Value chain and systems

The quote gives an indicative price. Client creation runs KYC and checks for duplicates. Data entry captures the risk (vehicle, family members). The proposal is the signed request for cover with declarations. Under section 64VB of the Insurance Act, cover normally cannot start until premium is received. Underwriting accepts the risk, and the policy is issued and sent to the customer.

ExampleOnline car renewal: the customer enters the registration number, the portal fetches vehicle details from the VAHAN database, shows a quote, takes a UPI payment, passes the STP rules and emails the policy within a minute.

Straight-through processing (STP) cases pass every rule and need no human touch. Non-STP cases break a rule and go to a work queue. A higher STP rate cuts cost and turnaround time, so BAs spend a lot of time on STP rules.

ExampleA family health proposal: the 35-year-old with no medical history would pass STP, but their 58-year-old parent on the same proposal triggers medical tests, so the whole case becomes NSTP.

The schedule shows the customer's details, covers, sum insured and premium. The wording is the standard contract. The CIS summarises benefits, exclusions and waiting periods in plain language. The invoice shows GST, or 0% for individual health and life.

ExampleA motor schedule lists the IDV, NCB %, add-ons, TP premium, CPA and compulsory deductible, with the GST invoice on the last page.

A nil endorsement corrects or changes details without changing premium. A premium-bearing endorsement charges extra, or refunds, for a change in risk. A cancellation ends the policy and may refund premium for the unused period.

ExampleChanging the nominee: nil endorsement. Adding a CNG kit to a car: extra OD premium. Selling the car and cancelling: refund for the remaining period.

Every refund must also reverse the GST charged on it through a credit note, claw back commission and adjust reinsurance. Missing one of these is a common defect.

ExampleA ₹11,800 policy (₹10,000 + ₹1,800 GST) is cancelled halfway through, with a pro-rata refund: ₹5,000 premium plus ₹900 GST on a credit note, and half the agent's commission is recovered.

Renewal is the cheapest source of business. Systems produce renewal notices, carry forward NCB or bonuses and flag lapsed policies. A gap in motor cover (break-in) needs an inspection; a gap of more than 90 days also loses NCB.

ExampleA car policy expires on 1 March. Renewed on 10 April, it needs an inspection but keeps NCB. Renewed after 30 May (more than 90 days later), the NCB drops to zero.

A customer who disagrees with the terms of a new policy can return it within 30 days. The refund is the premium less proportionate risk premium for the days covered, medical test costs and stamp duty.

ExampleA customer receives a ULIP on 1 May, realises it is not the pension plan they were promised, and returns it on 20 May for a refund less the allowed deductions.

FNOL records what happened, when and where. Registration creates a claim number and an initial reserve. Documents are collected, a surveyor or medical team assesses the loss, and the claim is approved and paid. Recovery from a third party and sale of salvage reduce the final cost.

ExampleA stolen two-wheeler: intimation through the app, FIR and keys collected, investigator appointed, police 'untraced' report received, RC transferred to the insurer, then the IDV is paid less the compulsory deductible.

In a cashless claim the network garage repairs the vehicle and the insurer pays the garage, minus the customer's share (deductible, depreciation). In a reimbursement claim the customer pays and claims back. If repairs would cost more than about 75% of the IDV, the vehicle is treated as a constructive total loss.

ExampleIDV ₹5,95,000 and a repair estimate of ₹4,80,000 (81% of IDV): the insurer settles as a total loss, paying the IDV less the deductible and taking the wreck.

Third-party liability for injury and death has no upper limit. The tribunal sets compensation from the victim's age, income and dependants, and the TP insurer pays the award. A June 2026 Supreme Court ruling raised compensation for homemakers, which pushes TP claim costs up.

ExampleA homemaker dies in a road accident. The tribunal assigns a notional income for her unpaid work, applies a multiplier for her age and awards compensation to the family, paid by the vehicle's TP insurer.

Cashless needs a network hospital: the hospital asks for pre-authorisation, the insurer or TPA approves an amount, and the final bill is settled directly at discharge. Reimbursement suits non-network hospitals: the customer pays and claims back.

ExampleAppendix surgery at a network hospital: ₹1.2 lakh pre-authorised within an hour, final bill ₹1.35 lakh, ₹1.3 lakh approved at discharge and ₹5,000 paid by the patient for non-payable items such as toiletries.

Fraud checks compare a claim with past claims, industry data from the Insurance Information Bureau (IIB) and red-flag rules such as a claim soon after the policy starts. An unhappy customer complains to the insurer first, can escalate on IRDAI's Bima Bharosa portal and can then go to the Insurance Ombudsman free of charge.

ExampleA health claim is rejected for a condition the customer says they disclosed. They complain to the insurer, are not satisfied, and file with the Ombudsman with a copy of their proposal form as evidence.

The policy administration system (PAS) holds products, policies, endorsements and renewals. It is the system of record and usually the centre of any transformation programme.

ExampleA PolicyCenter project to launch a new two-wheeler product configures its covers, rating tables, underwriting rules and document templates.

It may be part of the PAS or a separate service called by portals and partners. A rating specification listing every table, formula, rounding rule and effective date is one of the most important BA documents.

ExampleThe Calculators tab on this site is a small rating engine: change the city or engine size and the OD rate is looked up again.

The claims system registers, reserves and settles claims. Billing and receipting matches payments to policies. The commission engine pays intermediaries within IRDAI's expense limits.

ExampleA cancelled policy touches all three: a refund in billing, a commission clawback, and a check that no open claim exists on the policy.

Agents, POSPs, dealers and aggregators connect through portals and APIs. The data warehouse feeds management reports, actuarial analysis and the returns filed with IRDAI.

ExampleA car dealer's system calls the insurer's quote API at the point of sale, so the policy is issued before the car leaves the showroom.