Whalesbook
Anand Shrikhande, the Co-founder and CEO of QuickInsure, an online insurance comparison portal, has proposed that health insurance policies should adopt periodic payment options. He noted that while life insurance already offers flexibility with monthly, quarterly, or half-yearly payments, this is largely missing in health insurance.
Shrikhande explained that an annual health insurance premium for a family of four can range from ₹25,000 to ₹35,000, which can be equivalent to a month's salary in smaller cities. Introducing periodic payment mechanisms would allow families to pay in more manageable installments, making health coverage more accessible and affordable.
He attributed the limited adoption of periodic payments in health insurance to operational challenges and industry-specific differences compared to life insurance. Key differences include the frequent use of portability by customers to switch plans and the lack of established trust and infrastructure for insurers to manage direct periodic premium collection.
Currently, banks and Non-Banking Financial Companies (NBFCs) facilitate installment-based payments, often acting as intermediaries for financing and handling defaults. Shrikhande suggested that insurance companies could directly implement e-mandates to enable these periodic payments.
QuickInsure, a digital insurance broker, leverages technology to connect agents with insurers, facilitating real-time quotes and online policy issuance. The discussion comes at a time when health insurance penetration in India is growing, boosted by post-COVID-19 awareness, although misconceptions about insurance as an investment persist.
Impact:
Implementing periodic payment options for health insurance could significantly increase policy adoption by reducing the upfront financial burden on consumers. This would benefit insurance companies through a larger customer base and potentially more stable premium collection, thereby impacting the financial services sector. Rating: 7/10.
Difficult Terms:
Periodic payment options: The ability to pay insurance premiums in installments (e.g., monthly, quarterly) rather than a single lump sum annually.
Life insurance: An insurance policy that pays out a sum of money either on the death of the insured person or after a set period.
Health insurance: An insurance policy that covers medical and surgical expenses incurred by the insured.
Portability: The ability of a policyholder to switch their insurance plan to a different insurer without losing benefits, often maintaining their original policy terms or benefits based on the original inception date.
NBFCs (Non-Banking Financial Companies): Financial institutions that provide banking-like services but do not hold a full banking license. They often provide loans and credit facilities.
E-mandates: An authorization given by a customer to a company to automatically debit their bank account for payments, typically on a recurring basis.