PSU insurers to digitize motor policy settlement to stay in race
2 min read . Updated: 21 Feb 2023, 11:36 PM IST
PremiumThe process would be finished before March-end for operations of motor insurance policies to be digitized by FY25
NEW DELHI : State-run general insurers Oriental Insurance, National Insurance, New India Assurance, and United India Insurance, are completely digitizing their motor insurance policies to prevent ceding market share to private sector rivals.
According to people aware of the development, these general insurers, who are part of General Insurance Public Sector Association (GIPSA), are empanelling digital service providers (DSPs) as their agents to process and manage motor insurance policies, with claims up to ₹50,000.
The four insurers are embracing a new digital approach to boost an essential part of their insurance operations and free up time to concentrate on more lucrative policies. With their market share in the motor insurance sector hovering around 34% and on the decline, the digital drive is expected to help reinvigorate this segment. Over the past decade, the four insurers saw their motor insurance business lose ground to private sector rivals who had less than half the market in 2009. GIPSA has invited eligible entities to submit expressions of interest (EoI) by 27 February. The technical bids will also be opened on the same day.
The entire process would be completed before the end of March so that digital operations for motor insurance are ready by early next fiscal, the people cited above said, requesting anonymity.
“The digital agents would ensure easy and faster delivery of insurance products and its service while providing a better customer experience while reducing operational cost for the insurer," said one of the people.
Spokespersons for the ministry of finance, department of financial services and GIPSA didn’t respond to emailed queries.
According to regulation 12 of the Irdai (Insurance Surveyors and Loss Assessors) Regulations, 2015, surveyors and loss assessors have to be appointed either by the insurers or the insured to assess loss under a policy of insurance in respect of losses above ₹50,000 in the motor insurance segment. So it has been decided that public sector insurers would be given the option to get an assessment of loss done with an estimated loss up to ₹50,000 in the “motor own damage" department either through in-house surveyors, licensed agents, Irdai licenced surveyors or through any other means/methodology such as app-based claim settlement, and artificial intelligence. The DSPs will have the option to sell and manage motor insurance policies using the app-based methodology. The public sector insurers would create a common pool of DSPs through the empanelment from which individual companies can empanel any number or all DSPs separately as per their requirements.
Service level agreement will be executed between the selected DSPs and the respective insurer upon empanelment. Also, the agents so appointed will have to undertake 100% digital processing of the claims.