IRDAI proposes to link Executive Incentives to Claims and Grievance Performance.
This means insurance companies will be held more accountable for how they treat customers after a policy is sold. For insurance advisors, this development highlights the growing importance of customer service, accurate advice, and claim support.
IRDAI
Robin
6/19/20262 min read
The Insurance Regulatory and Development Authority of India (IRDAI) has proposed an important policyholder-focused reform. Under the new framework, the performance of insurance companies in claim settlement and grievance redressal will directly influence the incentives and variable pay of top executives.
🏛️ What Is IRDAI Trying to Achieve?
Traditionally, insurance companies were often evaluated based on:
Premium growth
Market share
Profitability
Business expansion
IRDAI now wants insurers to focus equally on:
Faster claim settlement
Fair claim handling
Effective grievance resolution
Better customer experience
The message is clear:
Selling a policy is important, but serving the customer after the sale is even more important.
📋 Why Claim Settlement Matters
For customers, the true value of insurance is tested during a claim.
A policy may look attractive at the time of purchase, but customers judge insurers based on:
How quickly claims are settled
How fairly claims are assessed
How easily complaints are resolved
Poor claim experiences damage trust in both the insurer and the advisor.
🤝 How Insurance Advisors Influence Claim Outcomes
Many claim-related issues begin long before a claim occurs.
They often arise during the sales process itself.
Common Causes of Claim Problems
Incorrect proposal information
Non-disclosure of health conditions
Wrong nominee details
Inadequate sum insured
Customers not understanding exclusions
Missing documentation
In many cases, these issues can be prevented through proper advisor guidance.
👨💼 The Advisor's Role Is Expanding
The modern insurance advisor is no longer just a salesperson.
Today's successful advisor acts as:
Educator
Explains policy features, exclusions, and conditions clearly.
Risk Consultant
Helps customers choose suitable coverage.
Documentation Guide
Ensures proposal forms are completed accurately.
Claims Support Partner
Assists customers during claim submission and follow-up.
Relationship Manager
Supports customers throughout the policy lifecycle.
💡 How Advisors Can Improve Claim Settlement Experience
1. Promote Full Disclosure
Encourage customers to provide complete and accurate information.
Honesty at the proposal stage prevents claim disputes later.
2. Explain Policy Exclusions
Customers should understand what is covered and what is not covered.
Clear expectations reduce future misunderstandings.
3. Recommend Adequate Coverage
Underinsurance often leads to dissatisfaction during claims.
Help customers choose appropriate protection.
4. Maintain Updated Records
Ensure customer contact details, nominee information, and policy documents remain updated.
5. Support During Claims
A customer facing hospitalization, an accident, or property damage often needs guidance.
Prompt assistance improves customer confidence and satisfaction.
📈 What This Means for Insurance Companies
If executive incentives become linked to claims and grievance performance:
Insurance companies may increasingly focus on:
Better advisor training
Stronger customer service
Improved claim processes
Digital claim support
Customer retention
Advisors who consistently deliver quality business and support customers effectively may become even more valuable to insurers.
🌍 A Real-World Example
Imagine two advisors selling identical health insurance policies.
Advisor A
Focuses only on completing the sale.
Customer does not fully understand waiting periods and exclusions.
A dispute arises during a claim.
Advisor B
Explains coverage, exclusions, waiting periods, and documentation requirements.
Customer knows what to expect.
Claim process is smoother.
Which customer is more likely to be satisfied?
The answer is obvious.
The advisor's guidance can significantly influence the overall customer experience.
🎯 Key Takeaways for Insurance Advisors
✅ Claim settlement quality is becoming a key performance indicator for insurers.
✅ Customer service after policy issuance is becoming increasingly important.
✅ Accurate disclosures reduce claim disputes.
✅ Educated customers experience fewer grievances.
✅ Advisors who support claims create stronger customer relationships.
✅ The future of insurance will focus on customer outcomes, not just policy sales.
💬 Advisor Action Plan
Moving forward, advisors should think beyond selling policies.
Ask yourself:
Did I explain exclusions clearly?
Did I verify all proposal details?
Does the customer understand the claim process?
Am I available when the customer needs help?
The advisors who can confidently answer "Yes" to these questions will be best positioned for success in the evolving insurance industry.
As IRDAI strengthens its focus on policyholder protection, advisors who prioritize transparency, service, and claim support will become key contributors to both customer satisfaction and insurer performance.