Motor and health insurance segments are set to see a flurry of new launches with ‘novel’ features, as general insurance companies prepare to roll out more outpatient department (OPD) plans, pay-as-you-drive, and value-added-services-loaded motor products.
New products will now come faster to you
In June, the Insurance Regulatory and Development Authority of India (IRDAI) gave its nod to the use-and-file framework for new insurance product approvals, a move that was long-awaited by the industry. Under this system, life and general insurers are permitted to launch their products in the market and seek approval from the regulator later.
Though it has been only two months since the announcement, insurers say the new rules have lent flexibility and agility to the product filing and approval procedure. “It gives insurance companies the flexibility to come into the market at an early stage. This move will enable insurance companies to think out of the box and introduce innovative ideas,” says Rakesh Jain, CEO, Reliance General Insurance.Earlier, the product approval could take up to three to six months.
“Now, insurers can come up with new products, do the paperwork and start selling the policy immediately. IRDAI will evaluate the products later. If it is in accordance with the regulatory norms, insurers can continue to sell. If not, then IRDAI can issue an order to withdraw the product,” says Pooja Yadav, Chief Product Officer, Edelweiss General Insurance.
Pushing insurers to innovate
Besides introducing the new product approval system, the insurance regulator also allowed insurance companies to offer novel motor insurance add-ons — pay-as-you-drive, pay-how-you-drive, and motor floater policies.
Companies such as Bajaj Allianz, ICICI Lombard and Digit have already introduced such add-ons. “Pay-as-you-consume gives customers the flexibility to choose their insurance premium based on how they want to use their vehicle and intends to extend benefits to them, depending on their driving behaviour, using telematics. This will also encourage customers to drive safely, thus making our roads safer in the long run,” Tapan Singhel, MD and CEO, Bajaj Allianz General, said at the time of the add-on launch.
Health insurance, too, could see more cashless OPD and wellness or preventive care elements — where policyholders get discounts on renewal premiums if they maintain healthy lifestyles — being introduced as part of health policies faster.
“It is overall a pro-consumer step, and innovations will be brought to the market much faster than earlier,” says Dr Bhabatosh Mishra, Director, Underwriting, Product and Claims, Niva Bupa Health Insurance. In June, Bajaj Allianz General had rolled out a global health policy (approved under the older, file-and-use regime) that also covers planned treatment procedures abroad. More such products could make their way to the market faster than earlier.
Here are some of the ‘innovative’ products that are set to hit the market in the days to come:
OPD products for meeting out-of-pocket expenses
For long, many individuals in India have been sceptical of the need for health insurance during their healthy years. ‘Why waste the premium paid on the policy when I am not going to be hospitalised?’ has been the prevalent sentiment.
COVID-19 may have forced such individuals to re-evaluate this approach, but insurance companies, too, are increasingly acknowledging the gap in regular health insurance offerings: lack of coverage for routine, out-of-pocket medical expenses, such as pharmacy bills, doctor’s consultation fees and diagnostic test costs.
Several insurers such as ICICI Lombard, Bajaj Allianz, ManipalCigna and Aditya Birla Health already offer OPD covers. The number is only going to rise. These products cover doctors’ tele-consultation fees, besides offering discounts on pharmacy bills and diagnostic tests.
An increasing number of top corporates have already started covering their employees’ live-in partners, including LGBTQI couples, and specially-abled children in their group health policies, and this trend is likely to pick up pace.
IRDAI’s three motor insurance add-ons to the base policy — pay-as-you-drive, pay-how-you-drive, and motor floater — are likely to be offered by all general insurers sooner rather than later. In simple terms, these add-ons will mean lower premiums for policyholders who are cautious drivers or use their cars for limited purposes.
For example, work-from-home could mean that the policyholder uses the car only on weekends. “Until now, there were no incentives for individual driving behaviour. Now, IRDAI’s nod allows insurers to come up with innovative products. Under pay-as-you-use, premiums will be based on usage — certain number of kilometers or number of days that you can choose while selecting the add-on. Your driving behaviour will be tracked via a mobile telematics app,” says Yadav.
The motor floater add-on allows a policyholder with multiple vehicles to buy a single policy for all — this will ensure that the premium is charged only to the vehicles in use, bringing down the cost for policyholders.
Also read: How health insurance purchase has changed
Value-added services for motor policyholders
General insurers will also focus on offering value-added services beyond the core motor insurance cover, going forward.
For instance, ACKO Insurance is looking at this space very closely. “We are evaluating this segment. It will be a good game-changer. Car check-ups, maintenance membership, wash, and so on, we believe, would be good additions to our offering. Likewise, road assistance and music memberships. Put simply, two-three offerings that are not orthogonal, but relevant for the car-owner,” says Animesh Das, Senior Director, Motor Underwriting, ACKO Insurance.
Driver-on-demand is another benefit that the company is evaluating. Policyholders can use this service when they are out partying. Likewise, cab vouchers when the car is in the workshop. “Insurance has always been a push product. If you come up with new ideas that make the product interesting, the penetration could increase in general,” says Das.
Be aware of the risks
The innovations that insurers are set to roll out are likely to add value to your policy, besides ensuring that it is lighter on your pocket. However, since the new products and add-ons will be launched in the market without prior IRDAI scrutiny, policyholders need to be extra cautious.
The same is applicable to insurance companies, too, as the onus on ensuring that the product is compliant with regulations is now in their hands.
The fact that the regulator could direct the company to withdraw the product can create uncertainty, especially when insurers launch products with innovative features.
“What if the regulator, say, after nine months, feels that the product is not fully in compliance and orders edits or withdrawal? Any such modification later on could be a risk to the consumer. For an insurer, it is important to go in to the launch with complete confidence that every bit of scrutiny has been done,” points out says a senior executive at a standalone health insurance company.So, insurers will have to be more responsible while launching any product, but particularly those plans with features not tested in the market before. They will have to ensure that policyholders understand all the features and exclusion clauses they are signing up for, in order to prevent disputes in future.