How Data Helps Make The Best Insurance Choices

INSURANCE BUYERS are spoilt for choice. India has over 50 insurers, over 300 life insurance, more than 200 health insurance and at least 30 motor insurance products. The options are bewildering if one looks at sub-variants and add-ons. So many options make buying insurance a difficult decision. There are two kinds of buyers. The first, more common, are those that ask friends and families and decide on anecdotal experiences. The second look closely at product combinations and analyse the information available. The best way is to combine both approaches. You must look at anecdotal evidence but also hard facts. To do this efficiently and not get caught in complicated analysis, work with an intermediary. In any case, the price of insurance generally does not depend upon the intermediary.

There is a vast amount of information. The data has become more granular over the years. Price information is available on websites of insurers and in their brochures. Insurers allow you to quickly look at various benefit combinations and immediately quote premiums. Their websites also have detailed benefits. Marketing brochures give key features and list a few exclusions but full policy wordings listing complete details are also available. Read policy wordings before final purchase. Finally, there has been tremendous improvement in quality of information on claims. From public disclosures that insurers must make every quarter, you can get claim settlement rates, claim settlement periods and grievances. The ombudsman publishes a summary of complaints and decisions taken.

Not everyone is able to effectively use such rich information. The main issue is that accessing the data is cumbersome. Each insurer publishes public disclosures. Mostly, the documents are in PDF format from where it is difficult to extract information for comparison. For Fortune India Best Insurers rankings, we manually feed information into excel, a process that can take days. The next step for the industry will be to publish information in a synthesised, easily extractable, format. Another issue is that all insurers are not consistent in the way they report data, especially related to grievances and persistency. Ratings and rankings do have a role in parsing and analysing the plethora of information available. I encourage buyers to look at well-curated rankings before taking a decision to buy insurance.

In any case, buyers should take comfort from the fact that there are no bad products, thanks to regulations and competition. In term insurance, no exclusions are allowed other than suicide in first policy year. And claims cannot be rejected after a moratorium period of eight years. These provisions ensure that all terms plans are good. Similarly, regulations require that all health insurance policies must be renewable for life, and prices cannot be changed for specific individuals based on claims. All individuals of same age will pay same premiums. Also, definitions of items like pre-existing conditions and critical illnesses are specified, and are the same across products. The regulator has also issued guidelines on which exclusions can be allowed. In motor insurance, terms and conditions are even more standardised. All insurers have the same essential conditions. The only difference is the price. All this provides an excellent safety net because any decision on insurance is okay, and you will not have a bad outcome. Of course, you can use your analyses and rankings to pick policies more suited to your needs. On more complicated health insurance, the facility of porting allows you to shift insurers if needs change.

The most important point is not to delay insurance purchase. Do your checks and analyses but act and buy. Being uninsured is a far greater risk than buying wrong insurance.