Simply Put: Standard Insurance Products

Satish: One of the perils of relocating to a new country is restarting insurance, which no one educates you on. House, health, term, life and travel — I am neck-deep in policy documents and don’t think I am anywhere near the end.

Dheeraj: Yes policy documents can be intimidating, and you are going after the full set of five penalty shots at one go. One of the easiest ways to ‘insure’ against a miss in any one is to go for the low-hanging fruit in each. These are called standard insurance products offered by all basic insurers, as directed by IRDAI.

Satish: Standard products governed by the regulator is interesting. What all do they cover?

Dheeraj: Standard products cover life with Saral Jeevan and Saral Pension, home with Bharat Griha Raksha, travel with Standard travel insurance and small business with Udyam Suraksha. Health is covered with Arogya Sanjeevani and, during Covid, IRDAI was able to roll out health insurance rapidly with Corona Rakshak and Kavach, which are standardised products.

Satish: That is broad and can cover many of my needs. How do these standard covers help exactly?

Dheeraj: Going for such products, the policyholder will have a clear idea of what to expect from the policy as they will be specified in one document on IRDAI website and every insurer offering them (which all insurers have to) cannot stray from these conditions. There will be no need to carefully go through several policy documents, do a comparison study and then analyse them from a price perspective.

Satish: I think such standardisation helps in commoditised products such as travel insurance, but complicated products such as health need customisation.

Dheeraj: Yes, that can be one view. To promote travel insurance, IRDAI has rolled out a standardised travel insurance product that covers domestic travels as well, and not just international travel. But even in ‘customisable’ products as health, for instance, standardisation helps. Consider critical insurance. What is the definition followed by each insurer for malignant cancer, what stage of End Stage Kidney Disease is qualified for coverage, pre-existing conditions for coronary events, the organs in major organ transplant? Common policy wordings reduce the stress on prospective policyholders while shopping for policy.

Satish: What about pricing?

Dheeraj: The standardisation is with respect to policy conditions and clauses. Pricing is not standardised, which will be based on reach, service ability and claims-processing capability of the insurers. But given the uniformity in coverage and negligible width in providing ‘innovation’, pricing cannot be that different.

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