With general insurers being given greater freedom by IRDA to design products,we are likely to see a slew of launches this year. Neelesh Garg,director-retail,ICICI Lombard General Insurance,spoke to Suneeti Ahuja about the products his company plans to launch.
•What is in store for retail customers in 2009?
Health and motor continue to be the prime areas in case of the retail segment. Both segments are expected to come up with a lot of innovative products this year. In motor,one product that might come in is zero depreciation. Today whenever there is a claim,certain amount is deducted first and the remaining is paid to the insured. Insurance companies deduct a percentage according to the tariff. With new products coming in,a person can pay higher premium and get zero depreciation clause entered into the contract.
•What are the other innovations you are looking at in motor insurance?
Today we have standardised products for everybody. So whether it is a taxi driver,who drives his vehicle a lot,or a conservative driver,who drives cautiously and mostly within the city,both pay the same amount of premium. We might see products that charge you different premiums depending on your usage.
We are also looking at products such as pay-as-you-drive. This will require a GPRS (global positioning radio system) device to be fitted in every car. This device will provide an insurance company with details like: average speed at which the driver drives; whether the car runs more in the city or on a highway; and so on. The insurance company will have data on the quality and quantity of drive and decide the premium accordingly. Companies in the US are already doing this. We are studying those models. Installation of these devices is also expected to bring down theft. This product is still on the drawing board. There is a cost attached with the device. Right now we are working out the economics between the manufacturer,financier,customer and insurer. Although this pay-per-mile kind of plan is still at the drawing board stage,we expect it to be launched within the next 12-18 months.
One of the things we foresee happening is standard deductibles that are part of the tariff. For example,a policy has a deductible clause of Rs 5,000. For every claim that arises,the first Rs 5,000 is borne by the insured. This will inculcate more discipline and will help in lowering premium rates.
•Often hospitals charge an insured patient more compared with one who is not insured. What is ICICI Lombard doing to check this practice?
Personally,I think what will change such practices is penetration. The amount of billing paid by insurance companies is very little right now. Out of the total health care spends of the country,insurance does not pay too much just 1-2 per cent. When penetration increases and insurance billing becomes significant,this equation will change.
Third Party Administrators (TPAs) play an important role in health insurance. Although their number is huge,their service levels are low. Sometimes,hospitals and patients complain about delayed payments from TPAs. We have set up an in-house TPA and have a large setup in Hyderabad. We expect this to improve service levels.
•Have you blacklisted hospitals that indulge in such malpractices?
We havent blacklisted anyone yet. However,we are in the process of identifying a preferred network of hospitals.
•How about health insurance? Are you working on new policies there?
Some amount of penetration exists in motor insurance because it is mandatory. Health insurance penetration,on the other hand,has miles to go. Here,we are developing a top- up plan. The cost of treatment is rising. Usually people in the organised sector depend on the cover provided by their employer,which is usually for Rs 50,000 to Rs 2 lakh. Through this plan,the insured can top up their insurance cover. In the case of an eventuality,first the employers cover comes into effect and then the top-up one.
•What are the other concerns in health insurance?
Right now the focus of the insured is on emergency reimbursement: a large population is interested in getting reimbursements when a medical emergency happens. Nobody is talking about preventive measures. Health insurance is seen as a requirement for people who reach 40-50 years of age. We plan to introduce plans that encourage customers to build a history at a younger age,and to take preventive steps. This could take the form of giving incentives to customers who do 100 hours of gyming every month.
•What are your plans for senior citizens?
In travel,we already have a plan salt and pepper for senior citizens. The entry age is 70 years. In health space we are working on a plan and will file it with IRDA (Insurance Regulatory and Development Authority) soon. We are in the process of working out the specifications.
•According to IRDA,ICICI Lombards premium collection dipped sharply in November and December.
There has been an overall slowdown. Market conditions,like low vehicle sales,have affected our business as well. Premium rates for fire and engineering have crashed. However,according to year-to-date figures,we have registered a growth of more than 5 per cent and retained our market share. Yes,the focus of the industry is on a robust bottomline. We are trying to use more technology and trying to make optimum use of current resources. u