Standard travel policy to ease purchase of product: Who should go for it?

Those travelling to developed countries or needing elaborate coverage should consider existing plans

The Insurance Regulatory and Develop­ment Authority of India (Irdai) has focused in recent months on getting insurers to launch standard insurance policies. There is Saral Jeevan Bima for term insurance, Arogya Sanjeevani for health insurance, a standard personal accident cover, and so on. It recently came out with an exposure draft for standard travel insurance policies for domestic and overseas travel. This policy will be launched on April 1.

Will act as benchmark

A standard policy can serve as a benchmark for customers. Sanjay Datta, chief of underwriting-claims and reinsurance, ICICI Lombard General Insurance, says, “Customers find it difficult to understand insurance wording and covers. With a standard cover, they get a benchmark against which they can compare other covers.”

Those who find it difficult to compare features across policies can go for the standard one, assured in the knowledge that they will get a policy whose features have been mandated by the regulator.

Expect it to be cost-efficient

While the standard policy’s features will be uniform across general insurers, other aspects can vary. Pankaj Verma, head–underwriting, SBI General Insurance, says, “Insurers can determine the premium and add-ons themselves.”  

Since the policy will be basic in nature, it is expected to cost less.

Milind V Kolhe, chief underwriting and reinsurance officer, Bharti AXA General Insurance, says, “Insurers will price the product, depending on various internal parameters, like their underwriting experience. But compared to the products available today, the price of the standard product should be a little lower.”

Pricing will also depend on coverage.

Naval Goel, chief executive officer and founder, PolicyX, says, “Some of the existing plans could be more or less expensive than the standard cover, depending on the amount and breadth of coverage and add-ons they offer.”

Multiple options available

The standard travel policy will be available as an individual and a group cover, and for domestic as well as overseas travellers.

The domestic policy will have five variants: travel by any mode of public transport — within city and outside city; train journey; air travel; and domestic tours involving road, water, train, and air travel. The overseas policy will have four variants: long-term trip (students); short-term trip (tours/leisure which covers travel by road, water, train and air); multi-trip during a policy period (business); and coverage only for travel (onward and return).

Who should go for it?

Travellers with basic needs should opt for the standard cover. Dutta suggests that travellers look at the coverages to understand which policy — standard or non-standard — suits their needs better. “If your needs are basic, choose the standard policy as price comparison across companies will be easier.” 

Your perception of risk should also play a part. Kolhe says, “In many existing products, there are more covers, which may not have a high frequency of claims, but if the event happens, the severity could be high.”

Choose depending on the destination you are travelling to. If you are travelling to the US, Canada or Europe, you may be better off avoiding the standard policy. “The liabilities tend to be higher in these countries, so it may be difficult to be properly covered with a standard policy,” adds Kolhe.

The nature of your trip will also matter. The standard cover may not cover a wildlife African Safari, while some existing plans could.