Illustration: Binay Sinha
Though the insurance sector
was thrown open to private players in 2000, insurance penetration still remains at only 3.49 per cent of GDP
(figure is for 2016-17, according to data from the Economic Survey
2018). A large swathe of the population doesn’t buy insurance products because it finds them difficult to understand. Customers also stay away because they are not sure whether they will get the benefit when they make a claim. To deal with these issues, a few new insurers and distributors have come out with products that are simple, have small premiums, and also make relatively smaller payouts. They are not comprehensive but cover specific situations. And customers have to submit fewer documents and face fewer questions at the time of payout.
Tripped by complexity: Many insurance products are so comprehensive, and complicated that most people are not able to understand the coverages they will get from them. “Since the product is complex, the buyer is not able to assess whether it is relevant to his life situation. The only factor he takes into consideration while purchasing is the price,” says Rohan Kumar, chief executive officer and co-founder, Toffee Insurance. Hence, people end up purchasing inappropriate products.
Customers are also not sure about whether their claims will be honoured. Says Jasleen Kohli, chief distribution officer, Digit Insurance: “With many older insurance products, the claim amount is big. At the time of claim, a negotiation ensues between the insurer and the insured, which is never pleasant for the latter.” She adds that the idea behind offering simple products is that the customer knows right at the time of purchase that if a specific event occurs, he will get a predefined amount with minimum hassles or questions asked.
Next, let us look at what a few of these novel, low-value insurance products have to offer.
Protect your mobile phone: Now when you buy a phone on Flipkart, you will be offered the option to buy a screen protection cover from Digit Insurance. If you buy a phone on Paytm, you will be offered a comprehensive mobile cover from the same insurer. This will cover damage to the phone due to a fall, water damage, and malfunctions. When you call up their call centre, the insurer will send you a link. When you click on it, it will diagnose and report the problem with the phone. The company will then come up with an estimate of the repair cost. You may either take the money, or the company will pick up the phone, get it repaired, and drop it back. The sum insured is equivalent to the phone’s cost, while for the screen cover it is 20 per cent of the cost.
Insure your cab rides: Often, people who hire cabs are not covered against mishaps. Acko General Insurance has tied up with Ola to offer insurance to those who ride the latter’s cabs. Three plans are available. The first covers point-to-point rides within the city. The second is called the rental plan and covers those occasions when customers hire an Ola cab for four-six hours. The third covers outstation rides, when customers hire the cab for a few days and travel from one city to another.
For rides within the city limit, the sum insured for hospitalisation is Rs 100,000, the death and disability cover is Rs 500,000 and the OPD (out-patient department) cover is Rs 3,000. It also offers a missed flight cover. In case you are travelling to the airport and don’t make it on time because the vehicle breaks down or there is unusual traffic, you will be reimbursed Rs 5,000.
All these covers are available in the outstation plan also. In addition, you get home content insurance worth Rs 100,000, and are insured for loss of baggage and laptop up to Rs 20,000.
Fitness and commuter insurance:
Toffee Insurance is offering a product that provides people against injuries suffered during running, cycling, gyming, etc.. “The normal mediclaim policy only covers you if you are hospitalised. But in 80 per cent of such injuries people don’t get admitted into a hospital. We have created a product that also has an OPD component,” says Kumar. The insured has to submit a copy of his Aadhaar card, medical bill, and the medical summary or report from the doctor. It comes with a hospitalisation cover of Rs 100,000 and OPD cover of Rs 5,000.
Toffee Insurance also offers a commuter cover. It, too, offers the same hospitalisation and OPD benefits, but covers people for mishaps suffered during their daily commute. “Most personal accident covers from insurers focus on accidental death. But that is a more remote possibility. Most people get injured to various extents, and this is what we want to cover,” says Kumar.
Many more such small-ticket covers are available (see table for premium rates).
Financial planners are of the view that everyone should buy some of the essential covers such as a term plan, a health insurance plan and others. “There is no substitute for these products,” says Vishal Dhawan, chief financial planner, Plan Ahead Wealth Advisors. Once you have these, you may buy these newer, small-ticket insurance products, provided there is no overlap in coverage.