Focus on covering more people, not just higher premiums: Irdai

Mumbai: Insurance companies must focus on covering more people and delivering effective protection for every rupee spent, rather than seeking higher premiums from existing policyholders, Irdai chairman Ajay Seth said.He also called for online insurance platforms to stick to their core role of helping customers compare products and buy policies, rather than expanding into physical distribution, using dynamic pricing or demanding contact details and do-not-disturb waiver before providing quotes.“We have to change our lens,” Seth said. “Instead of measuring insurance penetration and density, the industry should track lives and businesses covered, the effectiveness of protection and cover per rupee spent.” He was speaking during a fireside chat at a Business Standard BFSI event.Insurers serve the top 10-15% of the population reasonably well, but extending meaningful cover to the top 50% requires better affordability and quality. “Instead of chasing existing people for higher cover we should go for covering more people,” he said, adding that insurance must grow faster than the economy, not slower.Seth said digital insurance platforms should offer simplified products for easy price comparison and help customers find suitable cover at the lowest price. They should not dilute this role by building physical distribution networks, which operate on different dynamics. He also cautioned against the practice of offering dynamic pricing for covers by online platforms.“Dynamic pricing works in the airline industry, not in insurance,” he said, ruling out price changes on digital platforms. Customers should be able to compare prices without sharing personal details. Regulatory guardrails are needed to keep platforms focused on their core purpose.Health insurance is growing general insurance at 1.3 times the economy’s pace, but high customer dissatisfaction threatens to undermine growth. Seth called this an “uneasy, unstable equilibrium” and said insurers must disclose how much of the premiums they collect, they actually pay out in health insurance claims.Current settlement rates do not show this. “That information neither we track nor is it in the public domain,” he said. Seth was critical of the high churn in the health insurance portfolio under the guise of portability to show increased new business.Irdai is consulting insurers, intermediaries and policyholder representatives on distribution reforms to cut acquisition costs and ease premium pressure. Health insurance commissions average 24% across new policies and renewals; reducing them to 15-20% is the objective, he said. The regulator also wants to cut health insurance paperwork through the National Health Exchange. Cashless treatment accounts for around 60% of cases, rising by 1-2 percentage points a year, against a 90% longer-term target, he said.You use AI every day. Now get your AI Quotient. Take the AIQ test.