We Are Leveraging Advanced Technology To Weed Out Fraudulent Claims: Prashant Tripathy, Max Life Insurance

Congratulations on the admirable feat of surpassing the life insurance giant LIC on Claims Settlement Ratio this year. Broadly speaking, what do you think made this happen?
Thank you very much. Up until five years ago our death claims paid ratio was 93.26 per cent. Displaying consistent improvement in the numbers over the last five years, in 2017-18, we have achieved a claims paid ratio of 98.26% by settling a commendable 10,152 claims of the 10,330 death claims that were received. It is our customer orientation which drove this performance at the most important moment of truth. This has been possible by a two pronged approach of
Sourcing right through need based selling and robust technology driven underwriting
Finding reasons to settle a claim at the payment stage, instead of reasons to reject it.
To further fortify our endeavour on this front, we recently also pioneered the ‘Instaclaim’ initiative to help settle the death claims within one day from the claim receipt, subject to conditions such as sum assured, policy duration, etc.  

What role does technology play in your underwriting process?
Fuelled primarily by our commitment to ensuring superior customer centricity in the claims settlement process, we have continued to pivot technology to develop robust underwriting capabilities. From employing technology led tele-medication examination to facilitate interactive on-call checkups of prospective customers with doctors, to using video verification technique prior to issuing policies, we are leveraging advanced technology at almost every step to weed out fraudulent claims, thereby empowering the customers in the current digital ecosystem.

What checks and balances do you employ during the proposal stage, that ensure a smooth and hassle-free claims settlement process – especially for the lower ticket cases that do not involve medicals?
One of the biggest pillars of customer centricity for a life insurance firm is a measure of how well it pays claims.

It is our strong belief that if the filters at the input stage are efficient, the claim settlement process is much easier. Some of the initiatives mentioned below have helped us have a claim settlement ratio which is amongst the best as per industry standards.

We have robust analytical scoring model based on our early claims and industry triggers. This reduces the acceptance of fraudulent policies and ensures better medical conditions disclosure at the entry level. At the same time, these are designed in such a way that the process of genuine applications is seamless.

Additionally, 93-94% of our customers’ applications go through, without any medical examination. We had previously observed that in such cases the instances of misrepresentation of facts were high. To overcome this challenge, instead of customers visiting diagnostic centres, we put in place, Tele Medical Examinations for better & more accurate upfront disclosures at proposal stage. Disclosure rates are significantly higher in tele-medical examination as compared to physical verification and this sets us up for faster claims processing when claims take place.

Business wise, is term insurance a profitable product for you? What percentage of term insurance proposals do you generally reject on the grounds of them being too high an underwriting risk for you to take on?
Term insurance policies have always played an important role when it comes to life insurance sector as it is designed to fundamentally provide financial protection to the family of policy holder in the event of his/her demise. Term plans are win – win for both the policyholder and life insurer as it offers life cover at low cost and at the same time if the company has robust underwriting standards it offers reasonable profitability to life insurer.

At Max Life Insurance, nearly 7-8% of term insurance proposals are generally rejected on the grounds of being too high an underwriting risk. Right selection of risk is important to provide good life insurance solutions to all policyholders. Any process lapse at the underwriting stage will increase the number of claims resulting in a higher cost of insurance cover for all customers.

What is the persistency of your term insurance product? How does it fare vis a vis the industry average?
The 13th month persistency of our term insurance products is higher than the overall 13th month persistency for our portfolio, which is in at par with the industry best. The industry does not report on separate term insurance persistency numbers.

What’s your take on the resurgence of ULIP’s? Do you think this is good for the customer? 
Anecdotal evidence suggests that a lot of scepticism still persists about ULIP’s, especially within those who burned their fingers in the early 2000s….

ULIP’s are extremely beneficial products for long-term planners who seek transparency and lump sum payments to fulfil their wishes, a protection of life stage needs along with the opportunity for high market-linked returns. They also offer the flexibility to be structured as per risk appetite; equity, debt or both, with options to switch as the markets change and also offers tax deductions. Today, ULIPs are one of the most transparent investment instruments for those who have the ability to take an investment risk and actively manage their investment. ULIPs constitute 40 per cent of Max Life Insurance’s portfolio. Online ULIPs today are extremely competitive in costs and are a preferred investment instrument for many.

ULIPs are good products for customers, who understand the risk of volatility in the equity market.

What’s your distribution focus? Are you more inclined towards banca & channel strategies, or is direct to customer the way forward for Max Life?
We believe in the power of a well-diversified distribution channel strategy to engage with potential customers at every touchpoint available. Each customer is different and his/ her preferred channel to buy life insurance would also differ. Today, one in every 4 customers of Max Life walks in through the digital door. When it comes to savings plans, most customer prefer to make their purchase from an agent advisor or through a bancassurance partner. We continue to expand our agency distribution and our proprietary distribution which include agency distribution, direct sales and internet selling to drive comprehensive growth and wider customer acquisition.  In the next 2-3 years, the focus is inclined towards scaling up our proprietary channels to contribute 40 per cent of our new business revenue. In a country like India, it is essential to have a well-balanced multi-channel distribution architecture to ensure customer centricity.
 
How, in your view, will FinTech players influence the life insurance business in the times to come?
FinTech players have been applauded for continuously introducing innovative technologies to help businesses keep pace with the transforming industry, while simplifying the entire customer life cycle to achieve more efficiency and transparency. Working with innovative FinTechs will help life insurers provide superior customer experiences across the customer’s journey. Innovative solutions by FinTechs will help engage better with the customer, resolve queries faster and reduce friction.

Lastly, do tell us a bit about your business goals for the upcoming fiscal.
Max Life Insurance is driven by its robust business strategy, strong leadership and culture, which has helped in creating a steady growth rate of about +20 per cent year on year. Over the next few fiscals our vision and aspiration is to take this to 25:25:25 – VNB growth, Margins and RoEV percentage. We are aiming to grow our own channels and increase share of proprietary channel to 40%; along with deepening and strengthening relationships with our bancassurance partners. That should be the path to achieve +25% VNB growth. We are trying to do more protection and more non par designs and that will lift the margin to about +25%. If those two things happen, then 25% ROEV is definitely possible.

We want to continue to maintain this by focusing on protection, digitalization, customer centricity, people, multi-channel distribution architecture and balanced product mix in the upcoming fiscal year to achieve our long-term goals. We intend to create a more robust ecosystem by bringing customers in the forefront and offering a synergized experience to them in the insurance space.