The Indian government's proposed 100 per cent FDI in the insurance sector aims to stimulate competition, resulting in superior products, reduced premiums, and heightened customer service
The Indian health insurance landscape is grappling with the increasing burden of medical inflation, directly impacting insurance premiums. In a news report, Sumit Bohra, president of the Insurance Brokers Association of India (IBAI), highlighted this concern, stating that the rising cost of healthcare is a major driver of premium hikes.
Challenges In Claim Settlement
IBAI data indicates that private insurers settle 55-80 per cent of claimed health insurance amounts, often prioritizing smaller claims for quicker settlement. Larger claims may require more time due to increased scrutiny and documentation. This does not imply underpayment of legitimate claims.
However, one of the significant pain points for policyholders has been the lengthy and often cumbersome claim settlement process. To address this issue, the Insurance Regulatory and Development Authority of India (Irdai) has mandated that cashless claims be settled within an hour. Additionally, introducing the National Health Claims Exchange (NHCX) aims to streamline the process by providing a centralized platform for all stakeholders.
Government Reforms And Industry Innovations
The government has proposed several reforms to enhance the insurance sector. One such reform is the allowance of 100 per cent Foreign Direct Investment (FDI) in the insurance sector. This move is expected to increase competition, leading to better products, lower premiums, and improved customer service.
Another significant reform is the proposal to allow composite licenses for insurance companies. This would enable insurers to offer a wider range of products, including life, health, and general insurance, under a single license. This could lead to increased cross-selling and upselling opportunities, benefiting both insurers and consumers.
The Role Of Insurance Agents
While there have been discussions about allowing insurance agents to represent multiple insurers, Bohra emphasized the importance of maintaining the current regulatory framework. He argued that agents should continue to represent a single insurer to ensure ethical practices and avoid potential conflicts of interest.
Looking Ahead
The introduction of the Bima Sugam portal aims to simplify the insurance buying process and enhance transparency. However, the implementation of this platform may take some time due to the complexities involved in integrating multiple insurers and products.
Reducing or abolishing GST on health and term insurance is another potential reform that could benefit consumers, especially senior citizens. This could lead to lower premiums and increased insurance penetration.