Challenges Faced by Personal Lines Insurers

The iconic insurance tagline "Sar utha ke jiyo" once symbolized dignity and security. But today, rising medical costs, growing claim disputes, and escalating premiums are making policyholders question the value of insurance. A recent LocalCircles survey, covering over 100,000 people, revealed that nearly 50% of health insurance claimants faced issues such as rejections or long delays. Disillusioned by poor claim experiences and affordability concerns, many are reducing coverage or abandoning policies altogether. IRDAI data highlights a troubling trend—claim rejections in FY24 rose to ₹26,000 crore, up 19% from the previous year. While insurers and hospitals are mandated to process cashless discharges within an hour, 60% of patients reportedly waited 6–48 hours. Errors in paperwork, missed disclosures, and lack of documentation are key reasons for claim denials. Young, healthy individuals are increasingly opting out, while the elderly face soaring premiums compounded by an 18% GST, making insurance feel like a luxury. Experts argue that this tax—especially on essential policies like health and term insurance—is a major deterrent. There are growing calls to either exempt these policies from GST or reduce it to 5%, similar to global practices. IRDAI’s grievance data reveals over two-thirds of non-life insurance complaints stem from claims issues. Even life insurance saw over ₹1,000 crore in rejected claims due to basic documentation lapses. Until premiums become more affordable, claims more transparent, and taxes more rational, India’s insurance safety net may continue to unravel—leaving consumers reliant once again on personal savings for security. #policyholder #Healthinsurance #claimrejections #claimdelays #trust #risingpremiums https://lnkd.in/dbbcj6_k

This morning we're publishing our report into general insurance pricing - and calling on HM Treasury and the Financial Conduct Authority to take forward a number of measures to create a fairer market for consumers. Modern insurance pricing is complex - with some insurers using up to 400 different data points to generate their prices. These include everything from credit score to the web browser you're using and the time of day that you're getting quotes. These complex pricing models look to understand individual risk more precisely. But in doing so, they increasingly drive outcomes that are socially unacceptable. People's risk is not always aligned with their ability to pay. Our new research shows that the majority of consumers are not in support of insurers using information like credit score and occupation to price their insurance. Furthermore, it is evident that these factors are more often an indication of people's propensity to claim, rather than their inherent risk of having a car accident or getting flooded. Households with lower incomes pay a double poverty premium in many lines of insurance. With less financial resilience, they are more likely to need to make smaller claims, whereas a higher income household may choose to pay the costs themselves and protect their no claims discount. As a result, lower income households are firstly charged more because they are more likely to need to claim, and then charged more again when they need to pay monthly. There are many other anomalies in insurance which deliver unfair outcomes. People are charged higher premiums after being involved in an accident that was not their fault. Meanwhile, fraud detection mechanisms prevent consumers from testing out how pricing differs if they change their answers to questions. There are often multiple ways to describe an occupation - but if consumers experiment with their answers on a comparison site, their premiums will start to rise as they are suspected of being fraudulent. We understand that the UK home and motor insurance markets are challenging for insurers. The remedies we are proposing are mindful of that. We want insurers to be able to price on a wide set of data points - but we want these to be linked to the underlying risk. In motor insurance, we believe telematics data can be improved, and consumers should be able to take their driving record with them when shopping around for new cover. As part of our work, we spoke to many underwriters, pricing experts and executives across the insurance industry. Many are sympathetic to the issues we raise here. Some will not agree with the solutions we have suggested - but we hope they will engage constructively in the debate with policymakers. We share a common aim - which is to create a sustainable market for businesses, which is trusted and valued by consumers - and which is accessible to all. https://lnkd.in/ecjMaF4z

Personal Auto Insurance Is Becoming a Luxury, and That Should Alarm All of Us. New data from Guardian Service paints a troubling picture: - 15% of Americans have downgraded or canceled their auto insurance in the last year. - 8% have switched from full coverage to liability-only. - Nearly 1 in 3 would temporarily drop auto coverage just to afford basic living expenses. The #1 reason? Rising premiums, projected to increase another 7.5% in 2025, and a broader struggle to keep up with the cost of living. As an industry, we must ask these questions: - How do we make personal lines coverage more sustainable and accessible? - How do we balance pricing, profitability, and protection? Carriers are already very profitable. - And how do we serve the growing segment of Americans who feel insurance is a “nice-to-have,” not a “must-have”? These aren’t abstract questions. They’re at the heart of the future of personal auto. https://lnkd.in/ev6wHyJe