The Indian insurance market must align with leading global markets in freedom of pricing, coverage, limits, and deductibles in insurance, according to the “International Best Practices to Increase Insurance Penetration and Risk Management Study,” conducted by the risk management society RIMS and National Insurance Academy.

Overall, these market reforms will enhance the financial soundness of insurers, incentivise risk mitigation and product diversification, improve insurance coverage, and bridge the insurance protection gap. This would be a win-win for both the insurer and policyholder, said the study.

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According to the study, all countries are allowed to exercise freedom in pricing whereas pricing in some lines of business, like fire, remains fixed in India due to conditions imposed in reinsurance treaties.

Nine out of ten countries believe that they have freedom in policy wording. In India, insurers do not have the freedom to issue customised policy wordings. The report further suggests that enabling customisation in accordance with the risk profile would encourage product innovation and will meet customer needs.

Freedom in deductibles and loss limits is permissible in nine out of ten countries as the sum insured is higher. On the contrary, in India, the majority of commercial policyholders, where the sum insured is lower than $350 million at a single location cannot have loss limit-based policies or increase their deductibles.

Flexibility in policy tenure is allowed in eight out of ten countries globally as mentioned in the study. In India, access to short-term insurance in non-life insurance policies is minimum for one year. For motor insurance covers, longer-term polices for up to three-five years are available.

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Seven out of ten countries believe they can provide seamless claims experience to their customers. In India, there is a strong need for simplification and standardisation of the claims process, which would improve the claims settlement time and bring transparency.

Roop Kumar, Chairman, RIMS India Chapter said the insurance industry, as a facilitator and key contributor to economic growth, can play a crucial role in achieving the goal of ‘Insurance for all’ by 2047. The time is ripe for introducing changes in the insurance industry that will provide choices and options to the policyholder and lead to growth, said Kumar.

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