India:Lack of data prompts brokers to develop system to assess insurers' performance

The Insurance Broking Association of India (IBAI) has developed a robust measure of an insurer's performance on policyholder-friendly metrics, says Mr Kapil Mehta, co-founder and CEO of the insurance broking firm, SecureNow.

Writing in an article published in Livemint, he says that the focus of the IBAI exercise was on general and health insurers where brokers distribute over 25% of insurance. Life insurers and new insurers without a long track record were excluded from the study. Brokers represent clients through a formal mandate; typically, they work with several insurers and get a privileged view into insurance processes such as placement, grievance handling and claims that are required to evaluate an insurer’s performance. 

He said: “We identified four criteria. Claims and grievance were given the highest weightage of 40%, followed by policyholder and broker orientation, quality of policy placement and domain knowledge. Each criterion was further split up into smaller measures. Overall, 40% of the total score was based on quantitative information from public disclosures and 60% on a broker survey.”

The survey was introduced to capture feedback on measures where public information was unavailable or not consistently measured across insurers. The design was such that no single measure or survey result could swing the overall outcome, says Mr Mehta.

The IBAI received responses from 150 brokers and the survey was filled out by their founders, directors or senior executives. The results showed wide variation among insurers, from a high of 88% to a low of 13%. There was strong correlation between the quantitative assessment and survey results.

The study recognises general insurers in the top quartile to be, in alphabetical order: Bajaj Allianz, Future Generali, HDFC, ICICI Lombard, Iffco Tokio, New India and Tata AIG.

Mr Mehta, who is also a director of the IBAI, says that this exercise will be repeated each year to be an additional perspective for the industry and buyers.

The IBAI undertook the study to address the lack of synthesised information in the insurance industry that had made it difficult to analyse which are the best insurers in India.