- Date : 26/03/2020
- Read: 6 mins
The regulator has opened the insurance sector for innovative products, but these are still at an experimental stage
Incentivising wellness in health insurance was far from a novel concept when, in 2011-12, a small health insurer in California named SeeChange Health began to take it to another level – and, in the bargain, changed the rules of the game.
Among the many innovations SeeChange introduced was to send a nurse to the customer’s location to perform biometric tests; based on the results, it offered rewards such as reduced deductibles, reduced coinsurance payments, reduced out-of-pocket costs, and even cash for doctors’ visits.
To push its group health plans, SeeChange also incentivised employers to maintain a healthy workforce and offered rewards for meeting certain targets. So aggressive was the company in introducing these and other innovations that the bigger players were forced to sit up and take another look at their traditional business strategies.
As Forbes magazine noted later, SeeChange Health ushered in a new model of health insurance – a model where innovations played a key role.
The Indian millennial
In this era of a global village, new trends are not hard to spread to other parts of the world, and the ideas so aggressively pursued by SeeChange seemed to have found takers in India as well.
According to a report by the California-based health platform GOQii, driving the change in India are its millennials, who now seek out insurance policies that recognise their levels of health and fitness, and offer terms and conditions based on that.
Their argument is very simple: why should people who take pains to remain healthy be forced to pay the same premium under the same terms and conditions as people who lead unhealthy lifestyles and are more vulnerable to diseases?
So much so, says the report ‘India Fit 2019’, that 70% of Indian millennials are open to the idea of sharing personal health data with insurers so that health plans can be tailored to offer discounts and rewards. This segment wants comprehensive wellness plans that have features such as preventive health check-ups, stress management, nutritional guidance, and even gym membership.
Now, more innovations are on the way – and not merely in the health vertical but motor insurance as well – thanks to a push in this direction by IRDAI, India’s insurance regulator. Do you know abiding traffic rules can lower your car insurance premium. Click here to know more.
The IRDAI circular
In August 2019, IRDAI issued a circular inviting proposals that went beyond the current regulations but had the potential to be workable. However, the regulator clarified that it would take a ‘Regulatory Sandbox’ approach to these proposals.
With such an approach, the circular said, untested innovative proposals (including fintech solutions) can be tried out on a limited scale, so that ‘the consequences of failure, if any, can be contained’ and kept to a minimum.
Basically, Regulatory Sandbox refers to ‘live testing’ of new products or services in a controlled environment, for which regulators may or may not permit certain relaxations for the limited purpose of the testing.
IRDAI explained it took this route to:
- Facilitate innovations to develop the insurance sector, but at the same time ensure that the policyholders’ interests are also protected
- Facilitate creation of regulatory sandbox environment and, if deemed fit, to relax such provisions of any existing regulations if needed
The circular attracted 173 proposals related to health, motor, and intermediaries, from which 33 were approved by an eight-member evaluation committee headed by S Sadagopan, Director, IIT Bangalore.
The proposals for insurance solutions that landed with IRDAI ranged from wearable fitness trackers to usage-based motor insurance, and even using AI for automatic claim settlements. The insurer with the maximum number of approved proposals was ICICI Lombard General Insurance, which received a go-ahead for five of its proposed projects. Read this easy tips to reduce your motor insurance premium.
The products, which are to be sold on a limited scale (to a maximum of 10,000 customers), have since been launched as pilot projects with effect from February 1, 2020, and will be in operation for six months (till July 31). In other words, these come with a limited tenure and are not renewable for life, unlike regular health policies.
Some of the proposals that have been approved are:
- Two health insurance products from ICICI Lombard: an app-monitored diabetes mellitus wellness programme, and an app monitored dyslipidemia management programme, so as to include these conditions in the respective coverage (subject to insurer’s eligibility criteria)
- Three proposals related to distribution from Audatex India, an automotive claims and collision repair estimation platform
- Motor floater plan from Reliance General Insurance, in which one policy offers coverage of multiple vehicles owned by the policyholder, who has the option to add or delete vehicles; the sum insured will be based on the value of the highest sum insured vehicle
- Friend assurance projects from Max Bupa, Kotak Mahindra General Insurance, and Religare Health; the product allows friends and family (in groups of five and above) to seek health cover under one policy. Already being sold in Europe in slightly different formats, these plans are similar to regular health cover, but also offer discounts of up to 15% on premiums if no claims are made for in-patient care
- An app-monitored co-pay health plan from Bajaj Allianz, which is associating with GOQii; the co-pay is based on the insured person’s engagement level on GOQii’s health platform
- A usage-based motor vehicles plan, also from Bajaj Allianz, that will base policy premiums on the distance travelled or the amount of time the policyholder intends to drive the car; the company hopes this would encourage people to opt for own-damage cover (instead of the more popular third-party liability cover mandated by law)
- An outpatient department (OPD) reimbursement scheme from Religare Health that seeks to reimburse doctors’ fees and pharmacy bills, provided the insurer completes a quota of exercises every week; payments will be instant, as opposed to the current practice of rewarding annually against the renewal premium.
Most of these innovative products are useful, and the ongoing process of experimentation on a limited scale just might see these becoming permanent features in Indian insurance in future.
One such feature is the ‘pay as you use’ option in car insurance, which will link premiums to the driver’s rating that will be issued on the basis of app-monitored data on their driving habits. It is understood that other general insurers (including ICICI Lombard and Tata-AIG General) have similar plans1.
It is advisable to remember that these are only pilot products and do not call for long-term commitment. But people who buy these policies will enjoy the benefits much earlier if the plans are approved by IRDAI at the end of the mandated six months.