Insurance Policies, Surrender Process Need To Be Simpler'

After taking over the reins of ICICI Prudential Life Insurance as CEO and MD in June 2023, Anup Bagchi has been heard talking about making life insurance simpler, which is a big positive for policyholders. In an interview with Nidhi Sinha, Editor, Outlook Money, he talks about how simplifying insurance will help people buy the right product, curb mis-selling and reduce the possibilities of early surrender. Edited excerpts:

You recently talked about making life insurance simpler. Why is that so?

Our interaction with customers shows that they are anxious about buying insurance, mainly because of the complexity. The anxiety stems from the fact that they are not confident about what they are buying. I have seen it across BFSI that customers shy away from complex products, even if they are good, and flock towards simpler products. Since these are long-term products, they are not liquid and there are costs attached to exiting them midway, the decisioning becomes that much deliberate. 

But certain jargons are intrinsic to insurance. For example, you cannot think of insurance without understanding the concept of pre-existing diseases. What is the solution then?

The solution is explaining patiently and asking the right questions. As an example, for the medical part in life insurance, usually customers are asked to just make disclosures on their own, but these may not be validated all the time. This can lead to issues at the time of making a claim.

We have started simplifying the questions. For example, one can just ask, "Are you taking any medicines?" rather than asking "Are you under any medication?" It's the same question but worded more simply.

The complexity comes because the simplified words also need to be legally enforceable. So, to make it watertight, one ends up mystifying it too much.

The Insurance Regulatory and Development Authority of India (Irdai) has set up a committee to simplify documentations and wordings which are legally enforceable.

It is important to explain that disclosing a disease does not automatically mean it will not get covered. At a slightly higher charge, the same can get covered. One must balance deliberate misrepresentation against a genuine situation.