IRDAI raises concerns over low amounts settled in Insurance claims

The Insurance Regulatory and Development Authority of India (Irdai) Chairman, Mr Ajay Seth, has raised concern over the amount settled in Insurance claims being significantly small compared to amount claimed. He mentioned that the Regulator is closely monitoring the gaps in health insurance claim settlements, even as overall premiums increased.

As per him, promptness, fairness and transparency in claim settlement by insurers will build the trust, else the Insurance penetration will continue to remain low. He further added that the industry needs to accelerate growth, especially in underserved rural areas, informal sector workers, and women. A faster progress is needed to meet the vision of ‘Insurance for All’ by 2047 – he added.

To improve the services, Irdai is expanding digital access for buying, servicing, and claiming. It is promoting innovation through flexible product design, micro-insurance, and inclusive models and also emphasizing simplicity in communication. The Regulatory approach will be both facilitative and firm.

Even as Industry resolution rate remained 99%, Mr Seth stressed the importance of Insurance ombudsman for building trust through quick, fast, and just awards, ensuring fair treatment to the policyholders, proper disclosures of facts, responsible business conduct by insurers and intermediaries, objective and adequate advice to the policyholders, protection of assets and data, including from fraud and abuse, adequate complaints handling, and redressal mechanisms.

Our view:
As per annual report of IRDAI, the life insurance penetration has shown a dip to 3.7% in 2023-24 vs 4% in 2022-23. The notable factor remains however that the premium collected has, in fact, risen 6%. Indian insurance penetration also remains significantly lower than the global average of 7%.

Source: https://www.business-standard.com/finance/insurance/irdai-annual-report-2023-24-insurance-penetration-decline-124122500470_1.html