Group insurance: Good news for employees as employers now spoilt for choice

An employee worried about insurance coverage of his family members can now look forward to a better deal from his employer as companies now have a better menu to choose from. The entry of tech insurers aims to stir up the group insurance market. This should be good news, especially, for all those who yet have no independent insurance cover. In crisis (Read: Covid), comes opportunity — this adage seems to be playing out in the insurance sector.

Insure-tech startups have stepped in to help service the needs of smaller firms in the group insurance space. There are numerous smaller firms with less than 10-20 employees willing to get group insurance coverage but have been unable to access cover so far for lack of attractive products in the market. The onset of new age insurance companies promises to bring about a paradigm shift.

“Private players offering group insurance are ICICI Lombard, Bajaj Allianz, Care Health Insurance, and Digit Insurance. Big state players include New India Assurance and United India Insurance. However, established players tend to serve corporations with thousands of employees,” said Saurabh Arora, co-founder, Plum, an insure-tech in the group insurance space.

Technology as a pivot 

Plum says it has tied up with insurance companies such as ICICI Lombard, Care Health, Star Health and New India Assurance to offer insurance products for SMEs with staff strength of 5-10 employees.

The opportunity is there for other players to tap into.

Insurance aggregator Policybazaar last week launched a marketplace for SMEs, MSMEs and large corporates to offer customised plans based on company’s size, number of employees and location.

“Corporates can visit our portal where they can check out quotes from different insurers. They can customise features as per their needs. For example, if employees in the company are younger the policy construct could be different from those with senior employees who have also want coverage for their senior citizen parents,” said Policybazaar.

Policybazaar says that it is not only simplifying the process for companies, but also for employees while giving them choice. Asked to state the differentiator, the online insurance distributor claims it is focused more on the employee than the employer.

“Once a corporate comes on board with us, and accordingly its employees, we send out mails on behalf of the HR. We ask them to download our app where they can see their policy features and beneficiaries. We are giving them a wellness-oriented health insurance product with 27 non-hospitalisation features such as diagnostics, online doctor consult, Nutrition, Second-Opinion services, Mental Wellness, and training options like Yoga and Personal Training,” said Raghuveer Malik, Business Head, Corporate Insurance.

“There is nothing unusual about it. Most of these features already exist in group insurance policies, but 8 out of 10 employees will not be aware about it. The difference lies in the delivery of features which will lead to higher adoptions,” he added.

Challenges

This is where the catch is. Servicing an employee is bound to be the biggest challenge with awareness levels growing and disease mitigation being a top priority. Established players have learnt it the hard way. But a competitive scenario would always mean the employee gets a better return.

To bring in innovation, Plum says it has forged new underwriting and fraud detection algorithms to enable companies as small as five to benefit from group insurance. “The platform enables real-time insurance design and pricing to enable companies to buy insurance in 3-clicks, and offers employees hassle-free claims experience through an integrated digital process,” said Arora of Plum.

The efforts by insure-tech companies are commendable, but the real challenge comes in renewing the policies, not in issuing it.

“If the claims experience results in losses for the insurer due to adverse selection of policyholders in the group policy, they might charge even higher premium the next year. A new insurer may still give them policies at a cheaper premium because they have not born the losses, but changing insurer year after year will be a tedious process,” said financial advisor Rajan Bedi.