Financial Services
Bima Trinity: Streamlining India’s insurance journey
01 Jul 2024
This
applies perfectly to insurance. Think of it like this: imagine facing a
surprise medical bill - it hits you like a ton of bricks! Having insurance is
like taking a daily vitamin to avoid that financial ER visit. India, a nation
with a vast and diverse population, faces unique challenges when it comes to
financial security. Unexpected medical bills, property damage, or loss of
income can significantly impact families' well-being. This is where insurance
plays a crucial role. However, traditional barriers like limited access in
rural areas, complex products, affordability concerns, and lack of awareness
all contribute to low insurance penetration in India. According to Swiss Re,
the overall insurance penetration was just 3.8% in FY24 as compared to 6.5%
globally. A significant portion of the population walks the tightrope of
financial risk with no safety net. Having insurance offers peace of mind, but
there can still be challenges, such as managing costs, limited coverage
options, and navigating the claims process. Recognizing this gap, the Insurance
Regulatory and Development Authority of India (IRDAI) plans to launch the Bima
Trinity initiative in 2024. This visionary program aims to make "Insurance
for All by 2047" a reality with a clear vision: to increase the three As
i.e. availability, affordability and accessibility of insurance products to the
larger Indian population. This would be achieved through a three-pronged
strategy: Bima Sugam, Bima Vistaar and Bima Vahak.
Let’s
say Rajesh is a farmer in a remote village. Bima Vahak program will play a
crucial role in bringing insurance awareness, access and inclusivity to rural
communities through their women centric insurance distribution channel, which
has the potential to employ 2.6 lakh women across the country. If Rajesh has an
access to a smartphone and internet, Bima Sugam which is an online portal will
present various plans from different companies for him to compare and choose.
Once Rajesh decides to opt for an insurance, instead of a standalone insurance
policy, he will have an option to purchase Bima Vistaar plan which is a bundled
policy including a health coverage offered by a reliable insurer player through
a Bima Vahak agent. Thus, the arrival of Bima Trinity is poised to dramatically
transform the insurance sector in India. IRDAI foresees Bima Trinity as a
potential ‘UPI moment’ for insurance, akin to the digital payment system revolutionizing
transactions in India. This initiative isn’t just about improving insurance
accessibility for the public, it's a revolutionary move that has the potential
to revamp the entire insurance value chain.
Bima
Trinity aims to address inefficiencies at every stage of the insurance value
chain as follows:
Insurance
value-chain
- Customer
acquisition: Rural areas often have limited access to insurance agents and
lacking awareness about available products. Here, Bima Vahaks, deployed in gram
panchayats, will act as local points of contact for educating customers on
different insurance products and resolving their queries. They can educate
villagers about Bima Vistaar plans and resolve their queries. Buying insurance
often involves approaching individual agents or company branches, making
comparisons difficult. Here, Bima Sugam acts as an online marketplace where
people can browse plans from various insurers, compare features and premiums
side-by-side, and purchase directly. Even after having awareness and access,
existing insurance products might be complex or expensive, deterring potential
customers. Here, enters Bima Vistaar which offers a bundled product with
multiple coverages (health, life, property, etc.) at a potentially lower
overall cost. Bima Vistaar plans, sold by Bima Vahaks, will cater to those who
might not be able to afford separate plans and makes insurance more appealing.
- Risk management: While Bima Trinity doesn't directly affect the risk management process itself, it can play a significant role in setting the stage for smooth underwriting process. Bima Sugam, the online portal, can provide applicants with clearer information about eligibility requirements, health questionnaires, and claim processes leading to better risk assessment during underwriting. Bima Vahaks can guide villagers through the application process and answer questions about health history and lifestyle habits. This can improve the quality of applications submitted, making the underwriter's job easier. With a defined set of coverages and parameters, insurers could potentially develop standardized underwriting rules for Bima Vistaar.
- Customer
service: Lack of readily available information and difficulty reaching customer
service representatives are some of the key challenges in insurance customer
servicing. Bima Sugam’s centralized platform underscores the critical
importance of exceptional customer service. Having personalized & trusted
point of contact for issue resolution creates customer delight. On the other
hand, insurers will also benefit from reduced call centre workload. Bima Vahak,
acting as first point of contact for customer service enquiries, will also lead
to a more informed customer base, potentially reducing the number of claim
rejections due to lack of clarity about policy coverage.
- Claims
management: A true UPI like breakthrough moment for insurance will likely arise
from making the insurance claims settlement faster. While insurers are mandated
to settle claims within 30 days of notification, this period may extend up to
90 days depending on the complexity of the investigation required. Time isn’t
the only problem. The process to file a claim is cumbersome. In life insurance,
for example, the claimant has to contact the insurance branch office, fill out
a claim form, collect a death certificate and other supporting documents and
visit the nearest branch office to submit the lot. Bima Sugam aims to cut this
process short for life insurance by linking death registries directly to the
platform. A policyholder will just need to visit the platform, use their
consent to pull their policy and the death certificate. Then, the back-end system
will process the claim within 6-8 hours. There are plans to extend this system
to general insurance with health records data and property data being digitized
by the states on an ongoing basis. Standardized claim procedures will also
ensure that customers have a clear understanding of what’s needed and when.
As
the Indian insurance sector is moving towards innovation, Bima Trinity is at
the forefront of shaping this future. Bima Trinity empowers both consumers and
insurers with knowledge and accessibility. Consumers gain a user-friendly
platform, clear product options, and potentially lower costs. Insurers benefit
from streamlined processes, wider reach, and potentially better risk
management. By dismantling traditional barriers and fostering a more inclusive
environment, Bima Trinity paves the way for a future where financial security
is not a privilege, but a reality for all Indians.
Author: Vishal
Bhave, Practice Leader, Financial Services, Praxis Global Alliance
Co-author: Mit
Parag Desai, Senior
Manager, Praxis Global Alliance