When considering the factors that can affect your health insurance premiums, aspects such as age, gender, and driving record often come to mind. However, there are other lesser-known factors that can impact the cost of your insurance, including your health.

Here are five surprising factors, including health-related considerations, that can influence your insurance premiums:

Your occupation

While it may seem unrelated to health, your occupation can have an impact on your insurance premiums. Jobs involving high-risk activities or hazardous work environments, such as mining or aviation, may result in higher insurance premiums. Insurers perceive these professions as more dangerous, increasing the likelihood of injury or death.

Your hobbies

Engaging in high-risk hobbies like skydiving, rock climbing, or motor racing can also affect your health insurance and life insurance premiums. Insurance companies view these activities as potentially dangerous, leading to a higher premium to cover the associated increased risk. Such hobbies may raise concerns about potential injuries or accidents.

Your medical history

Your medical history, including pre-existing conditions and family health background, plays a significant role in determining your insurance premium. Insurers consider individuals with pre-existing medical conditions or a family history of illnesses as higher risks. For example, a family history of heart disease or cancer may lead to higher premiums due to the perceived likelihood of developing these conditions.

Your lifestyle habits

Certain lifestyle habits can impact your insurance premium, primarily due to their effect on health. Smoking, excessive drinking, and leading a sedentary lifestyle can increase the risk of developing health problems. Smokers, for instance, are known to have a higher risk of lung cancer and respiratory diseases, resulting in higher premiums. Similarly, individuals leading sedentary lifestyles may be more prone to obesity, diabetes, and other health issues, which can also lead to increased insurance premiums.

Considering these factors, including the impact of your health on insurance premiums, is crucial. It’s important to be aware of how your occupation, hobbies, medical history, credit score, and lifestyle choices can influence the cost of your insurance coverage.

By understanding these lesser-known factors, you can make informed decisions and potentially reduce your risk, leading to lower insurance premiums. Prioritising a healthy lifestyle and addressing any pre-existing medical conditions can contribute to both your well-being and potential cost savings on insurance.

We sit down with Pankaj Vashishtha, Co-Founder & CEO, Policy Ensure to talk about how they are leveraging technology and insurance industry adoption.

Give us a brief background on Policy Ensure’s journey far since its inception.

Policy Ensure is an insurance broker under IRDA License with a strong presence in tier 2 and tier 3 towns across India . Since its inception, Policy Ensure has been dedicated to simplifying the process of buying insurance with the help of POSP’s and ensuring transparency. They offer a diverse portfolio of general insurance products, including health insurance, motor insurance, home insurance, and travel insurance. With a partner-centric approach, Policy Ensure focuses on providing comprehensive coverage, exceptional service, and leveraging technology to enhance the overall experience.

How is the brand ensuring tier 2 & tier 3 insurance penetration?

The Policy Ensure brand is actively working towards increasing the insurance industry in tier 2 and tier 3 towns in India. They have implemented several strategies to ensure accessibility and awareness of insurance products in these areas.

Extensive Distribution Network: Policy Ensure has established a robust distribution network with tie-ups with local people as POSPs, operating in tier 2 and tier 3 towns. This enables them to reach out to a wider customer base and provide personalized assistance in understanding and purchasing insurance products.

Regional Offices and Branches: To strengthen their presence, Policy Ensure has set up regional offices and branches in tier 2 and tier 3 towns. These physical locations serve as touchpoints for customers to inquire, seek assistance, and purchase insurance policies. By having a local presence, they can cater to the specific needs and preferences of customers in these areas.

Digital Initiatives: Recognizing the growing digital adoption in smaller towns, Policy Ensure has invested in user-friendly online platforms and mobile applications. They offer digital channels for POSPs to compare, advise the right product to customers and manage insurance policies conveniently from the comfort of their homes. This digital accessibility ensures that customers in tier 2 and tier 3 towns can easily access insurance products and services locally with POSPs (Pepartners).

Education and Awareness Programs: Policy Ensure conducts educational initiatives and awareness programs in collaboration with local people and also train the young who want to start their insurance business. These programs aim to educate individuals and create awareness about the importance of insurance, its benefits, and how it can financially protect them and their families.

How is technology transforming the way Insurance is perceived in India?

Technology is revolutionizing the perception of insurance in India by making it more accessible, efficient, and customer-centric. With the advent of digital platforms and mobile applications, individuals can now compare, purchase, and manage insurance policies conveniently.

Technology-driven solutions such as artificial intelligence and machine learning are streamlining underwriting processes, improving risk assessment, and enhancing customer experiences. Insurtech startups are introducing innovative insurance products and personalized offerings. Additionally, digital platforms provide transparency, simplified claims processes, and 24/7 customer support. Overall, technology is reshaping the insurance landscape in India, making it more user-friendly, efficient, and responsive to the evolving needs of customers.

How has technology impacted the insurance industry, and what are some specific advancements that have transformed the sector in recent years?

Technology has had a profound impact on the insurance industry in India, driving significant advancements and transforming various aspects of the sector. Some specific advancements that have reshaped the industry in recent years include:

Digital Platforms and Mobile Applications: The proliferation of digital platforms and mobile applications has revolutionized the way insurance is accessed and managed. Customers can now compare, purchase, and manage insurance policies conveniently from their smartphones or computers. These platforms provide easy access to information, policy documents, and digital payment options, streamlining the overall customer experience.

Data Analytics and Artificial Intelligence: The use of data analytics and artificial intelligence (AI) has transformed underwriting processes, risk assessment, and claims management. Insurers can now analyze vast amounts of data to make more accurate risk assessments, automate underwriting decisions, and detect fraudulent claims more effectively. AI-powered chatbots and virtual assistants also enhance customer support and claim processing efficiency.

Internet of Things (IoT) and Telematics: IoT devices and telematics have enabled insurers to offer usage-based insurance (UBI) and monitor policyholder behaviour in real-time. Connected devices, such as telematics devices in vehicles or wearable fitness trackers, provide valuable data that insurers can use to offer personalized coverage and incentivize healthier lifestyles or safer driving habits.

Blockchain Technology : Blockchain technology has introduced transparency, security, and efficiency to insurance operations. It facilitates secure and tamper-proof record-keeping, improves claims settlement processes, and simplifies policy administration. Blockchain also enables the creation of smart contracts, automating policy execution and claims settlements based on predefined conditions.

Insurtech Startups: The rise of insurtech startups has brought innovative solutions and new business models to the insurance industry. These startups leverage technology to address specific pain points, introduce personalized offerings, and enhance customer experiences. They often specialize in niche insurance industry segments or introduce disruptive technologies that challenge traditional insurance practices.

Digitized Claims Processes: Technology has accelerated and simplified the claims processes in insurance. Insurers now offer digital claims filing, document submission, and tracking mechanisms, reducing paperwork and enabling faster claim settlements. Automated claims assessment tools, powered by AI, streamline the evaluation of claims, improving accuracy and efficiency.

These advancements have transformed the insurance landscape in India, making insurance more accessible, efficient, and customer-centric. Insurers are leveraging technology to enhance operational efficiency, deliver personalized experiences, and offer innovative products and services that cater to the evolving needs of customers also with the help of insuretech driver insurance brokers millions of new young people are setting up their insurance distribution business.

With the rise of insurtech companies, how do traditional insurance companies adapt and leverage technology to stay competitive in the market?

Here are some ways traditional insurers are embracing technology:

Digital Transformation: Traditional insurers are undergoing digital transformation to streamline their operations, enhance customer experiences, and improve efficiency. They are adopting digital platforms, automating processes, and digitizing policy issuance, claims management, and customer service.

Online Presence and Mobile Apps: Traditional insurers are establishing a strong online presence by developing user-friendly websites and mobile applications. This allows customers to access information, compare policies, purchase coverage, and manage their policies conveniently from any device.

Data Analytics and AI: Insurers are leveraging data analytics and artificial intelligence to gain insights into customer behavior, preferences, and risks. This helps them customize products, personalize marketing efforts, optimize underwriting processes, and detect fraudulent claims more effectively.

Customer Engagement: Traditional insurers are focusing on improving customer engagement by adopting digital channels for communication and support. They are utilizing chatbots, online chat functionalities, and virtual assistants to provide prompt and personalized assistance to customers.

Collaboration with Insurtech Startups: Rather than perceiving insurtech startups as competition, traditional insurers are collaborating with them. They partner with insurtech companies to leverage their technological expertise, explore new business models, and co-develop innovative solutions to enhance their offerings.

IoT and Telematics Integration: Traditional insurers are incorporating the Internet of Things (IoT) and telematics technologies into their products. They offer usage-based insurance (UBI) and use IoT devices to monitor policyholders’ behaviour, such as driving habits or health data, allowing them to offer personalized coverage and pricing.

Embracing Blockchain: Traditional insurers are exploring the potential of blockchain technology for secure data management, smart contracts, and improving transparency in policy administration, claims settlement, and fraud detection.

Enhanced Cybersecurity Measures: As digitalization increases, traditional insurers are prioritizing cybersecurity to protect sensitive customer data from cyber threats. They invest in robust security systems, encryption technologies, and employee training to mitigate risks.

Give us an overview of the phygital model.

The phygital distribution model of Policy Ensure combines the advantages of physical presence with the convenience of digital platforms. It aims to provide a seamless and integrated customer experience by blending both physical and digital channels. Here’s an overview of how Policy Ensure implements the phygital distribution model:

Physical Presence: Policy Ensure establishes physical offices and branches in various locations, including tier 2 and tier 3 towns, to provide face-to-face interaction and personalized assistance to customers. These physical touchpoints serve as convenient locations for customers to inquire about insurance products, seek guidance, and receive support from knowledgeable agents.

Digital Platforms: Alongside its physical presence, Policy Ensure leverages digital platforms, such as its website and mobile application, to offer a range of online services. Pepartner (POSP)can access these platforms to gather information, compare policies, sell insurance, and manage their policies remotely, manage their portfolio and see their earnings with complete transparency.

Offline Assistance: For customers who prefer in-person interactions, Policy Ensure’s physical offices and branches offer personalized assistance from trained agents. Customers can visit these locations to receive guidance on policy selection, understand coverage details, clarify queries, and complete the necessary paperwork.

Integrated Experience: Policy Ensure ensures a cohesive experience by integrating its physical and digital channels. Customers with PE partner who initiate their insurance purchase online can seamlessly transition to the physical channel if they require additional support or prefer face-to-face interactions.

Car driving in college is more of a thrilling and exciting experience. It is essential for college students owning their car to have their insurance policy in place.

However, if you’re under the age of 25 years, then you are supposed to shell out more for premium than your adult counterparts. As when you are a college student and young in age, insurance companies put you in a higher risk bracket as young people tend to drive rashly and are more prone to accidents and collisions as compared to the adults and thus charged more premium.

In India, there are no such special discounts or rebates given to college students for buying a car insurance policy, but surely there are several other ways which can help college students to get a car insurance policy at much better rates.

Forbes Advisor India has prepared a list of best insurance companies which are providing low-cost premiums to college students or young drivers not directly but on the basis of other ways. And, also prepared a detailed guide which assists college students in purchasing an insurance policy for their beast.

Methodology

We analyzed the best insurance companies for college students on the basis of several factors, such as:

Car Insurance Discounts (30% of the score): These are the kind of direct discount which college students might receive such as online discount, no claim bonus discount and multi-year discount policy, multi-vehicle discounts, which can further drive down rates.

Fully or Semi Digitized Process (20% of the score): Digitized and paperless process makes it easy for young and hi-tech college students to apply for policy issuance, renewals and ensures smooth settlement for claims.

Pay As You Drive (PAYD) (30% of the score): This is relatively a new kind of discount which is only offered by a few insurance companies in India. It is entirely based on how many kilometers you plan to drive in a given timeframe.

Voluntary Deductibles (10% of the score): It is that portion of the claim which the policyholder agrees to pay out of their own pocket, and thus it leads to a heavy discount in premium.

Cashless Garages (10% of the score): The better the tie-up insurance companies have with these garages, the more it assures the chances of having a cashless claim settlement in the time of contingencies which makes it super easy for college students.

Tips to Reduce Car Insurance Premium Cost for College Students

In India, there are no direct discounts and subsidies available to college students for purchasing a car insurance policy like the way it is given in the western part of the world.

Rahul M Mishra, co-founder and director, Policy Ensure, said, “for students/college students, discounts are currently not available. Though as tech is being incorporated based on usage, running Kms/per month, some of the companies are giving discounts”.

Below mentioned are the certain ways via which college students or young drivers can reduce the burden of premium cost up to a certain level.

Type of coverage purchased: The premium cost totally depends upon the kind of coverage that college students might apply for. For instance, the cost of the third-party insurance policy is quite low and starts from INR 2094 per annum. But the premium cost for a comprehensive plan is higher because it provides extensive coverage.

Location: If the college student drives in small or tier-2 and tier-3 cities, then the premium cost would be much lower as compared to cost associated with metros and tier-1 cities.

Age: Age of car owner is also an important component which helps in deriving the premium cost of the vehicle. Younger drivers tend to pay more as they have been statistically proven to be more prone to road accidents. But as your age starts approaching 24 or 25 years or beyond that, rates start to get low, assuming they have a great record of driving.

Kinds of Discounts Available: The premium cost also get decreased if the insurance company offers various discounts such as on online purchase, professional discounts, usage-based discounts, multi-year discounts or no claim bonus.

Voluntary Deductibles: If the policyholder opts for a higher deductible, then it automatically reduces the cost of premium charged.

Automobile Association Discount: If you are a member in any of the listed five automobile associations in India, then the insurance company will extend you a discount which might go up to the 5% of the total premium cost.

Pay As You Drive: PAYD, has become one of the most trending and useful add-on features in car insurance, which can prove ultra-beneficial to college students as their driving demand is quite limited as compared to their older counterparts. In the PAYD feature, the policyholder has to shell out from the premium depending upon the kilometers which they drive. The lesser the kilometers driven; the premium cost gets reduced in the same proportion.

Above mentioned are a few smart ways to reduce car insurance premiums which can definitely help college students in bringing down the premium cost.

Rakesh Jain, CEO of Reliance General Insurance, believes ” Keep a clean slate and get rewarded with a No Claim Bonus. With no previous claims, you can save up to 50% on your Own-Damage premium. Choose the voluntary deductible feature and pay a small amount during a claim to enjoy lower premiums and higher discounts. Just remember to pay the deductible upfront before the insurer settles the rest”.

What Do You Mean By Pay As You Drive (PAYD)?

“Pay As You Drive” or PAYD is a recently launched tech-enabled add-on cover which provides a discount up to 25% on the payable premium of own damage cover. This means you are no longer liable to pay a fixed premium on your car insurance policy, rather you pay a premium on the basis of the usage of the car.

The coverage of PAYD cover is quite similar to regular insurance coverage. However, here to get the benefits, the policyholder needs to declare the exact usage of the car in a given policy year. And based on the kilometers covered, the insurance company will provide the discount on the own damage premium. The policyholder can easily customize the insurance cover by choosing optional add-on covers.

It can be opted by any individual who drives less than an average of 10,000 kilometers in a year. Under this cover, the policyholder is eligible to receive a discount of up to 25%, subjected to the annual kilometer slab opted for an odometer reading.

Benefits of Pay As You Drive (PAYD)

Other benefits of PAYD for college students:

• Claim benefit up to 25%.
• No pre-condition or limit on kilometers.
• No extra changes even if the student drives extra kilometers.

The insurance industry also expects PAYD to be a game changer as it totally depends on usage-based costing which ensures full transparency and is not that heavy on the pocket of college students.

On the launch of PAYD in one of the leading insurance providers National India Assurance, Neerja Kapur, chairman and managing director, said, “PAYD policy fulfills a long-standing demand of customers for simple and flexible products that consider different usage patterns. This product is one of the few in the market to help the customer manage his outflows towards vehicle maintenance. We are confident that this product will herald a new age in vehicle insurance and promote better compliance thereby reducing the risks associated with uninsured and underinsured vehicles plying on the roads.”

Why do College Students Have a Higher Accident Risk?

Road accidents is a global issue which should be considered as a serious concern as statistically it has been researched that the majority of road traffic accidents are caused by the younger generation. Let’s see the main reason why college students have a higher risk of causing accidents:

• Lack of car driving experience.
• Overconfidence while driving.
• Poor estimation of risk.
• Peer pressure from co-passengers.
• Parental influence.
• Driving under the influence of drugs and alcohol.
• Involved in the cases of hit and run.

How College Students Can Buy a Car Insurance Policy?

• Visit the official website of the insurance company and click on ‘buy motor insurance”.
• Fill in your personal information such as age, location, profession and contact information.
• Click on what type of coverage you want to select such as third-party policy or comprehensive policy.
• If you select a comprehensive car insurance policy, then you can also select add-on covers along with the policy at an extra premium cost.
• Once you select, the premium quote will appear in front of you. At this stage, you can compare different policies and find out the best rates.
• Once you are ok with the premium cost, go ahead to buy the policy and make the payment via bank transfers or other online modes.
• After the payment, the soft copy of your car insurance policy will be mailed to you at your registered id. These days insurance companies also send the soft copy via WhatsApp.

What Factors Should College Students Consider While Buying A Car Insurance Policy?

• Conduct a proper research about various car insurance plans, coverage and different add-on riders which meet all your needs.
• Go through the online feedback and reviews which are easily available on the internet.
• Always compare premium quotes for various insurance plans and select the most appropriate one which is extensive in coverage and best suited to your pocket as well.
• Go for a comprehensive kind of coverage as it will help you more at the time of unexpected situations.
• Be judicious while purchasing add-on covers and choose only those that fulfill your insurance requirements. For instance, nil depreciation cover can be a perfect choice for a college student driver.
• Carefully read the fine prints of the policy which includes all the possible inclusions and exclusions.

Every insurance company has specific guidelines based on which they decide the premium cost. Here are the factors that they consider while determining the medical and health insurance premiums.

The rising cost of medical treatment and the recent COVID-19 pandemic have made people realise the importance of health insurance. While it can serve as a financial safeguard in case of unexpected medical emergencies, one important thing to consider is the amount of premium that customers are required to pay for the coverage.

The health insurance premiums are calculated based on different factors. These include the following, as compiled by Rahul M Mishra, Co-Founder & Director, Policy Ensure:

Medical Inflation

The cost of medical treatments and procedures is increasing every year, which can result in higher insurance claims and subsequently higher premiums.

Age of the insured

As individuals age, they are more prone to developing health conditions that require medical treatment. This increased risk can lead to higher insurance premiums.

Pre-existing medical conditions

Individuals with pre-existing medical conditions, such as diabetes, high blood pressure, or asthma, may require more medical attention and treatment, which can result in higher insurance premiums.

This means that they will have to pay more compared to healthy people of the same age group, as they are. The premium increase will depend on the severity of the disease as noted by doctors.

Lifestyle choice

Unhealthy lifestyle choices such as smoking, drinking, and lack of exercise can increase the risk of developing health conditions, which can lead to higher premiums.

Geographical location

Healthcare costs and medical treatment expenses can vary depending on the location in India, which can impact the premiums charged by insurance companies.

Policy features

The coverage and benefits offered by a health insurance policy can impact the premiums charged. Policies with more comprehensive coverage and higher limits can result in higher premiums.

Claims history

Individuals who have a history of making frequent insurance claims or filing for large claims may be considered higher risk, which can result in higher premiums.

India, with its vast population and diverse cultural and geographical backgrounds, faces significant challenges when it comes to insurance penetration or the Phygital model. Despite the government’s efforts to extend insurance coverage to remote areas, there are still large gaps in access to insurance. According to a report by the Insurance Regulatory and Development Authority of India (IRDAI), the penetration of life insurance in India was only 4.2% in 2022, while the non-life insurance penetration was even lower at 1%. This lack of coverage leaves millions of Indians vulnerable to financial risks and uncertainty.

However, there is a growing trend in the insurance industry that is addressing this issue – the phygital model. The term “phygital” is derived from the combination of “physical” and “digital.” The phygital model combines the convenience of digital platforms with the personal touch of physical interactions to create a hybrid experience for customers. By leveraging technology and physical infrastructure, insurers can provide insurance coverage to even the most remote areas of the country.

The phygital model is significant for insurance penetration in India because it overcomes the challenges posed by traditional insurance models. In the past, insurers relied solely on agents and branch networks to sell their products. However, this approach had limitations in terms of reach and accessibility. The cost of setting up branches and training agents in remote areas was often too high, making it difficult to extend insurance coverage to these areas. Additionally, customers in remote areas had limited access to physical offices, making it challenging to purchase insurance or seek assistance.

The phygital model addresses these issues by using digital platforms to reach customers in remote areas and physical offices or agents to provide personalized assistance. With the widespread adoption of smartphones and internet connectivity, digital platforms have become a powerful tool to engage customers and offer them convenient access to insurance products. Customers can compare products, get quotes, and purchase insurance policies from the comfort of their own homes. This convenience is especially important for customers in remote areas who may not have easy access to physical offices or face challenges in transportation.

Furthermore, physical offices or agents play a crucial role in the phygital model by providing personalized assistance to customers. They can help customers understand the intricacies of insurance products, clarify doubts, and guide them through the application and claims process. This human touch adds a sense of trust and reliability, which is particularly important in an industry where customers often seek expert advice and reassurance.

Another advantage of the phygital model is that it allows insurers to collect and analyse data on customer behavior and preferences. With digital platforms, insurers can gather valuable insights into customer demographics, preferences, and buying behavior. This data can be used to develop more targeted and relevant insurance products. For example, insurers can use data on customer demographics and buying behavior to design products that are tailored to specific customer segments. This approach increases the relevance of insurance products and can lead to higher customer satisfaction.

In recent years, several insurance companies in India have adopted the phygital model to improve their reach and penetration. Customers can buy insurance policies from the comfort of their homes, while still having access to physical offices and agents in remote areas.

In conclusion, the phygital model presents a promising solution to India’s insurance penetration challenges. By leveraging technology and physical infrastructure, insurers can extend coverage to remote areas and provide a convenient, personalized experience for customers.

Health insurance policy for family coverage for the medical expenses of the entire family, including the policyholder, spouse, children, and dependent parents. Here’s a list of 5 such policies

With the rise in lifestyle-related diseases, health insurance is a necessity not only for an individual but also for the entire family. A family health insurance is the one that can help in such a situation. In India, standard health insurance family plans offer coverage for the medical expenses of the entire family, including the policyholder, spouse, children, and dependent parents. These plans come with various features and benefits to ensure comprehensive coverage.

The sum insured for family plans typically ranges from Rs 1 lakh to Rs. 50 lakh, depending on factors like age and premium paid. Coverage includes hospitalisation expenses, pre and post-hospitalization expenses, daycare treatments, ambulance charges, and domiciliary hospitalization expenses. Some plans may also cover AYUSH treatments, said Rahul Mishra, Co-founder and Director at Policy Ensure while talking to CNBC-TV18.com.

“There is usually a waiting period of 2-4 years for pre-existing diseases, after which expenses related to such conditions can be claimed. Options like co-payment are also available, wherein the policyholder pays a certain percentage of the claim amount. Health insurance policy for family provide cashless hospitalisation at network hospitals, which are affiliated with the insurance company,” Mishra told CNBC-TV18.com

Furthermore, some plans offer a no-claim bonus if no claims are made during the policy year. This bonus can result due to increased sum insured, reduced premiums, or other benefits.

The premium for family health insurance plans depends on factors like the insured person’s age, sum insured, and the number of family members covered.

“To make an informed decision, it is crucial to carefully review the policy documents and understand the terms and conditions of the family health insurance plan,” Mishra said.

Here are some of the family policies available in the market ( as compiled by Policy Ensure‘s Rahul Mishra):

Apollo Munich Optima Restore Family Health Plan

This policy covers people in the age group 91 days to 65 years. The maximum entry age is restricted to 65 years. The minimum entry age for adult dependent is 18 years and maximum entry age is 65 years. This policy can be issued to an individual and/or family. A maximum of 6 members can be added in a single policy, whether on an individual or family floater basis.

ICICI Lombard Complete Health Insurance

All expenses pertaining to in-patient hospitalisation such as room rent, intensive care unit charges, surgeon’s and doctor’s fee, anesthesia, blood, oxygen, operation theatre charges etc. incurred during hospitalisation for a minimum period of 24 consecutive hours are covered under this policy.

Floater cover gets family (self, spouse, dependent parents, dependent children, brothers and sisters) covered for the same sum insured under a single policy by paying one premium amount. Individual above 3 months of age can be covered under the policy provided 1 adult is also covered under the same policy.

HDFC ERGO Health Suraksha Gold Plan

In this case, the base policy can be issued on individual, multi-individual and family floater basis. In case of family floater policies, discount of 50 percent will be applied on all the members except the oldest member.

Niva Bupa Health Companion Family Floater Plan

Health Companion Family Floater Plan is designed for individuals and nuclear families consisting of individual, up to 4 children and spouse. It offers a direct settlement of claims, cashless hospitalisation and lifelong renewal of health insurance plans. The policy comes in 3 variants and the sum insured ranged from Rs 3 lakh to 1 crore.

New India Assurance Mediclaim Policy

This plan offers a comprehensive range of health insurance plans to the customers. It usually cover pre and post-hospitalisation expenses, daycare treatment, ambulance charges, domiciliary charges and so on.

Sum insured must be adequate, include consumables like PPE kits – The resurgence of Covid-19 has reignited fears of infection and the financial burden of medical treatment. The importance of assessing one’s health insurance policy covers and financial preparedness can’t be overstated.

Inadequate coverage – The previous waves offer a few lessons. “Medical costs tend to shoot up in a crisis. During Covid, hospitalisation was two-three times more expensive than normal. The frequency of hospitalisation also rose,” says Kapil Mehta, co-founder, SecureNow. Many either did not have health insurance or had policies with insufficient sum insured, which was inadequate to meet the expenses of multiple hospitalisations.

Reportedly, insurers have been adopting AI technology to enhance the customer experience

By Rahul M Mishra

While gaining ground in India, the insurance market is expected to become one of the fastest-growing markets in the world. Currently, the Indian insurance market is the 10th largest in the world; however, it is anticipated to become the 6th largest by 2032, according to a report by Swiss Re.

In order to meet this aim, the insurance companies in India need to tap into new markets, such as Tier 2 and Tier 3 cities. These cities have become hotbeds of business growth owing to several developmental factors. However, to target this market efficiently, the insurers need to adapt new-age technologies such as AI. As AI technology has advanced, it has become an integral part of the insurance sector.

The insurers have been adopting AI technology to enhance the customer experience, streamline operations, and make faster and more accurate decisions. As growth in Tier 2 and Tier 3 cities has become necessary for the insurers, AI will aid them in penetrating these markets.

Aiding in personalised marketing

People residing in Tier 2 and Tier 3 cities have different purchasing habits and considerations when compared to those in metropolitan areas. Hence, the strategies that insurers would have used in developed areas might not work in the minor cities. Therefore, insurers need to understand the market and then cultivate their strategies in order to be successful there. One way to do this is by leveraging AI technology in order to provide personalised experiences. According to a previous Epsilon study, brands that offer personalised experiences increase the likelihood that 80% of consumers will make a purchase.

Based on the customer data, including behavioural patterns, demographic information, and location, the marketing strategies can be tweaked. The individualised approach will help target specific cohorts residing in Tier 2 and Tier 3 cities with relevant messaging. Another way is to form alliances with micro-FinTech companies in these areas that have a better understanding of people’s financial wellbeing.

Round-the-clock support with chatbots

Pandemic acted as a catalyst for the growth of conversational AI along with the rise of digitalization. The technology disrupted almost every sector in operation, and the insurance sector is not an exception. Insurance is a 24/7 industry, and since mishaps can occur at any time, so can the claims. Manually catering to the needs of customers can be daunting owing to the number of claims an insurer receives every day. Therefore, AI with bots can improve efficiency, improve processes, and satisfy customer needs.

An insurance chatbot makes sure that every query and claim receives a real-time response. A conversational AI can initiate quotes, carry on conversations, ascertain the customer’s intent, recommend products, and even respond to follow-up queries. A Statista statistic claims that one-third of customers found chatbots to be “very effective” in answering their questions. Chatbots can also be customised in local languages to provide 24/7 support. This guarantees that no customer will go unanswered and gives them the option to connect to a live agent if necessary, keeping customers of Tier 2 and Tier 3 cities satisfied.

Identifying potential customers

Businesses continue to benefit from AI and predictive analytics in terms of identifying consumer trends, creating customer profiles, and creating more precise potential target audiences. But it’s also doing much more, both in terms of gathering data and using it to provide customers with the individualised service they require. All marketing initiatives must include target group segmentation, and insurance companies are no exception. If businesses don’t know whom to persuade, convincing consumers in Tier 2 and Tier 3 cities is challenging.

Today’s marketers can accurately identify the best target audience thanks to AI and predictive analytics. It also helps identify new subgroups of this group that share characteristics with insurance in a quicker and more accurate manner. With the help of these data sources, insurers can make ex ante decisions about pricing and underwriting, enabling proactive contact with a bindable quote for a product bundle customised to the customer’s risk profile and coverage requirements.

Facilitating fraud detection

Insurance companies found it challenging to expedite the claims processing process under the previous traditional model because of the daily claim volume. It can be difficult to identify specific patterns in the claim data that might call for closer examination under human supervision. But with AI, it only takes a few minutes and skilful programming for digital tools to detect particular claim patterns that happen arbitrarily or in large quantities. And all of this is accomplished without unnecessarily raising operating costs or adding to the workload.

Therefore, it is in the best interests of the insurance companies and the claimants for the claims to be resolved as soon as possible. The entire claims process has been streamlined and expedited as a result of technology like artificial intelligence (AI), data analytics, and other related tools. AI and other technological advancements have not only significantly sped up the processes, from data capture to settlement initiation, approval, and authorization to tracking payment and recovery and managing communication but also aided in improvising fraud detection.

All things considered

Along with AI, insurance companies also require a well-coordinated strategy that involves re-evaluating the company’s capabilities. This can be accomplished by living up to each company’s value proposition and thinking creatively about how to best meet the needs of customers in Tier 2 and Tier 3 cities. Then they can finally understand how to leverage AI and learn how to create value for their products. With the advancement of AI technology and its accessibility, modern insurers are tapping Tier 2 and Tier 3 at an astonishingly rapid rate and expect to soon modify their priorities according to their customers.  As they leverage the power of AI, they can extend their reach, find potential customers, efficiently detect fraud, and cater to the needs of the customers in these minor cities.

The author is co-founder and director, Policy Ensure

Home insurance is an important investment for homeowners. It will come in handy if there is any damage to property. However, choosing the right policy can be a daunting affair. Here are some factors for buyers to consider before purchasing home insurance.

The risks: Firstly, it’s crucial to understand the scope of the policy’s coverage. While most policies typically cover damage to the physical structure and any personal property inside it, there may be some exclusions or limitations.

For instance, the policy may not cover natural calamities like earthquakes, floods, and landslides. It is crucial to consider the risks of such events to your property. Also, Rahul M. Mishra, co-founder and director of Policy Ensure, said, “Home insurance policies typically have limited liability for personal injury or damage caused to a third party on the premises of the property.”

Coverage level: You must consider factors such as the home’s value, the cost of rebuilding, and the value of other personal property, etc. Mishra said, “It’s essential to consider a worst-case scenarios and ensure adequate coverage for rebuilding your home and replacing valuables, if required. For instance, the Bharat Grih Raksha Policy provides additional benefits such as coverage for buildings, furniture, fixtures, fittings, and contents at home, etc, besides renovation.”

Deductibles: Several insurers offer comprehensive coverage without deductibles. “For instance, the Bharat Grih Raksha Policy has no deductible and provides coverage for flood and earthquake damage, architect fees, alternative accommodation, and debris removal to a specified limit. It also imposes no penalty for underinsurance claims of less than 15%,” said Mishra.

The claims process: You must know how to file a claim, the type of documentation required, and the typical time taken for claim settlement. You should also be aware of any limitations or exclusions to the coverage and any applicable deductibles. Also, you must check the claim settlement ratio from the website of Irdai while choosing the insurance company.

Additionally, Sudhish Ramteke, associate director–head of Property Practice at Anand Rathi Insurance Brokers, said, “ You must ensure the correctness of particulars. For instance, property description, content description, location address etc., should be complete. Any mismatch in these areas can cause problems in the event of claims.”

For the records: Maintaining a record of your personal property is vital. This includes ownership deeds, with visuals of the exteriors and interiors of the property, and receipts for expensive items such as electronics and jewellery. These records can be helpful in the event of loss or damage, as they can provide proof of ownership and help expedite the claims process.

The regulator has asked companies to disclose the discounts they can offer on direct purchases since they involve no commission. Direct modes exist even now. All that IRDAI has now mandated is a bit more transparency. That doesn’t mean insurers and policyholders are mandated to offer direct plans, unlike MFs

The Insurance Regulatory and Development Authority of India (IRDAI) has asked insurers recently to disclose to policyholders the probable discounts on premiums, if those policy sales do not involve agents, and, therefore, commissions.

Since no commission is to be paid, the savings on such policies, available directly on an insurance company’s website, can be passed on to policyholders as lower premiums.

“Every insurer shall have a well-documented policy approved by its board on an annual basis, which shall, at the minimum, specify the measures to bring cost-effectiveness in the conduct of business and reduction of expenses of management (EoM) on an annual basis, manner of transfer of benefits arising from reduction of expenses and/or from directly sourced business to the policyholders by way of reduction in premium,” says IRDAI’s notification on EoM caps for life, general and health insurance companies.

Also read | Beyond health cover: How employers can widen their insurance bouquet for employees

A direct mutual fund plan moment? 

To be clear, IRDAI has merely mandated a bit more transparency on insurance companies. This does not mean that they have to mandatorily offer direct plans or policies to policyholders.

Mutual funds (MF) are mandated to offer direct plans to unit holders. These plans are called direct plans and do not come embedded with distributor commission, unlike the regular plans. The difference between the expense ratio of a direct MF plan and a regular plan is a distributor’s commission.

Investors, who buy plans directly from a fund house’s branch or from its website, can save on distributor’s commission.

Insurance companies, on the other hand, are not mandated to offer direct plans. However some insurers like Acko General Insurance and Aegon Life Insurance have been offering direct plan-like insurance policies on their websites, with lower premiums.

IRDAI’s latest notifications take a small step forward. Now, insurers who offer such direct policies must state the quantum of discounts they offer, clearly in their board-approved policies. The quantum of discounts, though, has been left entirely to insurance companies.

Besides, even the commission and EoM structure in force until March 31, 2023, did not prevent companies from charging lower premiums to policyholders buying policies directly.

“The circular does not make any specific mention of direct plans. Technically, insurers could pay lower commissions and pass on the benefit to policyholders even when commission caps existed (the new rules effective April 1 allow insurers to pay commissions as per board-approved policies, while adhering to the overall EoM ceilings. It is up to the life insurers to decide how or whether to offer differential pricing),” says Kamlesh Rao, MD and CEO, Aditya Birla Life Insurance.

The new payment of commission and EoM rules, effective April 1, have mandated insurers to specify board-approved policies on commissions, clearly. They include any reduction in premium benefit that can be passed on to policyholders.

Also read | A health insurance policy that locks your premiums till you make a claim

Move unlikely to herald changes in the distributor-reliant industry  

However, insurance is still a push-product in India. Even today, companies rely heavily on agents to sell policies. Any move to cut costs here and pass on the savings to policyholders, experts say, can upset the agents’ lobby.

“If I were to offer lower premiums on commission-free, direct products, my distributors are bound to demand the same pricing while keeping the commission payout intact, which will be difficult. This is what has prevented life insurance companies from offering lower premiums on direct policies so far,” says the CEO of a leading private life insurance company who spoke on condition of anonymity.

This will continue to be the case unless IRDAI issues an unambiguous diktat mandating differential pricing for direct and distributor-sourced policies, he adds.

Companies like Acko General Insurance and Aegon Life Insurance have promoted their direct models as their USPs and all insurance companies, including the Life Insurance Corporation of India (LIC), sell policies through direct and online modes.

“Every company is free to offer differential pricing, but the challenge for most companies is that they operate with agents. So, those distribution channels are bound to object if they offer discounts on policies sold through, say, online channels,” explains Animesh Das, Chief Underwriting Officer, Acko General Insurance.

“Every company understands that there is a saving for the customer. It depends on the provisions in the product filed. If the company decides to offer a 30 percent discount while selling online, it can (which was the case even prior to the new EoM rules).”

Then, there are industry players who believe that IRDAI’s rules will pave the way for savings, if any, to be passed on to all policyholders, not just direct customers, and over a period of time.

“The clause has to be read in conjunction with the first one, which says that insurers have to review their EoM every year and strive to bring them down annually. So, if you (insurers) source the policy directly and it leads to a reduction in cost, it should be passed on to policyholders. However, it is a broad guideline. The reduction in premium could be passed at the portfolio level to all policyholders and not restricted only to those who buy directly,” says Abhishek Bondia, Managing Director and Principal Officer, SecureNow Insurance Brokers.

A nudge to insurers  

While rules did not prevent insurance companies from offering discounts to policyholders reaching out through direct channels, IRDAI’s latest notification could act as the much-needed nudge towards passing on the savings on commissions to policyholders.

Overall, IRDAI’s move is positive as it will act as a guide to companies to reach out to customers directly. It is more like a guidance as not all companies are utilising it (the existing flexibility to offer discounts), while some companies, like ours, were already making use of it. It will be beneficial to customers as the direct route is a transparent, cheaper one,” says Das.

However, others believe direct route does not automatically translate into savings for insurers. “Even to sell policies through the direct mode, the insurer will have to incur advertising and sales expenses, which the intermediary would have borne. Then, there is claim servicing, which, otherwise, the agent would take care of,” says Hari Radhakrishnan, Regional Director, First Policy Insurance Brokers.

The quantum of discounts, too, will be a critical factor in determining whether policyholders make a switch to low-commission policies. “The objective of the government and the IRDAI is to encourage insurance penetration and there is a feeling that higher pricing (due to higher commissions) is one of the barriers. However, the under-penetration is not due to the price points. It is because people see insurance as merely an expense and do not appreciate the value it can add. Now, insurance companies can start direct verticals, but this, too, involves costs. If they offer discounts of just 5-6 percent, policyholders might still prefer agents as insurance is a complex product that necessitates hand-holding,” says Rahul Mishra, Co-founder and Director, PolicyEnsure, an insurance broking firm.

Put simply, it remains to be seen if insurers take a cue from IRDAI’s nudge to move to offer worthwhile discounts on policies purchased through online and direct platforms.