Why is D-JFM so crucial for the insurance industry?

December in geographies following Jan-Dec financial year and JFM quarter in India are crucial for the insurance industry; being the closing of the financial year. Industry operates under twin pressures – pressure of closing at a high new premium amount as well as lowest possible pending cases at claims and legal.

The JFM quarter marks up to 25-40 % of the annual business of any insurance company. The reason of more sales in JFM might be due to part-time agents working rigorously in these months or due to consumers pitched with the view of tax saving or because the insurance companies’ lower premiums to achieve their target or it could be all. Another not so obvious reason is the consumers being aware of the pressures, try to sneak in high risk proposals and experience has shown a large percentage of new policies sold in this period are so-called ‘bad’ lives. Also, probably for the same reason – life insurance gets a large number delayed claim intimation – knowing well enough the pressures to reduce pending numbers and returning attractive numbers to regulator.

Thus, it is obvious both underwriting and claims functions are under much more pressure during this period – both quantum and quality!

The JFM month may be fruitful, but it comes with challenges:

1. With increase in business, increase the challenges that are put forth in front of the business stakeholders. Each department in the insurance company needs to work their bit to achieve the targets.
2. Another challenge includes resource availability to cope up with business volumes, processes and to ensure a good turnaround time for issuance of policies.
3. The high number of issuance of policies will be paired with increase in the number of risk analysis to be done and may lead to improper documentation.
4. As the number of policies sold in JFM are higher as compared to the rest of the year, the IT systems are overloaded with over postings and processing. This might lead to negligence of UW and analyzing the reports.

1. Interoperability of the IT systems is also crucial at such times.
2. High number of pending cases which need to be closed before the financial year ending. Reasons for pending cases may be:

• Lack of requisite medical expertise.
• Increasing number of frauds.
• Large number of claims.
• Improper documentation.
• Increasingly relaxed underwriting protocols.
• No update of existing processes.
• Underwritten document not compatible legally

1. Apart from that, the other challenge that is posed is the solvency ratio (the amount by which the assets of the insurer exceed its liabilities.)The Insurance Regulatory and Development Authority, or IRDA, has prescribed methods of valuation of assets and liabilities.