The 3 Bs in the news
The much-talked about triad of initiatives by the IRDAI to quickly ramp up Bima or Insurance penetration are:
1) Bima Sugam 2) Bima Vistar 3) Bima
Vahak. What are these 'Bima triplets'?
BIMA SUGAM: The most ambitious program of the regulator -- creation of an electronic marketplace where all insurers, intermediaries and insurance buyers(insureds) can come together, compare thvarious products on view, their features, prices, etc. and then easily buy, sitting in the comfort of their homes. What is more, Bima Sugam would have claim settlement features too, where documents can be uploaded and the claim journey can be viewed in a transparent manner. It will be the UPI moment for insurance, say media reports. Too good to be true, but I submit, please have a look at the flipside:
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a)?Media reports galore, but Bima Sugam has not yet been initiated. Issues on who would operate it, who would bear the Capex/Opex costs & whether all stakeholders would come to the party are big question marks. Established insurers with large market shares & well-set distribution channels- Will they display all their products & pricing on the platform? Distributors look at it with suspicion, given the price arbitrage that the platform would purportedly create if a buyer goes direct. Finally, the buyer – Is she hesitant to buy because of accessibility being not there? No sir, the need for insurance or the perception that claim-settlement is an onerous task? puts people off. The Trust- deficit prevailing is not being addressed. Perhaps, those who already buy insurance may start using the platform, but how will the uninsured masses be attracted/driven to the platform? The role of an intermediary can never ever be underestimated in this regard.
b)?The time and monetary resources Bima Sugam would take before stabilisation would be humongous. As I had stated in an earlier post, when the ONDC has the capability?to include insurance, among other products in its marketplace and is already functional partially, do we need to start from scratch all over again? Will it not make sense to collaborate and latch on to ONDC for quicker and cheaper marketplace requirement, if at all?
c)?Comparing Bima Sugam to UPI is not apt. The aim of UPI was to make bank transfers faster, safer and digitalised. It was not meant to promote bank transfers. People were already transferring money from one to another through cheques, demand drafts, etc. UPI as an option is quicker and comes free , so people have adopted it. In case of Bima Sugam, if the idea is to bring first-time insurance buyers to the platform, how can it be compared to UPI? Hope the electronic and print media see the difference.
BIMA VISTAR: This is an exciting prospect – a package policy , covering Life, Health, Property, PA. How this will play out remains to be seen. Will it be an attractive option for buyers? Will it be a viable options for insurers? Being commercial organisations, insurers would not sell any product that does not give them top-line volumes + healthy bottom-lines too, with the social cause of insurance penetration being low down in their priorities, and why not? Can they be forced to sell products that does not meet or sync with their corporate strategies? To be fair, let us give space and see how this product pans out.
BIMA VAHAK: The exposure draft for this has come out for suggestions. It will be a new channel (preferably women) at the Gram Panchayat level to push sales of Bima Vistar in rural areas. Yes, a new product through a new channel. Well, looks a bit stretched. What’s more, Bima Vahaks can be either corporate BVs or individuals appointed by corporate BVs and can represent one insurer only.?Corporate BVs will be appointed by the insurers and existing agents/PoSPs cannot become BVs. Do not see the logic. Is it felt that this will be a cheaper channel? Answer is No. Being a new channel, the initial cost of recruiting, training, hand-holding and supporting will have to be done by insurers for which they would need permanent teams – additional fixed costs. It would be better if existing insurance channels too are allowed to appoint and support BVs, if rural areas penetration is the motive. Again, a wait and watch.
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The regulator has taken a consultative approach in each of the aspects. Unfortunately, the discussions do not appear to be open and?possible roadblocks/pitfalls, not discussed at all by the stakeholders, who merely agree to all the proposals, knowing full well, they would not be capable of/ unwilling to implement all of them, the way they are intended to, in letter and spirit.
Let us put our best foot forward to ensure that the existing pie in insurance is enlarged and the protection-gap reduced.
Independent Insurance Professional
1 年Too much confusion in insurance market place with insurance space being cluttered with new products and formats of distribution. The Regulator is doing his Best to increase penetrations but the fact remains that the customer and his psyche is the same when it comes to buying insurance. Time and industry will shape and decide the future contours..
Joint Director at School of Insurance Studies
1 年All three B's very well explained Balasundaram R . All three aim at Simplification. Simplification of products and ease of selling with a presumption that insurance is a pull product and customers will be suo motto attracted to buy it as they buy other commodities from other digital platforms. Fully endorse your views that the root cause of low penetration - customer dissatisfaction needs to be addressed first. Bima Sugam does talk about claim process simplification. Time will only tell how this simplification helps the customer at the grass root level or only the educated people in urban areas will be benefited. Standard products being offered by the Insurers ( under compulsion by IRDA) have not received much response, the Insurers are being indifferent,as it does not align with their corporate strategies. So, we can't expect much from Bima Vistar unless it is mandatory to do certain business from that portfolio. Bima Vahak seems to be a newer concept and might help in Insurance awareness and penetration amongst women in rural areas. Initial cost of recruitment and training may be high but might help in the long term.
In Search of Truth
1 年First of all I must admire you for putting forth your views without fear or favour. It is easy for a person like me to be critical because I am not holding any important position in any insurance organisation and hence I do not mind incurring the displeasure of those in authority. A few days back, a leading member of your insurance broker community, shared a Whatsapp message with me, which was compendium of cloyingly sweet eulogies of the CEOs of insurance companies regarding the much anticipated arrival of Bima Sugam which they term as a watershed moment for insurance industry. Without having tasted even a bit, these guys are going gaga over the menu card itself. First of all, is there an honest investigation of the root cause of customer dissatisfaction in the insurance industry ? Without ascertaining the "Causa Proxima" how are we rushing to administer some medicine ? Too much of feigned euphoria over a mere concept which has not yet seen the light of the day is actually a disservice to the idea itself. There should be some restraint in showering encomiums just to please the authority in power. Dilli ab bahut door hai.
Chief Executive Officer at Insure-Edge
1 年Thank you for the lucid exposition of the concepts and the intent of the IRDAI. However, if insurance inclusion was so simple, why the experts in the field since 1818 could not imagineer them before. Experiments such as nationalisation, then allowing private and multinational entry, the introduction of concepts such as micro-insurance, bancassurance etc. have all failed to motivate the average citizen. There is probably no short-cut and everyone may have to relook at informing and advising customers and ensuring that treating customers fairly may hold the key to marketing insurance. The IRDAI must discipline those who fail the customer by violating the regulations.
Chartered Engineer, Insurance Broker & Certified Arbitrator
1 年I think these initiatives are being overly hyped. They have reached a peak of inflated expectations and will now descend down the trough of disillusionment before ascending again through the slope of enlightenment and on to the plateau of productivity. These things can succeed only if there are corresponding efforts to improve customer journey at the time of claims and reduce trust deficit. I don’t see much traction on that front. If that’s the case, it will be like Vande Bharat trains. They can run fast but the tracks and signaling systems have not been improved to allow them to run at their full speed.