Claims trends in Indian Insurance Market - Policy Pulse Podcast

Had a great chat with Patrick Kelahan and Hitesh Saini on the subject of insurance claims, the global trends, challenges, the imprint of technology in claims and how the claims handling in India compares with mature markets and the challenges thereof. You can watch the podcast on the following link:

https://youtu.be/up2tqFTgkWM

Here are my thoughts in this regard, some of which are have been addressed in the podcast.

While there has been a fair amount of brouhaha in the Indian Insurance market about enhanced penetration of insurance, the focus has been on the distribution side of things like the Bima Sugam platform, more licenses to insurance carriers and the like, claims apparently have been left out like a step child with little attention being given.

Claim is the main product of insurance, but it’s often contemptuously viewed as an undesirable by-product of underwriting. The combined ratio talks of claims “cost” plus expenses as a fraction of premiums. Claims aren’t being seen as an investment that’s needed to keep the insurance business going; for if there ain’t no claims, there ain’t no insurance either.?

Some of the issues with claims in the Indian market are systemic. The low penetration and low awareness of insurance are corollaries to each other. Most people who buy policies aren’t sufficiently insurance literate, so they don’t know when, how and what to claim, how to present and how to support their claims with evidence and paperwork. This causes friction and mistrust while dealing with insurers at the time of claims, when faced with many requirements to validate their claims.?

On the other hand, given the general public’s apathy to the core principles of reciprocity and trusteeship underpinning the insurance mechanism, a section of the customers treats insurance as a cash cow, resorting to opportunistic as well as organized fraud. To counter this, insurance companies and their surveyors, TPA’s or investigators, at times employ a combative and interrogative style of claims handling, which leads to further mistrust.?

In commercial claims, Indian insurers themselves are often not clear about their own products, leading to underwriting at the time of claim. They’re suffering from a severe talent deficit. I find their frontline people are confusing even basic principles like insurable interest. The problem also extends to other stakeholders, such as insurance intermediaries, surveyors and almost everyone else.

Contract enforcement continues to be poor and dispute resolution takes ages. Commercial claims are like the Russian Roulette, where out of 10 claims, one or two may get stuck while the rest sail through. Often difficult to predict which shall pass and which shall stall. The likelihood of stall increases with magnitude and complexity of claims.?

The digitalisation of claims has happened mainly on the transactional or workflow aspects of claims, but not on the core assessment side. There has been reduction of paperwork and faster settlement through cashless mode for motor and health claims. Fraud detection is one area where digitalisation has been put to good use with trigger based investigations. However, the use of AI in claims assessment has not seen much traction, wherever they have been implemented.?

A lot of work needs to be done on the claims front to gain customer trust which is needed to drive penetration. While systemic issues like lack of insurance consciousness take time to resolve, other things like knowledge embedment in people dealing with claims, contract certainty through standardization and better claims processes through enhanced digitalisation can certainly be prioritized for action.?