- Those familiar with the workings of any government offices in the Indian context must have noticed how the welcoming signage proudly states – the government’s work is God’s work. In other words, any customer or citizen walking into any office is considered no less than a god, with service remaining utmost in the minds of the officials, ideally speaking. It’s another matter altogether how our Indian government offices function when ordinary citizens are made to run from pillar to post in search of relief and/or to access day-to-day documentation purposes, socio-welfare measures, and some such things. Of course, the band of corruption bogging the nation needs no further elaboration/emphasis since we are completely used to the menace.
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- Though efforts by various law enforcement agencies, duly guided by the government, have put in place strictures/policies/guidelines to curb the menace of corruption, ingenious and corrupt officials have found a way to subvert. Corruption apart, what about insurers and their modus operandi to ensure the insured are provided with relief when it matters most? Interestingly, in recent times, IRDAI (Insurance Regulatory and Development Authority of India) made a telling statement that insurers should put customers before shareholders. Insurance is a business, but it’s no ordinary business. It exists to provide financial stability to families when a breadwinner dies, and to shield monthly budgets from hospital bills and cracked windshields.
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- As such, unlike hair salons and cafes, it shouldn’t be driven by the profit motive alone. But it is, and not just in India, as the killing of UnitedHealthcare CEO Brian Thompson in Dec 2024 reminded us. Why don’t insurance and greed sit well together? Because an insurer with a profit-firstbusiness model isn’t above misselling – pitching unsuitable products to customers, pumping premiums, and arbitrarily denying claims. And insurance regulator IRDAI has repeatedly flagged these problems in India. So, IRDAI’s new guidance to insurers, to link CEO pay to customer outcomes, is most welcome. Essentially, it’s asking insurers to put customers, not shareholders, first. A laudable thinking. When CEO pay is linked to how satisfied customers are, measured by complaints against a company and regulatory breaches, the incentive structure changes.
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- Further, greater transparency and better quality of service are key to growing a business. In fact, they are pillars of any customer-centric business, from cookies to cars. Doing business honestly may result in lower profits this year, but a far bigger business in five years. Beyond linking executive pay to quality of service, IRDAI wants penal clauses, or clawbacks, so that CEOs who don’t deliver have to surrender some of their remuneration. IRDAI has also expressed concern about upper management cornering a disproportionate share – up to 14% – of overall compensation. Its 2024-25 annual report shows that complaints of misselling rose 14% over the previous year. Two main complaints against insurers relate to keeping claims pending and denying claims without a reason. Insurers should pay attention to the image makeover since healthcare and other costs are rising.
