Why Bancassurance Claims Often Fail to Protect Borrowers – And How We Can Change That

The Challenges We see

Underinsurance is widespread – Policies are often issued only to the extent of the Bank’s loan exposure, not the borrower’s full business risk. This leaves customers vulnerable when a major loss occurs.

Risk assessment is overlooked – Few Banks assess the true insurance needs of their clients. The policy becomes a compliance formality, not a protection tool.

Claim support is minimal – When a loss occurs, surveyor requirements multiply, insurers delay decisions, and borrowers are left alone. Most Bank staff are not trained to handle claim complexities, and valuable time is lost.

Financial stress builds quickly – While insurance claims take months, loan EMIs remain due. The borrower faces pressure from both sides—insurer delays and Bank recovery processes.

The Result....

Borrowers, who trusted their Bank’s insurance product, feel abandoned at the time of crisis. The very cover meant to protect both Bank and client often fails in its purpose.

A Smarter Way Forward

The solution lies in aligning the claim process with banking realities:

On admission of liability by insurers, on-account payments should be released within 15–30 days. This gives borrowers the liquidity to continue operations and service EMIs bankers avoid making the account NPA.

Banks should ensure adequate risk-based insurance, not just coverage of their loan exposure.

Basic training in claims handling for Bank staff can make a huge difference in monitoring insurers and ensuring timely settlement.

How We Can Help?

At Expert Claim Solutions India Pvt. Ltd., we bring 35+ years of expertise in insurance claim settlement. We help Banks and borrowers by:

*Drafting better agreements with insurers to guarantee timely on-account claim payments.

*Designing risk assessment processes to avoid underinsurance.

*Supporting clients during the claims process, ensuring faster settlements and reduced NPA risk.

The Win–Win Outcome

Borrower: Receives genuine support, survives the crisis, and repays loans without default.

Bank: Prevents NPAs, builds stronger customer trust, and enhances its reputation in Bancassurance.

At the end of the day, insurance is meant to protect—not just to sell. With the right approach, Banks can transform their Banca portfolios into true value-adding partnerships for both themselves and their clients.

Vinay Kumar Nerella

Managing Director

Expert Claim Solutions India Pvt Ltd.,