Insurers must report claims data in greater detail to improve accountability

livemint.com:

The Insurance Broking Association of India recently published a report on general insurance claims, which includes a simple comparison of various insurers’ claims performance across a range of metrics. The data is also broken down by line of business – health, motor, fire, etc. 

In its 8th edition, the report drew attention from a cross-section of society. Several newspapers analysed and cited it, and a member of parliament brought it to the attention of the finance minister. There have been differing views on how to interpret the report. However, it establishes the larger point – that insurers need to step up their game on claims. Insurers require nudging to include greater detail in their public disclosures, which aid public discussions and help to hold them accountable.

Also read: Is a GST rate cut for insurance good news?

Consider the fact that the overall claims-paid ratio of the four public general insurers slipped from 80-90% in 2022, to 40-60% in 2023. This coincided with a massive drop in the solvency ratio for three of them. Two of them even went into negative territory in terms of solvency. 

Was the drop in the claims-paid ratio driven by these insurers’ ability to pay? We won’t know, unless there is a much greater level of scrutiny. As an industry insider, I can tell you that it is not uncommon for insurers to find reasons to delay, deduct and deny claims. Some time ago, a standalone health insurer suddenly started rejecting all health insurance claims that were outside its cashless network to manage its losses. Despite a hue and cry, the insurer went unpunished, and policyholders got little respite.

As you navigate various lines of the insurance business, you find more unanswered questions. Take the fire