‘Insurance is about selling a promise, not a product’

This is not just an Indian problem, but a global one. I think it is because insurance is still a very complicated product with a lot of terms and conditions, where the customers struggle to understand the jargon and technicalities. There’s a saying globally that insurance is never bought, it is always sold. Essentially, therefore, people buying insurance don’t wholly know what they’re buying. Those selling the product also, sometimes don’t fully know what they’re selling.

Insurance selling is very difficult because one is not selling a visible product, but a promise. This is why it is an industry where, if 100 people join as agents on day one, 60 leave by the end of the first year. But the customer is expected to stay with a life policy for many years. This leads to a lot of orphaned customers and, thus, complaints. 

We receive three main kinds of complaints. We get complaints about mis-selling, mainly in life insurance policies. Seniors get sold life policies as substitutes for fixed deposits. Small businessmen get sold insurance products in lieu of business loans. People from all walks of life are sold life insurance plans promising ‘high’ returns. In case of health insurance, most complaints we get relate to short settlement, claim rejections in both and delays in claim settlements. We also get complaints about fire, theft or marine claims.

There may be non-disclosure of material information while buying insurance. The problem also has to do with the many parties involved in the processing of the claim – the hospital, the third-party administrator (TPA), the insurer, the investigators and also the customer. When the insurer receives only partial information, there is a tendency to reject or partly pay claims.

Claim settlement is often a function of how well you represent the claim to the insurer. The person receiving claims at the insurer’s end is taught to have a certain checklist and to assess claims in a particular way. The customer may not be aware of this. Hospitals often do not do this efficiently. This results in rejections and partial health claims settlement.

The foundation of a home decides its strength. The proposal form you fill at the time of buying health insurance needs to be filled very carefully as it is the foundation of your insurance contract.You need to disclose all pre-existing conditions, no matter how trivial you think they are. A pre-existing condition like hypertension can later lead to many other health conditions for which you may need to file a claim. Lifestyle factors like smoking, drinking, using tobacco must be disclosed. Family history of illnesses must be disclosed. One important disclosure that most people miss out on is mentioning if they have another health policy in force. If all of this is properly taken care of, claims won’t get easily rejected.

Let me clarify that none of the insurers intend to deny claims when they take on a policy. Sometimes, insurance buyers also don’t understand the terms of the policy, such as the waiting period or exclusions. In this context, Insurance Samadhan recently launched an app which can help insurance buyers easily understand their policy by simplifying its terms. The app can also process any policy document in 3-4 minutes and spot any errors that can lead to claim rejection. It reaches out to insurance companies and fixes the issue.

There are three situations. One, you knew and chose to hide this information, then you cannot complain. Two, if there is a health condition that you were not aware of, but the insurer has conducted a medical test, and the same is revealed, in which case the insurer treats it as a pre-existing disease. Three, in cases where you really didn’t know about the existence of a health condition while buying a policy, you should be able to prove to the insurer that you were not aware of it. If you are able to show that your first doctor’s consultation on this condition was after buying the policy, that can help. But proving this is tough and this is a grey area.

I joined Max Life Insurance in 2005 as an employee. This is where I met my co-founders Shilpa and Shailesh. We worked at their largest office in India. Unlike a typical sales office, we used to get a lot of walk-in customers who had grievances or service requirements. We used to try and get them resolved. In 2010, I became a full-time wealth manager and insurance advisor. But again, through my interactions, I realised that almost everyone I met had either bought a wrong product or had a bad claims experience. So, in 2017, we decided that we still start something around resolving consumer issues with insurance and started it on August 15, 2018.

The ombudsman system is very efficient, and today there are online hearings and not just offline. But again, the ombudsman is a decision-maker. The biggest problem in the entire chain is how the customer represents his complaint. Under insurance regulations, every customer has to represent his or her own complaint with the ombudsman. This requires understanding of the medical and technical terms that go into insurance and articulating the problem well.

At Insurance Samadhan, we try to understand the customer’s issue thoroughly and help them represent their complaint to the ombudsman in a correct manner. Our own success rate with the ombudsman is almost 80 per cent. 

There is a one-time registration fee of ₹500 once we evaluate and decide to accept the case. In case the complaint remains unresolved, this fee is refundable. There is a success fee of 12 per cent plus GST if the case is successfully resolved, after the customer receives the settled claim amount in their bank account. If 100 people come to us every day, we accept 7-8 per cent. Often, ongoing through the case, we find that the customer has some confusion about the policy, which we clear.