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Recently, we came across news in an online Publication, economictimes.indiatimes.com

Oriental Insurance

India’s insurance sector witnessed dramatic changes in the last 10 years after it was opened up for private players at the turn of the millennium. An influx of private players and the tough competition that ensued forced state-run insurance firms to focus more on the quality of services, rather than just acquiring new customers. RK Kaul, chairman and managing director of the state-run Oriental Insurance, explained the company’s strategy to survive and thrive in a highly competitive environment in an interview with ET. Excerpts:

What are the growth prospects for the company in the face of tough competition from both private and public sector rivals?

As an organisation, we are undergoing a transformation. We are concentrating on the retail market and, especially, on the service aspect. We are also extending our operations to cover a wider area. In India, premium is collected upfront and we’ve already collected around Rs 1,000 crore in the first two months of this fiscal. In the current year, we have grown at 14% and expect to retain this momentum.

Health insurance is a loss-making business for most insurers. How do you plan to turn it around?

Earlier, the cost of health insurance was subsidised by the tariff structure in motor and fire policy. But this cushion doesn’t exist now. Health insurance is one of the largest segments for general insurers today, and it will become a profitable proposition once there is a cor-rection in rates, which will happen sooner than later. We are looking to increase our spread and target the young population, especially the entrepreneurs and those in the unorganised sector.

To read full news, click here

Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

Oriental Insurance, though has collected Rs. 1000 Crores if first two months of this fiscal, they have slipped to no. 4 position (from earlier no. 2 position) in market share & expected to continue so in next 2-3 months too due to their changed outlook towards risks.

Oriental’s health insurance portfolio is shrinking & the same would be detrimental to their market share numbers. The increased reach expected by them would be achieved thru Retail segment which is a good strategy as the loss ratio in retail segment is better than the corporate sector.

Unorganised sector reach can be obtained thru’ pushing all distribution channels to focus on this sector & creating products that would attract this segment.
For young to get attracted, Oriental should look at distributing products thru their online intermediaries as this segment is net savvy. Also Oriental should create attractive product that would make a young Indian to buy Health Insurance policy instantly.

Recently, we came across news in an online Publication, centralchronicle.com

Mobile Enrollment Technology by HDFC ERGO

Bangalore, June 25:
HDFC ERGO General Insurance, a leading private general insurance company, in association with Biocon Foundation, today launched 'Mobile enrolment technology' to enable the rural masses to buy health insurance policies with the help of just a mobile phone making the process paper-less and hassle free.
Over 10,000 policies were sold in the first phase last month in the remote region of Chikballapur village. With the success of the study, HDFC ERGO plans to replicate the same across other rural regions in India, beginning from the South this month.

To read full news, click here

Experts from Medimanage.com give their opinion:

KS Sankar:

K S Sankar from Medimanage.com

Medimanage Health Insurance Experts have already spoken about how reach is not a major concern if insurers/brokers use technology. In this blog, Our Health Insurance Expert, K S Sankar had spoken about how health insurance can reach the masses especially in the rural areas if the health insurance companies can use technology that appeals to them. Exactly 2 months after this blog, the HDFC Ergo has come up with this Mobile Enrollment model, this shows how Medimanage is clearly is accurate in its prediction and analysis.

 In this excerpt from the blog, K S Sankar says, “You find cybercafés even in C- towns. Even villagers are on to mobile phones and are used to ‘bill pay’s. There are more mobile phone users in India than health policy holders.” And thus he says, “Technology, at least in its elementary form, has reached out and just riding this reach would itself increase health insurance reach manifold.”

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

This is an interesting development & the efforts are laudable…

The Rural India remains a largely untapped market for Health Insurance where the penetration is abysmally low, less than 0.3%.

This is due to lack of disposable income (mostly) & lack of awareness.

Many NGOs & Corporate (thru’ their CSR Initiatives) are trying to insure them thru micro-insurance.

HDFC Ergo’s this step (paperless & Cost effective) will improve the health insurance coverage.

The company should also allow such paper-less transactions over the net to improve the health insurance penetration among the educated class as the convenience will be a key feature.  

Recently, we came across news in an online Publication, business-standard.com

Buy Health Insurance to improve your Health

You need not shell out the big bucks to be pampered. Buy a health insurance and enjoy luxury treatment at a spa, join a gymnasium or a yoga centre and get the necessary incentives that suit your budget.

Insurers, including ICICI Lombard General Insurance Co Ltd and Bajaj Allianz General Insurance, are tying up with yoga centers, gyms and spas to provide policy holders an opportunity to improve their health — and looking for avenues to sell more heath insurance. Some of the other insurers are also exploring collaborations with these centers.

“We can pass on the benefit of these initiatives if policyholders start taking preventive measures,” said Datta. “Globally, the benefits are transferred to policyholders in terms of discount in premium. It may happen in another two years in India also.”

To read the full news, click here

Experts from Medimanage.com give their opinion:

KS Sankar:

K S Sankar from Medimanage.com

I would however suggest that the insurance companies, rather than carrying out these initiatives themselves, will stand to benefit by outsourcing these activities to entities enabled to carry this out better. Reasons:

1)      Core competencies: Insurance companies’ core competencies lie in underwriting, not preventive health management.

2)      Customer perspectives: We live in a world where, for all that it is a good to do thing, the mere fact that it is rolled out by the insurance companies who would also tomorrow determine admissibility of my claims, makes me suspect motives. Is it that the insurance company is seeking to establish I am non-compliant with something, using which they could say ‘no’ to my claim.

3)      Focus: Except for Apollo Munich, the other insurance companies are not even dedicated health insurance companies. This activity would obviously not be an activity of prime focus for them.

4)      A lone tree does not make the woods: Just a visit to a spa or participation in gym exercises or yoga is only a part of the more wholesome approach – diet, lifestyle modification, etc. need to be integrated.

5)      Non-specific: Each individual needs a customized holistic prescription of the above combinations. To dish out memberships as panacea for all will not be the most effective way to ensure good health.

6)      Sustained involvement of the beneficiary: Most of the endeavors mentioned here seem merely to take the horse to water. Mere providing a spa/gym/yoga centre membership does not ensure the beneficiary will work through the fitness regimen. The woe of many a gym, we know, is the very high drop out percentage.

To ensure success in this, the following are essential:

a)      Thorough knowledge of pro-active health care and health insurance.

b)      Working dedicatedly in this sphere so that focus is not diffused.

c)       Ability to customize lifestyle modifications that are right fit for each individual.

d)      Interactive IT driven robust processes that will gently but effectively monitor and help the beneficiary through the fitness regimen. 

It would make better sense for these insurance companies to outsource these activities to an entity that has all the above capabilities. This entity could, on one hand, guide and monitor the beneficiary through the regimen and on the other, provide compliance reports to these insurance companies – with complete knowledge of the beneficiary, of course.

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

Though the moves by the insurers would be called visionary & pragmatic, if these are looked at as remedies for immediate claims reduction, it would not happen so.

The real reasons for current higher claims ratio are:

  • Faulty pricing – The current premium rating emanates for old claims data which is hiked by certain percentages over a period of time. The corporate health insurance, which contributes to 50% total health insurance premium & around 70% of losses, is still priced differently when there are other portfolios like Fire & marine that are bundled together. The pricing across all customer segments should be based on stand-alone basis only.  
  • Unrestricted covers – This pertains more to the corporate segment where the maternity cover or pre-existing cover is offered at nominal premium which brings in huge losses. Also the optional parental cover is also another drainer which brings in anti-selection for the insurer.
  • Uneven spread – Over a period of time, the average age of the insured members is on rise which shows that either more old people are getting the insurance cover (which would bring in claims in immediate future) or not enough young people (below the average age) are buying the health insurance.
  • Low penetration – The low penetration remains a big concern as more than 90% population (among those who can afford insurance) if still uninsured. More than 85% of the payouts at the hospitals remain out of pocket.  

The tie-ups with Gyms are flimsy & one need to create more penetrating program if real change is expected out of such efforts. The gyms have 90% drop outs & that’s how they make their money & remain viable. The diagnostics tie-ups may bring in other diseases which may warrant hospitalisations at the behest of the doctors (read blog by Dr. Aniruddha Malpani here)

Recently, we came across news of a judgement in a leading online Publication, Zeenews.com

Non Disclosure in Proposal fom

New Delhi: The National Consumer Commission has upheld the rejection of a Mediclaim of person, who suffered a heart attack within a week of taking an insurance policy, saying he failed to disclose the past history of the disease to the company.  

"It is well settled that principle of insurance is fundamental to utmost good faith which must be observed by the contracting parties and good faith forbids either party from non-disclosure of the fact which the parties know," the Commission said.

To read full news, click here

Experts from Medimanage.com give their opinion:

KS Sankar:

KS Sankar

Whilst on our friend Chandra I will refrain from commenting for want of adequate information on facts of the case, purely from the legal perspective, I actually see the silver lining behind this apparently dark – not in favour of consumer – cloud. Read decision.

Insurers in their policies had been trying to disown liability for claims traceable to preexisting conditions, irrespective of whether the insured person was aware of such conditions are not. In the subject judgment, however, the Ld. Commission’s surmise that Chandra ought to have known about his heart condition stems more from the legal position of ‘res ipsa loquitar’ (In the normal course) than from a ‘reasonably expected to know’ stand point.

Let’s talk English and not Law. In simple English, the difference is this:

Through their policy wordings, insurers attempt to disown liability for claims traceable to any pre-existing condition that the insured person is reasonably expected to know. Imagine I had been having some symptoms of hypertension but had not recognized them to be such symptoms – In its strict application, the pre-existing condition exclusion in the policy will render me ineligible for a claim. ‘Cause I was reasonably expected to recognize these symptoms to be indicative of Hypertension. This is the ‘reasonably expected to know’ stand point.

The judgment however evolves around Chandra suffering heart attack within a week of taking the policy. The Ld. Commission has taken specific reference to this occurrence happening within a week - "It would be too much of a coincidence to argue that within a week of the complainant taking the policy, he had a sudden heart attack and from the available records, we cannot but hold that he had a past history which was not disclosed for reasons best known to him," the Commission said. This judgment will therefore not become an authority (an authority is a previous judgment relying on which a current case can be decided) in a case where, say, a Surya suffers a heart attack in the eleventh month of his first policy.

The judgment also specifically says "It is well settled that principle of insurance is fundamental to utmost good faith which must be observed by the contracting parties and good faith forbids either party from non-disclosure of the fact which the parties know," the Commission said. (Highlighting mine). So, the insured knowing and not disclosing is what can result in insurer rescinding liability, not merely the insured being reasonably expected to know.

Significantly again, the Ld. Commission, in its wisdom, has passed this judgment based on the basic principle of insurance (utmost good faith), and not a reference to the exclusion condition in the policy contract.

So this judgment does not uphold insurer’s self proclaimed ‘right’ to disown liability on non-disclosure of what the insured person does not know or was merely reasonably expected to know.

Thank Lord Dharma there still are judges who give speaking judgments!

Sudhir Sarnobat:

Sudhir Sarnobat

This is an interesting decision under Mediclaim policy where the judgement is given against the health insurance buyer.

Many of the insurance agents misguide the buyers & push them to Buy health insurance policy so that they can get a claim.

They believe that Health Insurance Company will overlook this & they can get their claim by managing the officials at TPA or Insurer or by suppressing the facts while getting the hospitalisation done.

Health insurance is not a lottery where people can pay a premium of Rs. 5000 and get guaranteed return of 2-3 Lakhs.

We believe that with this judgement Mediclaim buyers would not wait till the illness strikes them to buy health insurance policy. They would buy it earlier to gain peace of mind which is essential principle of the insurance.

Aids and Health Insurance in India

A staggering 25 Million.

That's the figure quoted by experts, for the number of Indians who will be afflicted by AIDS in the current year. Considering the 2.3 million in the year 2007 it is indeed a sharp rise, which horrifyingly will go on to increase in the near future, given the stigma and shame attached to the disease in India, as well as high medical costs that make treatment a remote possibility for the majority afflicted who cannot afford it!

Considering the role Health Insurance plays in making health care affordable to the general public, AIDS being included in the list of permanent exclusions by Health Insurance Companies makes it rather painful.

The case of AIDS v/s Health Insurance in India  

So why this Exclusion of AIDS from the coverage under health insurance

Delving deeper into the reasons as to why this exclusion of AIDS from the coverage under Health insurance, leads us back to a very old thought process that still exists in India, that of AIDS being contracted only due to illicit sexual relations. Sudhir Sarnobat, Founder of Medimanage Insurance Broking Pvt Ltd. explains the thought process stating that “When AIDS as a disease was first identified, the genesis of the disease was identified as illicit sexual act which in insurance terms comes under the term ‘Moral Hazard’, meaning a disease contracted by virtue of an illicit act by the person himself and hence AIDS became an exclusion”.

However with ongoing research on AIDS still not able to come up with a complete cure, treatment is relegated to simply delaying the inevitable for patients and not a cure, which makes for another strong point in favour of AIDS in the case of AIDS vs Health Insurance in India. However it wouldn’t be fair to blame the Health Insurance Industry for ‘neglecting’ AIDS. According to the insurance policy terms, the main criteria set for a claim to be payable are that 1) there has to be hospitalization and 2) the treatment should be a definitive and curative one and since both of these criteria are not met by any line of treatment for AIDS, it might continue to remain as an exclusion.

What this means for the population suffering from AIDS is an indefinitely ‘long wait’ till cure for AIDS is ultimately found, following which the health insurance industry could probably draft health insurance schemes for the same.

With the constant rise in the number of AIDS cases, why aren’t we seeing an initiative from the Govt. to cover the 2 million + plus population who are living with AIDS

World Bank states that the Indian Government’s spending on AIDS is just 5% of its total $5.4 Billion budget on health care. This will soon start falling short, what with the AIDS cases being alarmingly on the rise in India. A question that is bound to arise in everyone’s mind is ‘Why isn’t the Govt. taking any initiative to come up with an AIDS specific health care scheme for the poor?’

Health Insurance in India is not yet geared to come up with an AIDS specific mediclaim policy

“According to the Indian Government’s data base, over 36 million people do not have access to even primary health care. And given India’s total population of 1.2 Billon, the 2 million odd number of AIDS cases does not even figure in the priority list for the health ministry” states K.S.Sankar, corporate member of Medimanage Health Insurance Pvt. Ltd., throwing ample light on the woes of the Indian governments health care plans.

Plus with perceptions and awareness regarding the need for health Insurance being quite low in India, a fact highlighted by the dismal figure of only 9.8 % of the total population opting to buy health insurance, the idea of an AIDS specific health insurance scheme by the govt. in the near future does not seem quite probable.

Moreover with 42.5% of the 2 million+ AIDS affected population belonging to the BPL category - who simply cannot afford health insurance, it nullifies the effectiveness of the any such health insurance scheme, even if it were to be launched. This one fact alone can do mighty well to explain the government’s reluctance in launching an AIDS specific health Insurance Scheme. 

Is there any hope for the AIDS afflicted?

Is there a consensus with the thought process of getting the IRDA to regulate the list of exclusions, so as to pave a way for AIDS to get covered under health Insurance in India?

The Insurance Regulatory and Development Authority (IRDA) primarily functions as a regulating body for the Health Insurance Industry, wherein technically its job is to protect the policy holders’ interest and issue directives necessary for the same. “There is a faint chance of the social cause behind AIDS propelling the IRDA to issue directives to Insurance companies to devise cover for AIDS. This is not something such as making sure that a minimum percentage of the Insurance company’s premium comes from the rural areas and so on, so as to ensure that the rural population gets the benefit of insurance” states K.S.Sankar, implying that even assuming the IRDA intervenes it wouldn’t by default amount to much of a difference in Health Insurance Industry’s stand towards AIDS.

In the very same vein of thought, Sudhir Sarnobat states that one cannot expect the IRDA, which is primarily formed to look after the insured persons’ interests to add directives that would push for a health insurance cover for AIDS when almost half of the afflicted population is found to be living below the poverty line. “I feel that coming out with a health insurance scheme for AIDS isn’t feasible at this point of time as most of those who are afflicted fall under the BPL and it doesn’t bode well for the health Insurance Industry from the overall premium perspective. Plus given the market’s maturity level in the current scenario, directives issued by the IRDA won’t account to much in regards with insurance coverage for AIDS”

Suggesting a possible alternative route, he adds that “I would rather expect the government to use the tax benefit angle (better tax benefit) for donations to NGOs working in AIDS domain & thus route more funds which would have better utilization”

The Verdict

The verdict in this case is rather grim for those afflicted with AIDS in India.

Health Insurance and AIDS in India

The moral hazard angle is strong, which makes it almost impossible for AIDS to get a Government backed health insurance scheme at least in the near future, in spite of other reasons for the spread of AIDS being identified.  Plus that a majority of AIDS patients belong to the BPL category also poses huge problems for the health Insurance Industry from the premium affordability perspective to launch an AIDS specific health insurance scheme. 

Somehow one can’t help but think that, what really lies at the base of this whole AIDS vs health insurance saga, is the fact that AIDS goes without a health insurance cover in India more than anything else due to the poor social interpretation of AIDS, along with AIDS being more a problem of the poor! As Sudhir Sarnobat puts it, “I think it’s more to do with the stigma AIDS carries with it that has made it very difficult for India to look at AIDS with changed mindset”. Says it all, we guess!

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