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9 in 10 willing to buy extra insurance through employers



Almost all employees (92%) in India said that they are willing to share premium costs and buy voluntary insurance plans offered by their employers, according to Marsh India's annual Employee Health and Benefit Survey.



In addition, 33% said that they are willing to spend 1-2% and another 37% willing to spend 3-5% of their annual salaries on voluntary insurance plans.



The survey was conducted among 500 companies and and over 2,000 employees. It included employees for the first time this year.



Mr Sanjay Kedia, Country Head and CEO of Marsh India, said that the employer is now the one-stop shop for all insurance needs. “Since the employer is able to negotiate with the insurance and/or broker for better rates, even other products like motor insurance and travel insurance are now being sought by employees from their company,” he added.



The survey said that the majority of the employees are keen to invest in top-up, outpatient department and insurance plans for their parents to minimise their out of pocket expenses.



Employers in India are now encouraging staff to pay a proportion of the premium for their parents’ insurance coverage. In 2010, about 51% companies covered employees’ parents completely, and this proportion declined to 41% in 2015 and 35% in 2016.



Almost 83% of employees said they are looking to customise the insurance offered by their employers such as increasing room rent and maternity limits. There is also increasing demand for voluntary programmes to cover assets like car or house and travel insurance, provided it is facilitated by the employer.



The survey showed that reducing financial concerns of employees, out-of-pocket expenses, and addressing chronic medical condition are the three most important employers’ objectives.

Meanwhile, the median sum insured in medical insurance provided to employees increased to INR350,000 (US$5,200) from INR300,000 previously.

Mixed views on premium savings on e-insurance policies

Insurance players in India have mixed views on how the compulsory issuance of insurance policies in electronic form, due to start on 1 October, will lead to lower insurance premiums.

The move, directed by IRDAI, is expected to increase efficiency in the insurance industry and require insurers to change their operations by being more technology-oriented. Consumers will be required to open a e-insurance account with insurance repositories in order to access their policies.

Mr Shivakumar Shankar, Managing Director of LexisNexis Risk Solutions India, told The Financial Express that the impact on premiums would be marginal at best. “At a broader level, the premium is based on perception of the risk and this does not change much. Hence, the impact on premium rates is marginal, if at all.”

Mr S R Balachandher, Company Secretary and Chief Compliance Officer at Royal Sundaram General Insurance, said that the success of the scheme would determine its impact on premium rates. “Premium rates may not be impacted immediately but depending on how successful the scheme is, there could be a possibility of a reduction in premiums as administrative costs come down for companies over a period of time.”

Mr Yashish Dahiya, CEO & Co-founder, Policybazaar.com, however, feels that insurance products will become cheaper in the long run. “With the launch of e-policies, we expect insurance companies to become more cost-efficient in their logistics, especially in their distribution. Insurers are expected to transfer the benefits of this cost efficiency to their end-consumers, thus making insurance products cheaper over time.”
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3rd-party insurance premium may go up after new MV Act

The premium for third party insurance for motor vehicles or this component in the comprehensive insurance that you take could increase by at least 10-15% once amendments to the Motor Vehicles Act are passed by both Houses of Parliament.

Third party insurance accounts for about 30% of the premium of comprehensive insurance. Only third party insurance is mandatory.

The primary reason for this is the substantial increase in compensation proposed in the amendments for accident victims. From the present Rs 25,000 compensation, it will be increased to Rs 2 lakh in case of death in hit and run cases.

For grievous injuries, the compensation proposed is Rs 50,000 against the present Rs 12,500. Similarly, there is a provision for payment of compensation up to Rs 10 lakh in road fatalities where the offending vehicle and the owner are identified. In case of grievous injuries, the compensation would be up to Rs 5 lakh.

As per the proposed amendments, insurance companies will pay the compensation amount within 30 days.“This is the minimum compensation we have proposed and people must get the compensation quickly.

But if the family members are not satisfied with this amount, they can approach the tribunal for higher compensation,“ road transport minister Nitin Gadkari told TOI. He added that the main reason behind coming out with such a proposal was to provide quick relief to the families of those killed or grievously injured in road crashes.

However, experts in the road transport sector are not impressed. “Why should government get into the business of capping compensation? In the present law, police refer every case to the Motor Accidents Claims Tribunal and the compensation is calculated based on a set formula. The government should only bring reforms to ensure that people get justice quickly from the tribunal said S P Singh of IFTRT, a Delhi based think tank on transport-related issues.

He added that there were several cases in the past where victims' families got higher compensation. Singh said the government seemed to be playing into the hands of insurance companies and the transporters' lobby. “Let them make it public what consultations they did with road users before proposing such an amendment,“ Singh said.

But ministry sources said they had only put the best possible proposal and all aspects of the bill would be discussed in both Houses of Parliament. They added the penalty for driving a vehicle without insurance would be doubled from the present Rs 1,000 to Rs 2,000 to ensure that every vehicle on the road had insurance. “It's a deterrent fine”, said a government official.