Concerned about malaria or chikungunya? You can always get insured for a paltry sum and claim on your hospitalisation bills. In other words these are bite-size insurance covers that address immediate issues and are highly effective too.
There is a plethora of innovative products available in the market to cater to the needs that were largely unmet in high-cost traditional insurance covers.
For instance, if you fall prey to a vector-borne disease then you can go for an insurance to cover the illness. You can buy a dengue insurance for only Rs49, Rs99 or Rs149. You can even buy a cover for diseases like chikungunya, malaria, japanese encephalitis, lymphatic filariasis and get a lump sum payout of Rs10,000 to Rs30,000, with an accidental death cover ranging between Rs1 lakh and Rs3 lakh. It is easy to settle a claim as the payment will be made on the actual hospital bills. The product catalogue of bite-size insurance plans also include cycle insurance, backpack insurance, online fraud protection, hospital cash and critical illness.
The beauty of the product is that the cost of a bite-size insurance can be less than the price of a 300 ml Coca-Cola bottle. And the cherry on the top is the swiftness of buying the product. Just a few clicks and you can have an insurance plan for specific needs. Insurers see this as a perfect gateaway for people who have traditionally stayed away from insurance.
“Bite-sized insurance products are gaining popularity not only among the younger generation but anyone who has not been formally introduced to insurance. Our focus is to make insurance accessible and affordable for the next half a billion or the five crore first-time internet users, who are expected to come online within the next five years through mobile phones. And that is how we will gauge the popularity of such offerings,” says Rohan Kumar, CEO, Co-founder, Toffee Insurance.
Toffee Insurance through its online portal offers bite-size plans. Another platform MobiKwik, a digital wallet company, in association with insurers like ICICI Lombard General Insurance, Max Bupa Health Insurance, Aditya Birla Health Insurance, Chola MS General Insurance, Edelweiss Tokio Life Insurance and ICICI Prudential Life insurance, offers bite-size plans with zero paperwork. Toffee Insurance has Apollo Munich, HDFC Ergo General Insurance, ICICI Prudential Life Insurance, IndiaFirst Life Insurance, ManipalCigna Health Insurance, Tata AIG General Insurance and Religare Health Insurance as partners to provide tailor-made products.
Some other platforms that offer such services include Go Digit General Insurance, ACKO General Insurance, Symbo Insurance.
“The concept of bite-size insurance product is fast gaining momentum and this platform is tailored for people within the age group of 25-40 years, who are first time buyers. They are easily accessible and doesn’t have the traditional complexities associated with buying an insurance product. Getting an insurance policy is just a few taps of a button,” explains Kunal Bajaj, Head Strategy and Investor Relations, MobiKwik.
One of the most famous vertical of bite-size insurance is health products. A health insurance plan may not cover every specific requirement. However, a bite-size insurance could fill that gap, and yet is nominally priced.
“India is one of the most underpenetrated countries with only about 20 per cent of the population having any form of health cover. Bite-size health covers are usually easy to buy, economical in nature and hence are fast picking up pace in India and gaining huge interest from customers who are always on the go and are looking for convenient, low-price and accessible health plans for their specific health needs,” argues Ashish Mehrotra, MD and CEO, Max Bupa Health Insurance.
Industry experts believe bite-size insurance products are easily accessible and affordable and will help increase the insurance penetration in the country. These products are gaining popularity among the younger generation who are looking for quick, simple and affordable cover.
“Bite-sized covers are certainly picking up in the market owing to its convenience and economical pricing. However, there is no substitute for a comprehensive health insurance. It will not fulfill all health insurance requirements,” adds Mehrotra.
Insurers follow different underwriting methods for bite-size insurance plans as compared to traditional products. While in traditional plans, insurers arrive at the value of premium considering the risk and exposure of the policyholder, in case of bite-size plans, a single premium amount is offered to all customers as the underwriting method varies completely. Bite-size insurance plans ignore general eligibility criteria like risk exposure due to their quick-fix nature. For instance, a health related plan can be bought without undergoing any sort of medical test.
Aditya Birla Health Insurance’s Critical Illness plan covers cancer of specific severity, open chest CABG, open heart replacement or repair of heart valves, kidney failure requiring regular dialysis, strokes resulting in permanent symptoms, major organ or bone marrow transplant, permanent paralysis of limbs, multiple sclerosis with persisting symptoms, coma of specific severity, end stage of liver, end stage of lung failure, parkinson’s disease, alzheimer’s disease, loss of vision, major burns and benign brain tumour. One can buy this plan for Rs495, Rs1,490 and Rs2,470 and get sum assured of Rs1 lakh, Rs3 lakh and Rs5 lakh respectively. The cost of plans would be the same for all buyers. Insurers are also taking action to make the right product reach the right customer. Personalised products is the trick behind reaching the right customer.
“We do granular in-depth research of a vertical and then break down largely incomprehensible policies into simple, mass-market and consumer-centric constructs. Simultaneously, we work with channel partners and use deep data-mining techniques to drive context for offering personalised and relevant products,” explains Kumar. Contextualised insurance policies are relevant and introduce first-time buyers to financial planning without neglecting their income and lifestyle requirements. Bite-sized insurance policies are curated and thus have wide coverages that can tackle multiple risks at the same time. The products are essentially simpler and affordable versions with very low premiums of the traditional insurance policies offered by insurers. Moreover, the products are accessible in most true form as there are no lengthy forms, no hidden clauses, ease of purchase and claims.
“Since our products construct are simple, the claims process is modelled accordingly. In most cases, we only need a few easily available documents to initiate a claim. Starting with the assumption that almost all customers are making honest claims, we strive to treat them in that way. If a cycle is stolen, for example, we simply ask for a Police Intimation Report (filed online) and a photo of the customer’s aadhar card. Claims can thus be approved within 24 hours and money sent within a few days. We have deep data science abilities and third-party plugins which work on fraud mitigation through a separate process,” says Kumar.
The quick-fix nature of the service and it’s ease of purchase has made bite-size insurance plans extremely popular among the millennials with most of the policyholders. For now, the bite-size insurance plans have yearly premium options. However, MobiKwik is planning to soon introduce quarterly, as well as half yearly premium options. Also, once customers start buying or renewing insurance on a regular basis, not only would their creditworthiness improve they would also be able to avail newer policies at cheaper rates.
The novelty factor however means that the claim settlement ratio is not known for bite-size plans, although we know the golden rule of business is ‘customer first’. And while it may be new, it has all the potential to have a large-scale usage essentially because of its low cost, ease of purchase and ability to meet unique requirements. Affordability also is a major factor why it can allow us to provide a complete cover in the truest sense and provide long-term relief. After all, it may be bite-size still be rest assured it packs a lot of punch.
nirmala@outlookindia.com