Govt sets performance targets for state-run general insurers for FY27

Government sets ambitious FY27 KPIs for PSU insurers, targeting lower claims ratios, faster settlements and stronger digital adoption

The government has prepared enterprise-level key performance indicators (KPIs) for state-owned general insurers for FY27, setting a target to bring down the incurred claims ratio (ICR) to 85 per cent over the next five years. This compares with the general insurance industry’s ICR of 82.9 per cent, while the combined ICR of the four public-sector general insurers stood at 97.3 per cent in 2025. 

The insurers have been tasked with reducing the ICR of their group health insurance portfolios by 3 percentage points annually. They have also been asked to increase their market share in the retail health segment by at least 5 per cent every year over the next five years. Any regional office reporting an ICR of more than 90 per cent in the health segment will be required to explain the reasons, with monitoring by the head office. 

According to a government communication to the state-run insurers, the performance indicators cover operational strategy, customer-centric measures, IT strategy, HR strategy and compliance. 

Insurers have also been directed to identify the root causes of high loss ratios in health insurance and take corrective action. They have been asked to introduce outpatient department (OPD) coverage in selected health policies, supported by actuarial pricing, if it helps reduce loss ratios. 

Insurers have been asked to increase cashless claim settlements by at least 5 percentage points annually in offices where the ratio is below 80 per cent. 

Further, noting the high pendency of claims in motor third-party, fire and engineering segments, the government has directed insurers to form task forces to reduce claims pending for more than two years across all lines of business by 90 per cent over the next year. They have also been asked to settle all high-value claims of more than ~50 lakh within six months. 

The insurers have been directed to strengthen fraud prevention mechanisms and conduct quarterly performance-linked reviews of surveyors, third-party administrators (TPAs), investigators and advocates. 

On the customer front, general insurers have been asked to launch at least two new products annually in the health and motor segments. The proportion of claims settled within three months should increase by 2 percentage points every year. 

Insurers have also been asked to produce short awareness videos in regional languages, with at least 10 videos to be released every quarter and shared with the Department of Financial Services (DFS). 

The government has also asked insurers to strengthen their digital presence through digital marketing strategies. Engagement rates are to be measured and increased by 5 per cent every quarter during the current year. 

Every general insurer has also been directed to launch dedicated mobile applications for customers and agents within the next two years. Within two-and-a-half years, all products should be available through the apps for enrolment, renewal and claims processing. 

On the HR front, insurers have been asked to implement a 100 per cent objective performance appraisal and promotion system through the HRMS portal within six months. 

The General Insurance Public Sector Association (GIPSA) has been asked to frame the criteria and submit them to the DFS within three months. The framework of non-performance and removal based on proposed criteria needs to be defined by GIPSA. Adherence to turnaround times may be added as an objective criterion for performance evaluation, the

communication said. 

In addition, all marketing officers in Scale III and above have been advised to meet monthly targets for client meetings and field visits across locations, with these metrics potentially forming part of promotion criteria. 

The performance of the bottom 5 per cent faring officers on field visits across the company, has be assessed and if their non-performance is found to be beyond any excusable reasons, they may be removed from the organisation after due process. GIPSA has been asked to formulate a framework for non-performance-based removal within three months. Insurers have to submit progress reports on all KPIs every quarter, within one month of the quarter's completion.