IRDAI plans 100% cashless health claims, more long-term products, flexible plans for old people

Health insurance, the top segment in the sector, has seen a premium mobilisation of over Rs 37,000 crore in the April-July period of 2023-24.

“We are looking at long-term products in property and motor, P&I (protection and indemnity) clubs, insurance for warehouses and non-performance insurance,” he said at the Global Fintech Fest.

He said the proposed amendments to Insurance Act also aim to create a more robust, facilitative and supportive insurance landscape offering more choice, flexibility and scope for innovation. “We may see new players in the form of micro, captive, regional, specialized, composite insurers catering to the needs of different geographies and strata of the populations,” he said.

Other measures include different capital requirements based on risk for different entities, various value-added services coupled with the insurance plans, more flexibility in investments resulting into faster adaption to market dynamics and various financial products on offer by insurance companies, he said.

IRDAI Chairman said change is also coming from a very non-millennial cohort — older people who are living longer and expecting more out of their retirement. The world’s population is ageing as a result of higher living standards and technological advancements in medical research, posing a new financial and care challenge. “There is need to create flexible retirement plans for an evolving later-life environment,” he said.

According to him, in the insurance sector also, times would come which would necessitate venturing into the world of continuous underwriting and seamless insurance, where the way conventional insurance is offered would be altered substantially. “And, let me tell you that such times are not too far,” he said.

“Consumers would demand highly personalized offerings. For instance, drivers would like to see how their insurance costs fluctuate minute by minute depending on the route they travel, the state of the roads, and the way they drive, which will encourage them to drive more safely and also to save on insurance costs,” he said.

“Insurers would be able to quickly handle such massive datasets from several sources using quantum computers, revolutionising risk modelling and decision-making,” he said. There is a smart travel insurance contract, which is operating on a public block-chain. It would include details of the booked flights, he said.

“It would be programmed to monitor flight data continuously and react accordingly, triggering an instant payout in case of say delayed flight, using such real-time flight data. The same could be used for say Hurricane insurance,” he said.

When sustained winds over a geographical location hit a certain speed, people in that area with decentralized insurance would get paid compensation based on their policy terms. “Internet-connected weather gauges will communicate with the smart contract in real time. If all the conditions are met and the wind hits a certain speed, compensation will be paid automatically, Panda said.

“We need more players, we need more products, we need more distribution partners, and most importantly we need more technology, more integration,” Panda said.

“Our businesses, MSMEs are not adequately covered. There is missing middle which requires urgent attention. And we need to bridge these gaps on priority,” he said. But at the same time, the insurance sector also has to come to terms with new types of risk like climate change and pandemics. These are the areas that will drive significant shifts in the industry, he said.

Another major emerging risk is cyber risk. The more tech based and digital the world is becoming, the more it is prone to cyber-attacks and consequent losses. There is a huge potential market for the same, he said.

Panda said the next ten years are of utmost importance for insurance sector and will see radical changes in the nature of insurance products as well as the way it is distributed. Since the level of awareness is on the rise too, more customized products will be required.

There is a need to step out from the metro cites and focus more on the villages, districts and blocks, IRDAI chief said. Traditionally, insurance was mostly available in big cities and had less reach in smaller towns (tier 2 and tier 3 locations), he said. In this direction, a state level insurance plan has been formulated wherein each insurer has been entrusted with the responsibility of increasing insurance inclusion in the assigned state/UT.

To take IRDAI’s mission of universal insurance further, a Bima Trinity is also being conceptualized, he said. It includes Bima Vistaar – a simple benefit-based product with parametric triggers to be distributed by Bima Vahak which would be localized women centric insurance force. Bima Vahak and Bima Vistaar will play an important role in taking insurance to remotest places in the country. This will make it easier for people to access insurance and also, more jobs will be created in these areas. The third element of Bima Trinity is an electronic market place protocol – Bima Sugam which would universalize and democratize insurance.