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Covid-19 Calls For Part Motor Premium Refunds; But There Is No Insurance Consumers Association In India To Take This Up!

The efforts of this association will result in increasing insurance penetration in the country which will be a great achievement.

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In the last 3 months, general insurance companies have made windfall gains on motor books in all parts of the world .This is mainly due to the covid-19 fallout which saw fewer vehicles on roads due to countrywide lockdowns. Motor insurance companies in the US and UK have already refunded 10%-15% of annual premiums back to customers. Unfortunately, none of the major motor insurers in India has stepped forward to do so.

This is mainly due to want of a strong insurance consumers’ association in India which can take up consumer expectations or grievances with the regulator, the government or the industry. To earn the goodwill and trust of customers, motor insurers in India should refund a part of the motor premiums to customers. This gesture would have attracted the goodwill of crores of motor vehicle owners predominantly motor bike owners.

By giving refund to customers or extending the policy period, insurers can avail this once-in-a- lifetime opportunity to earn the goodwill of crores of policy holders. They should not miss this chance. It is ironic that there are crores of insurance customers in India and we do not have an Insurance Consumers’ Association in the country. May be to fulfil this need, an initiative should be taken by the Ministry of Consumer Affairs or by IRDA.

The efforts of this association will result in increasing insurance penetration in the country which will be a great achievement. A refund of premium or extension of policy period is a genuine demand from customer's perspective and for the insurer's goodwill. It is high time the industry revisits its underwriting philosophy and pricing policy. It is noticed that individual customers are leaderless and do not have any means to reach the plush offices of the insurance companies.

In a discussion on Linkedin where more that 6,200 views were noticed one of the comment was that Industry has been giving heavy discounts. The fact is that the customer is not aware of pricing and losses being faced by the industry in motor portfolio, or say, any other portfolio and therefore cannot be blamed for this. Rather with the support of Insurance Industry insurance consumers association should be formed in the country and this will protect the interests of insurers as well as insured as it will educate customers by spreading awareness, which is badly needed.

Consumer Associations are popular worldwide and we find that it is the need of the hour in India. Consumer cooperatives may be another option towards increased insurance penetration and this concept needs discussion at various levels. One of the viewpoint appearing in Linked was that the market has been taking heavy discounts on own damage (OD) premium rates for last few years. The answer to this is: customers do not take it---Insurers give it due to the competition. In the present scenario, the need is to earn goodwill by giving refund now or alternatively extend the validity of the insurance policy by 8 weeks .Extending the policy period is a very simple method.

Considering the huge amount of profits which the industry has earned in motor portfolio during 8 weeks of lockdown period , the demand for refund of premium is just. The individual bike owner is realizing the need but unfortunately he does not know how to take his genuine demand to the appropriate platform. The insurers should take it suo moto that either refund or extension of insurance policy has to be given.

The insurance companies will get goodwill of crores of customers by giving this refund. This is especially important when we know that Insurance companies are going to increase Health Insurance premium by as much as 25% in the coming months.

However, a counter argument by industry stalwarts is that the motor portfolio is already bleeding and penetration of insurance is low. Most of the insurance companies depend on New Motor business which is not coming and there are no positive signs of getting new motor business in days to come as they are depending only on renewals. Insurers will have difficult time ahead especially for new motor premium. In this scenario, many insurers think refund or extension or contribution will not be fair.

In the US, almost every auto insurer instituted a temporary rate reduction in recognition of the reduced auto usage during the lockdown. In reality, it was very little to each policyholder, but compared to the acquisition cost for a new customer, the economics makes sense. It is a great opportunity to create goodwill for an industry that has little conscience for most of its customers. Refund of premium like in US, UK due to lockdown shall not be treated as benchmark/model to refund the premium in India, as the underwriting conditions and geographies are different. But by saying this it does not mean that the benefit of lesser claims outgo in motor claims during lockdown shall not be shared with the end users (insured). May be some extra coverage’s or discounts shall be offered by the insurers to policyholders at the time of Renewal.

Again it falls on the head of the silent majority of honest, law abiding, careful customers of insurance companies to pay for the inability of the insurance companies to properly, strictly control fraudulent and/or inflated/padded claims. Many concerned insurance experts have been trying to stir the conscience of the General Insurance Industry for the past one week.

Even for the continuity of the Health insurance policies which could not be renewed by many insurers due to the national lockdown, the industry has not shown any empathy or initiative; instead it is the Ministry of Finance , which had stepped in with a much needed concession/relaxation. These are wonderful opportunities for the industry to gain the confidence and trust of the general public.

Concept of Insurance Consumers Association can be a nodal body at national level with chapters at state level so that feel of consumers is monitored . Representative of the association can be member in bodies like Life Insurance council, General Insurance Council to express the view of individuals These people are the people who are backbone of our society. Large corporates do not need any support for conveying their wish or grievance as they can always reach the right level within insurance companies or other bodies.

Today we have an opportunity to gain the goodwill of crores of individuals and increase the insurance penetration. Today is the time to collect them under an Association.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Covid 19 insurance lockdown irda

SK Sethi

Founder and Chief Executive Officer of the Insurance Foundation of India and the Founder Director of Ria Insurance Brokers Pvt Ltd .

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