheme is set to be launched in 2016. This might even have the Rashtriya Swasthya Bima Yojana merged with it. Family covers for four members would be available with options of including a senior citizen in it. This, however, could alter the pricing.

Irdai is also exploring ways to make insurance popular online via e-commerce. It has formed two groups — comprising life insurers and general insurers, respectively — to look into the opportunities in insurance e-commerce.

According to the regulator, insurance e-commerce would lower the costs and bring in higher efficiencies and ensure greater reach. This would also leverage the government’s Digital India initiative, aimed at creating a digitally empowered society and knowledge economy. The two groups will identify opportunities of e-commerce in the insurance sector, recommend technological solutions, suggest regulatory and other facilitation measures for growth, and synergise with Digital India initiatives of the government.

INCREASING COVER

• Low insurance penetration has been a cause of concern for the sector
• One of the solutions has come up in the form of simple OTC products which could be sold in rural as well as urban areas
• These products would have a standard structure of features with standard pricing
  

They are expected to be low-ticket basic insurance coverage in the areas of:
* Life insurance
* Health insurance
* Motor insurance
* Cattle insurance

• A universal health insurance scheme is set to be launched in 2016
• Rashtriya Swasthya Bima Yojana might be merged with it

Based on the recommendations, which could be out soon, the regulator would take decisions on how to expand the product category and how to make the e-commerce platform more attractive for prospective policyholders.

On after-sales servicing and premium benefits, telematics is expected to gain more traction. While only a handful of vehicles fitted with these devices that are designed to capture data including number of kilometres clocked every day, average speed, vehicle location and engine run time, many more devices are hitting the market causing prices to come down.

Although the real intent is to use the data to incentivise or disincentivise customers based on driving behaviour, insurers are currently focused on collecting data. When adequate data is collected, this will be used to give premium benefits to policyholders.

Similarly, mobile phones could be used for not only purchasing products but also for claims intimation and settlement. Insurance policies in electronic format will also be accessible from the mobile.