Both life and non-life industry witnessed healthy growth in 2020 as people realized the importance of securing their own lives and of their loved ones with term insurance and health insurance.
Let’s look at some of the key events of insurance industry in 2020:
Standardization of plain vanilla policies
In line with IRDAI’s direction, all general and standalone health insurers have launched their Arogya Sanjeevani Policy, a standard health insurance that comes with uniform features. This policy comes with sum insured of up to Rs.5 lakh at competitive premium.
Very soon, non-life insurers will also offer standard personal accident insurance product with uniform features and benefits. The standard accidental policy will offer coverage for accidental death, permanent or partial disability and hospitalization expenses incurred due to accidents.
Similarly, life insurance companies will come up with a standard term insurance policy called Saral Jeevan Bima from January 1, 2021.
IRDAI feels that introduction of standard policies will reduce mis-selling and potential disputes at the time of claim settlement.
Pre-existing conditions
Insurance companies will have to honour claim requests on diseases that a policyholder contracts after buying a health insurance policy. The move is expected to reduce instances of claim rejection in health insurance.
Thus far, if a policyholder was diagnosed with a major ailment within three months of buying a policy, insurance companies would consider the disease as pre-existing condition.
Additional requirement for agents to sell ULIPs
Insurance agents have to obtain certification and training to sell market-linked insurance products. This training covers topics like development of capital markets, basic knowledge and concept of ULIPs, suitable market segments and so on.
Pre-defined agent rewarding system
In an effort to check discrepancies in the payment of rewards and incentives, IRDAI instructed insurance companies to set a well-defined process based on necessary justification and logic for payment of rewards to insurance agents and intermediaries.
Earlier, IRDAI found instances where insurance companies had rewarded their agents exceeding the commission paid to them. The rewards are paid in the form of benefits such as insurance cover, gratuity, office expenses, promotional gifts etc.
Aadhaar as a valid KYC proof
IRDAI has simplified KYC process by allowing insurance companies and intermediaries to onboard new clients through Aadhaar authentication.
Reduction in TDS of insurance agents
The government reduced TDS on commission of insurance agents by 25% with effect from May 14 to March 31, 202. Currently, insurance companies deduct 3.75% and 7.5% TDS on commission income of insurance agents and insurance distribution firms (companies), respectively.
New distribution channels
IRDAI gave corporate agency license to Apollo Pharmacy, which runs a chain of hospitals and medical stores. With this, we may see more clinics, hospitals, pathology labs and pharmacies becoming health insurance distributors to increase their offerings.
No need of physical in-person verification
Agents can now onboard new customers sitting at home as IRDAI has done away with the requirement of doing in person verification physically.
Today, your clients can undergo video based identification process (VBIP) through any insurance company and submit necessary documents like PAN card, address proof and bank details verified by ‘Digilocker’. Clients can authenticate purchase of policies through OTP or simply by clicking confirmation link before buying a term plan.
Color coding to indicate complexity of health policies
Recently, IRDAI has proposed to introduce color-coding - green, orange and red in health insurance policies to indicate level of complexity, with green being the easiest to understand.
These color codes will be used by every general and health insurance company on their website, product advertisements and other promotional activities.
While green color will signify that the product offered is a simple product, easy to understand and comprehend, orange will indicate moderately complex product. Red will indicate the most complex health insurance policies.
Health insurance may soon include OPD treatment
IRDAI Chairman Dr. Subash C Khutia has asked non-life insurance and standalone general insurance companies to include OPD treatment cover under all health insurance policies. OPD treatment includes coverage for doctors’ consultation fees and cost of medicines based on prescription.
Record keeping
Now insurance intermediaries like agents and brokers will have to keep their business records like payments, policies sold, employee details in electronic form as well.
With this, agents are required to maintain business records like list of new policies sold, policies renewed, claim settlement, grievances and complaints received and details of employees if any.
Similarly, insurance companies need to maintain list of all the proposals received, policies sold and renewed, claim request, grievances and complaints and appointment letters issued to all agents, consultants, members of the staff along with changes.
Both insurers and agents required to keep invoices and vouchers of all kind of payment received separately - commission, rewards, bonus and any other remuneration.