Top 5 Mistakes NBFCs Make While Choosing Group Insurance – And How to Avoid Them
- Naval Goel
- Jun 24
- 2 min read
Introduction
NBFCs today are not just lending institutions — they’re workforce-heavy, customer-facing ecosystems. With increasing regulatory focus and borrowers expectations, group insurance is no longer optional.
But in a rush to onboard a group health or life insurance provider, many NBFCs make costly mistakes — from underinsurance to compliance lapses. This blog outlines the top 5 mistakes NBFCs make while selecting group insurance and how you can avoid them. Table of Contents
1. Focusing Only on Premium, Not Coverage
Mistake: Choosing the cheapest plan without reviewing exclusions or sum insured.
Why it hurts: Low premiums often mean low coverage, high co-pay, or critical disease exclusions, leading to poor borrowers experience and disputes during claims.
✅ Fix: Choose plans that offer adequate base cover, minimum exclusions, and value-for-money riders like top-up or maternity.
2. Ignoring Customization Based on borrowers Type
Mistake: Applying a one-size-fits-all policy to sales staff, field agents, and office workers alike.
Why it hurts: Different job roles have different risks. For example, loan agents traveling daily may need higher PA cover, while head-office staff might benefit from better outpatient benefits.
✅ Fix: Work with platforms like Xurance to customize group insurance plans by role, location, or income band.
3. Missing Add-ons Like Hospicash or Maternity Cover
Mistake: Selecting a barebones policy without understanding key add-ons.
Why it hurts: borrowers expect more than hospitalization — maternity, OPD, daily cash, and critical illness benefits are becoming standard.
✅ Fix: Offer modular add-ons like:
Maternity benefits
Daily Hospicash
OPD & Dental reimbursement
Critical illness rider
🎯 Tip: These benefits significantly improve borrowers retention.
4. Choosing Insurers Without Digital Support
Mistake: Partnering with an insurer that lacks API integration, digital issuance, or self-serve claim portals.
Why it hurts: Manual paperwork slows onboarding and frustrates borrowers during claims.
✅ Fix: Choose a provider with:
Instant policy issuance
Borrowers e-card access
App-based claim tracking
API for HRMS/LMS sync
🖥️ Platforms like Xurance automate the entire process — saving NBFCs 40+ admin hours/month.
5. Not Reviewing Claim Support & TAT
Mistake: Not checking past performance on claim processing time, approval ratio, and hospitalization network.
Why it hurts: A delayed or rejected claim can lead to borrowers dissatisfaction, attrition, and even reputational risk.
✅ Fix:
Ask for claim TAT reports
Verify cashless network hospitals
Ensure 24x7 support, especially for field staff
“One denied claim ruined 3 years of borrowers trust. Now, we only work with insurers who provide real-time claim tracking.”— HR Head, Mumbai-based NBFC
So What, What Next?
Choosing the right group insurance is not just about cost — it’s about borrowers well-being, risk protection, and operational efficiency.
If you’re an NBFC with 10 or 10,000 borrowers, the right group insurance can:
Boost borrowers loyalty
Cut financial risk exposure
Improve compliance with HR norms
Why NBFCs Choose Xurance
Xurance offers tailor-made group insurance solutions for NBFCs:
✅ Group Health + Hospicash + Maternity ✅ Group Term Life + Accidental + Critical Illness ✅ API-enabled onboarding & claim support ✅ HRMS-integrated dashboards ✅ Affordable plans starting
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