Were you looking for any changes in the Budget this year?
From our perspective, the status quo is helpful because it keeps everybody focused. The job is to increase awareness about the right kind of insurance, which is term and health. We are a developing country and need to focus on the bottom of the pyramid first. So, for the middle class, it is very important that they are protected against death, disease and disability. Countless reports show that the single biggest reason people fall back into poverty is either an illness in the family or death of the chief wage earner. This is the job that needs to be done, and this is what Policybazaar is focused on.In the Budget, a big change that can help is the removal of 18% GST for term and health insurance. Another could be increasing the tax deduction limit of Rs.25,000-50,000 for health insurance premium, especially for older parents. There should also be a separate section for term insurance premium because it needs its own nudge rather than being clubbed with other forms of investment.
Do you think the struggle with selling term plans is real because people are still buying traditional plans?
Yes, absolutely. Probably only about 60 lakh Indians have term insurance, which is too low if you look at the number of taxpayers. This is at a time when term insurance is very attractively priced and is comparable with Singapore and Hong Kong, where the mortality rate is better. The product is very good and you can buy it for 40-45 years, while in other countries, you can only buy up to 60 and it gets very expensive after that. We have a very good product and prices, and a lot more people need to buy it. We spend a lot of money on TV and digital media talking about term insurance. However, we are not able to get through to them.
Irdai has made a lot of customer-centric changes in the recent past. Is this pace overwhelming for insurers? What are the changes you’d like to see?
The regulator is looking at it in the right way and this is exactly what is required if you want to increase insurance penetration in the country. We are aligned with this. As far as the pace is concerned, whenever any change happens, there is a moment of panic when you’re not sure how it will be done, but eventually it happens. There’s no other way to do it, and I doubt things would have been smoother if we had taken one more year to do it. The industry is doing its best to cope and there will be some hiccups, but the good news is we are headed in the right direction.
As for changes, we look at it in a very simplistic manner. Customers pay premium expecting that when there is a claim, it will be paid. The technicalities of the policy are beyond their understanding. One of the practical things the regulator could do is talk more about claims. In health insurance, the claims data is a mix of corporate and retail, and it’s impossible to disaggregate it and understand what is happening. If we can focus on retail claims and give confidence to the customer, it would be good. Right now, there is a bit of fog around the truth. Some customers tell you the claim is never paid, but our recent survey on health claims found that 94% of claims were paid. If you have proper statistics and it is distributed by a credible body—if Irdai were to say that every month this is the ranking of claims—it would give a lot of confidence to people.
Do you think hospitals need a regulator because a lot of issues lie at their end?
There needs to be better alignment between the patient, hospital and insurer. The word ‘claim’ is a challenge. From the patient’s perspective, the word should be ‘treatment’ and ‘prevention’. This is an indemnity policy and the patient is not going to get any money. So, from the patient’s perspective, the most important thing is proper and speedy treatment without the pressure and stress about documents or money. This should be the focus. There should be a symbiotic relationship between hospitals and insurers, where we focus on the health of the customer.
Should there be mandatory contribution for health insurance, especially considering the issues senior citizens face?
I don’t want to go straight to the solution, but two things are true. The young have to pay for the old and there are only two ways this can happen. One is you yourself put in money when you are young and use it when you are older. Two, the younger section of the society can help pay for the older one. There’s no magic and after a certain age it’s impossible for someone to pay the high premium. The solution could be a mandatory contribution or a health savings account, which is tax-exempt and used only for healthcare benefits. In some countries, everybody needs to have a certain amount of health insurance, making sure that as an overall pool, the rates are ok for everybody. There are a variety of solutions that exist and the government is also thinking about it.
Are people informed enough to make the right choices while buying insurance through online platforms?
They need a lot of hand-holding and we deploy a huge number of people for this. When a person is looking for health or term insurance, we have different modes of communication. On our website, we have videos that explain the features; we have buying guides that give a sense about the policy; you can speak to advisers on phone with the video calling facility. A sale takes about 50-60 minutes of conversation, and we offer home visits in over 100 cities to explain to buyers.
After they have bought the policy, there’s a verification process, wherein a person from a separate team calls and confirms what they have said. He ensures that it is the correct picture because there could be some chance of disclosure slipping through. We are trying to create awareness for the product, and once the person comes to us, we try to guide him through a step-by-step process in terms of the various options, and help them if they need to make a claim. It’s a full journey.
The author is Sarbvir Singh,Joint Group CEO,PB Fintech