RP Samal, both a lotus eater (poet) and a utilitarian, a think-tank of insurance industry of the country, bristles with many invigorating ideas of reforms in the sector. Which, when applied in the insurance industry, may usher in an Eldorado for the destitute, wailing widows and crying orphans. A former General Manager of The New India Assurance, Samal’s epoch-making book, ‘The Invisible Side Of Insurance Claims’, is a treasure token for every underwriter in the insurance industry. Samal’s luminous and weighty ideas, if translated into reality, shall unmistakably prove as a harbinger of progress, prosperity and plenty for the teeming multitudes of suffering humanity by completing a peaceful revolution. All that is needed is as this radical thinker wishes a brilliant masterstroke by the Government at the Centre to achieve the goal. In an interview to The Pioneer, Samal of Odisha, who lives in Mumbai and is currently engrossed in writing an English novel, spoke to Sugyan Choudhury on the much-needed reforms in non-life insurance industry.
How can the Government contribute towards repowering the non-life insurance industryIJ
Our countrymen may rub their eyes in disbelief that there are about 1.5 million Motor Accident Third Party Claim cases pending in various Motor Accident Claim Tribunals (MACTs) for decades for settlement because the wheels of justice move at a snail’s pace. Thus, the MACT has become a masterpiece of melancholy for widows and orphans who are waiting with bruising moments for rightful compensation out of which lawyers ultimately snatch a lion’s share!
The solution to this complex problem is very simple. It is the MV Act which should be suitably amended to dismantle the MACT which has been created to give employment to the jury, advocates and court officials and to stand as obstructionist to victims’ families by forcing them into the clumsy challenges of legal processes in getting their undisputed compensation. To extricate them from the paralysing grip of the complex system in far-flung courts, the underwriters should be authorised to pay the amount directly to the beneficiary within one month after submission of necessary documents. The services of MACT can be utilised for more important civil and criminal cases.
For such alternative arrangement, the compensation has to be fixed at Rs 18 lakh for those who have been paying income tax and filing IT returns for 5 years preceding the year of accident and Rs 12 lakh for the non-payers of taxes. (In UAE such amount is equivalent to Rs 35 lakh irrespective of income). For children below 18 years half a lakh every completed year of age; and disablement claims percentage should follow the scale the WC Act. Since third party premium has gone up considerably accounting for 24% of the total premium, it would not be a burden on the companies.
It will create an unprecedented history if Union Surface Transport Minister Nitin Gadkariji takes up this issue and brings such amendments because it would be a great relief to the suffering of millions of widows, orphans and dependent parents. He is capable of doing this noble mission for his countrymen since the BJP enjoys an overwhelming majority. If this revolution happens, it would be the dawn of renaissance for the insurance industry. A popular Government cannot remain deaf-eared and blind-eyed to a cumbersome system putting obstructions into the stream of public life.
How should the IRDA creatively contribute towards development of non-life insurance industryIJ
The geographical location of IRDA depreciates much of its shining sheen as a Regulator. It is as discomforting as driving while sitting in the back seat of the car. Since it is not possible to shift its HQ to either Mumbai or Delhi, its top officials should meet representatives of all stakeholders once in three months in all four metros to listen to their grievances, feel the throbbing heart of the market and use them as feedback for development measures. The most urgent challenge before the Regulator is to introduce minimum rates for fire, marine, engineering and miscellaneous portfolios where insurance companies are extending covers by giving 99% discounts on risk-based premium throwing caution to the wind. This is one of the reasons why year before last all non-life insurance companies incurred huge underwriting losses except Bajaj Allianz which averted the misfortune by a whisker.
This is the only way to bring the erratic underwriters to their senses and restore the reputation of the market. The Regulator should take steps to simplify all policy wordings (except marine the wordings of which have international implications), which are medieval in nature and rewrite them in common man’s words. In India, 90 % of the insured public are nor qualified enough to understand complex languages and the rest 10% have no time for that which amounts to saying no one reads insurance policies because their wordings are unreadably bad. The IRDA manual is a lawyers’ paradise. Rewriting it in easy words seems as eternally a faraway dream. When man’s precious life is so short and simple, why the language of his business transactions should be lengthy and complexIJ
The Regulator should take some officials from the industry regularly on deputation on a temporary basis so that his interaction with the industry become better-established .
Why the officials of non-life PSUs are not as effective as their counterparts in private sectorIJ
like elections in our country, promotion processes and postings are most important activities in non-life PSU companies. Throughout the year, they are busy conducting written tests, 10th Standard intelligence tests, 11th standard Maths and 12th standard public speaking (which have no relevance to the jobs of the employees and officers), then personal interview at various places spending crores of public money on air tickets, hotels and various allowances, let alone the loss of many valuable working days for the companies. When the most unpredictable ones are selected, the blame goes to GIPSU, which exists only in paper like Malgudi in RK Narayan’s novel, to work as a scapegoat for the omissions and commissions of the top officials. It is all in public domain that in the past, several officers had been promoted by superseding 50-odd of their senior colleagues which crushed the backbone of the organisation besides breaking many a heart.
Such men of ‘genius’ later on brought disgrace to the organisations they had headed. Some had been charge-sheeted for their wrongdoings; and there are some others who created hell with both their juniors and seniors with their megalomania. The bosses, who had promoted them with savage ignorance of moral principles by dumping aside more deserving ones, have been suitably punished, the details of which need not be discussed in print. Such immoral activities are mostly responsible for taking away life and draining out positive energy from the PSUs. The lIC, which promotes its officers and employees only on the basis of performance and seniority should be the role model for the PSU non-life companies which would save enormous time and huge amount of money and salvage the ruins of reputation strewn over wrong decisions. And when their forefathers had no uneasiness in following the lIC process in their glorious past, why should theyIJ
How can the leakages which contribute to 20% of the total claim be preventedIJ
In New Zealand where the similar leakages are just 10%, the industry has introduced an Insurance Claim Register, popularly known as the Red Book, which allows insurers to mine the claims of habitual fraudsters. It works by aggregating claims data across member insurance companies into a single database. The database can then be accessed by the underwriters via an easy-to-use but highly-secure web-based interface when they underwrite new business or process claims.
The ICR gives fraud analysts the ability to slice, dice, and analyse claims data in a variety of ways to identify patterns and conduct powerful business intelligence queries. A similar system is also followed in the UK called Insurance Fraud Register. These effective systems deserve undiluted admiration and can be followed in India.
But most of the percentage of leakages in our industry are due to inflated assessment which can only be prevented by visiting the site of claim by a group of competent officials and their wholehearted participation in claim assessments as are done in ICICI lombard and Bajaj Allianz on a regular basis.