Until the beginning of the year 2011, the risk-taking capacity of specifically health insurers was considerably low in comparison with other insurance sectors health insurers as they had the option of increasing the premium of the policy for consumers during the renewal period. This was specifically done for the consumers who had a claims history i.e. they had to file a claim within the policy tenure. However, in the year 2012, Insurance Regulatory and Development Authority of India (IRDAI) steeped in and introduced reforms by eliminating the practice of increasing the premium of consumers who has a claim history. This was considered as a welcome move by the consumers and prompted more and more people to buy insurance.
This move of IRDAI suddenly made under-writing a very important aspect from the insurers point of view. The insurers started the practice of conducting medical tests of the customers who wanted to buy a health insurance. Conducting medical test of the consumers helped insurers to the reduce the risk of paying a claim in the near future. The premium of customers who had no medical history was significantly lower in comparison with those with some medical history. It was finally around 2016 and 2017 when the health insurance market finally started building up and health insurance specialists were introduced in the market.
This was the time when the authenticity of Pre-Policy Medical Checkups (PPMC) took the centre stage and was for some reasons the process was not completely accepted by the insurers for issuing a policy to the potential customers. This was because the process was seen to not give visibility into all issues despite of best efforts put in by the insurers. Also, though the physical medical check-up could be substantial in knowing the current health condition of an individual however, it was not helpful in knowing the history of a particular ailment. This was the time when insurers started looking out for alternative options for issuing policy to the customers in an efficient and cost-effective manner, and the answer to this was - Tele-underwriting.
Tele-underwriting is a perfect way of catering to a generation that is digitally dependent and is accustomed to on demand services and minimal customer barriers. Tele-underwriting is the overall process used to make an underwriting decision based on the tele-interview wherein recorded telephone interview is used to gather risk related information directly from the customers or policy seekers. Tele-underwriting helps insurers to know more about the health of their potential customers as usually people are more friendly to telephonic conversations and rightly disclose their medical conditions which are sometimes hard to know through physical verification.
For instance, diabetic patients usually manage their sugar levels either by controlling their diets or through regular medicines (often insulin intake). It is hard to know the diabetic conditions of a person through medical tests if someone has controlled sugar levels. However, customers are significantly more open to doctors over call and would rarely hide their medical history.
This is also because, during tele-underwriting process, the assigned doctors ask a set of questions to the patients regarding their medical history and it is not possible for the customers to hide about their medical conditions. Apart from helping insurers know the actual medical conditions of the patients, tele-underwriting also helps insurers to reduce the turn-around-time wherein they can easily convert a policy seeker to a customer.
Change in Underwriting Process During COVID-19 Pandemic
The coronavirus pandemic is opening new chapters in the insurance sectors with businesses suddenly disrupted as human lives remaining under threat. The coronavirus outbreak has reached over 196 countries and sickened over 8,60,000 people worldwide with total death toll nearing 42,300, the majority in China and Italy, but also in other countries as the virus is spreading fast. In India, there are 1,600 confirmed cases of coronavirus and in total 45 deaths have been reported so far. While policy seekers may feel that a global health crisis like the widespread COVID-19 outbreak that began in late 2019 may make buying a life and health insurance policy difficult, the fact is something else.
During the corona crises, the insurers are simplifying their underwriting process by providing insurance both, health and life insurance to people through the process of tele medical – a distance mode underwriting methods - in place of conducting physical medical test at the medical centres. To ease off the underwriting process and in order to keep the customers away from medical centres - in its attempt to stop spread of coronavirus – the insurers have partnered with prominent online aggregators to offer insurance to the potential customers through telemedical consultation instead of a physical medical test. Under the tele medical process, while buying a health insurance, the customers will be asked to provide some information about their basic health condition to an appointed doctor over the phone. The questions would revolve around the lifestyle of the customers and general questions about his or her physical health. Bases on this conversation, the customer will be issued a health policy up to a maximum sum insured of Rs. 1 crore.
Coming to life insurance, under the telemedical a cover of up to Rs 2 crore can be bought through tele medical. Apart from providing appropriate information about your current health condition, your credit score and income range will also be considered while issuing a term insurance policy. This information is available through credit bureaus and is becoming an effective tool in evaluating risk before issuing a term plan. Customers can completely rely on the tele medical process, as it is regulated by the IRDAI and is reliable from the customer’s point of view.
The author is the Head of Product and Innovation, Policybazaar