The new products could usher in customization that may lead to making insurance popular. Irdai has asked insurance companies to launch their products on a pilot basis with a cap of 50,000 policies between February and July. Depending on the outcome, insurers may then file them as regular products. We get you the details of some of these products.
Motor floater policy
ICICI Lombard General Insurance Co. Ltd, Reliance General Insurance Co. Ltd and Edelweiss General Insurance Co. Ltd plan to test a motor floater policy soon.
Shanai Ghosh, chief executive officer (CEO) and executive director (ED), Edelweiss General, said their product is an innovative app-based floater plan that will allow policyholders to cover any damage to their vehicles based on usage. The policy will cover multiple vehicles. “Premiums will be charged as per usage. So the customer has the flexibility of adding and deleting vehicles as required on the app. The cover can be switched on or off as per requirement," added Ghosh.
Rakesh Jain, ED and CEO, Reliance General, said their sum insured-based floater plan will cover all the vehicles owned by a customer. It will be defined on the basis of the value of the vehicle that has the highest sum insured, and the customer can add vehicles under the cover even later. “The premium under sandbox guidelines shall typically be declared as per the existing own damage pricing of the company," said Jain.
The policy will help you optimize your premium and the sum insured. “All the benefits including no-claim bonus and cancellation shall be made available to a customer like in the case of any typical motor insurance own damage product both at the time of entry and exit," added Jain.
While the outline of the product has been presented by the insurers, details on calculation of the premiums and the benefits are yet to be finalized.
Pay as you drive
For the longest time, there have been discussions on how motor insurance premiums should be linked to the driver instead of the vehicle. It finally looks like there is some development on this front because insurers have taken the pay-as-you-consume model seriously and designed products that will make policyholders pay based on the kilometres travelled.
“We are also considering vehicle mileage during the policy period as a parameter. Lower the mileage, lower the probability of an accident. These products are already available globally," said Sanjeev Srinivasan, managing director (MD) and CEO, Bharti AXA General.
Current market practices don’t incentivize policyholders with lower-than-average vehicle usage, but that may change now. Adarsh Agarwal, appointed actuary, Go Digit General Insurance Ltd, said, “Millennials use app-based cab services and office transport to beat the traffic and save money. This policy would cover their vehicle at a lower premium due to their lighter driving behaviour. And if during the policy period, they do exceed the declared light usage and have a claim, their additional premium will be adjusted in their claim amount," he said.
While family health plans and employee group policies are quite common, a group policy to cover a bunch of friends was unheard of. Three insurers—Religare Health Insurance Co. Ltd, Max Bupa Health Insurance Co. Ltd and Kotak Mahindra General Insurance Co. Ltd—will offer this product. The group can have five to 30 individuals.
The policies will work well if the members are health conscious. “There would be discounts based on the group size, available on a normal policy premium. Also, there would be wellness-linked incentives at regular intervals," said Ashish Mehrotra, MD and CEO, Max Bupa Health. “A score would be generated for each group member. On the basis of that cumulative score, a discount would be passed on to the entire group at the time of renewal," he added.
Ashutosh Shrotriya, head, products and business process, Religare Health, said until now they don’t have a special offering for a defined group of people that is more health conscious and has a relatively better health profile.
If nobody from the group files a claim in a year, then a part of the premium (about 15%) will be refunded. “A cycling club or a group of marathoners or trekkers have people that are usually fit and healthier. We wanted to have a product that could appeal to such individuals," said Shrotriya.
Religare Health Insurance and Bharti AXA General Insurance Co. Ltd have got Irdai’s nod for their short-term health insurance product with a tenure of less than a year. “Customers may choose to take a plan for a short period during the emergence of certain diseases. The product will work as a litmus test for a customer entering the category for the first time and his experience could translate into a long-term purchase," said Srinivasan. The company will offer short-term critical illness, hospital cash and hospitalization covers that address specific illnesses. Srinivasan said that the premium will be based on the cover and the segment of customers, and the sum insured would be capped at ₹5 lakh.
“The policy will have a tenure of one to six months," said Shrotriya. While there are sachet policies available even now, they come with a term of at least a year. Shrotriya added that the company was looking to service people who remain without health insurance when they take a break from work for a few months or when they are between jobs. But such a policy is unlikely to cover any pre-existing disease and come with a host of exclusions, said Abhishek Bondia, principal officer and MD, SecureNow.in. “It is always better to go for a long-term standard health insurance policy (other than what your employer offers) with adequate sum insured," he added.
“The products are still under development and all of them may not work in the long run. Companies may discontinue them if they are not viable in terms of cost and the number of takers," said Shweta Jain, CEO and founder, Investography. We recommend buying all the basic policies before going for these new-age products.