Insurance companies must prioritise consumer welfare at all times

CONSUMER trust may be foundational to the insurance sector, but a recent survey points to the stark reality that calls for stricter regulatory supervision. According to its findings, 65 per cent of insurance policyholders in India have limited or no understanding of essential details such as benefits, exclusions or claims processes. Nearly 60 per cent of dependents don’t even know they are covered under any policy. The broad conclusion is unmistakable — a vast majority of policyholders are unaware of what they have signed up for. This even as insurance ownership is on the rise in the country. The lack of understanding stems not just from the terminology that is difficult to comprehend. The very purpose of insurance is defeated when the insurer fails in the basic duty to empower consumers with the right knowledge and tools.

Mis-selling of financial products across segments remains a key concern, diluting the end goal of financial protection at the first step itself. In the public perception, the insurance industry is seen as self-serving and adversarial. The health segment, in particular, has gained notoriety over the insurer-hospital nexus at the cost of the patient. Regulatory controls have been found wanting, with an abysmal lack of accountability. Transparency, simplified language and encouraging discussions on insurance coverage among families and friends score high on the to-do list. What must take precedence is a change in the transactional approach that reduces insurance selling to business dealings. Insurance products have a human element attached, and consumer welfare must be prioritised.

Considering the risk factor in insurance fraud, relying on checks is par for the course. That cannot in any way justify burdening the claimants with an overarching and hostile system. Honouring rather than denying claims has to be the industry standard.

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