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Family-Health-Insurance-India-from-MedimanageIntroduction:

Life Insurance Corporation of India (LIC) the biggest, and most trusted Insurance Brand in India, launched Jeevan Arogya policy - a Defined Benefit Health Insurance Policy. 

The product essentially is a Hospital Cash Benefit Product with additional lumpsum benefits for surgeries.The product being a defined benefit product pays fixed amounts as per the policy conditions irrespective of the actual costs.

The claim for such policies are paid by submitting photocopy bills, hence can be claimed in addition to a claim made for any other Health Insurance policy (Personal/Individual, Corporate etc.)

Maximum Entry Age

65 Years. 75 years for Parents

Who can be covered? 

Self, Spouse, Kids, Parents, In-Laws.

This product should not be misunderstood as a standard Health Insurance product. The biggest mistake may have made, when buying such a product is looking at the Sum Insured for Major Listed Surgeries and comparing this with a similar Sum Insured of the usual Health Insurance products sold by General Insurance/Health Insurance Companies. This does not make sense, as the sum insured, in the case of indemnity based products,is generally the same amount across all and any treatment, and is not subject to a list...this ofcourse is subject to policy conditions.

What are the Benefits?

LIC's Jeevan Arogya is an Comprehensive/Advanced (read complex) Defined Benefit Product. In addition to Daily Hospital Cash Benefit for the number of days of Hospitalization, the product provides the following additional benefit:

- An additional lumpsum benefit for listed Major Listed Surgeries for a maximum limit of 100 times the Daily Limit.

- An additional lumpsum benefit for all listed Day Care Procedures at 5X of the Daily Hospital Cash Limit.

- An additional benefit for Other Surgeries (Not Listed ones) are covered by providing 2 times of the Daily Cash Limit, per hospitalization day.

How is Jeevan Arogya different from other Health Products in the Market?

Jeevan Arogya is an advanced version of Aegon Religare's Health Plan (which is/was an advanced version of Tata AIG General's Defined Benefit Health Product).

Such products have been aggressively sold over phone by Tata AIG General for years now. Aegon Religare Life recently launched this product with full page advertisements in Mainstream Print Media.

Here's what is Unique from other similar Defined Benefit products?

- The product's most unique feature provides the benefit of increasing Limits on Benefits every year. This, to an extent takes care of the healthcare inflation. There are 2 ways the limits would increase.

- Renewal Bonus: The Daily Cash Limits increase every year by 5%, upto 1.50 times of the Initial Daily Cash Limits. This is not dependant on Claims.

- No Claim Bonus: Addition of another 5% to the Initial Daily Cash Limit, without any maximum limit - when there are no claims in the previous year.

- Premium Waiver: In event of a claim for a Major Surgical Benefit, this feature in the product would waive the subsequent one year's annual premium.

- You can make payments in Monthly, Quarterly, Semi Annually, Annually. This is unlike most Mediclaim products where payment modes are either annual, or minimum quarterly.


Important Points to know before you sign up:

- The Maximum Benefit under this product is Rs. 4 Lakhs. With Healthcare Inflation in India being around 20% every year, this is a very low cover, if you are looking at a long term coverage.

- The lumpsum benefit, again, for certain Major Surgical ailments is very low, compared to the possible actual costs. 

- The coverage for other treatments (which are not listed) is Rs. 20000/- for this highest coverage plan in the product.

- There is no Cashless Network. However, there is a provision for Cash Advance upto 50% of Claim for Admissible Major Surgeries.

- Pre-Existing Ailments are excluded for life.

- Specified Ailments like Hernia, Piles, Gall Bladder Stone, Slip Disc etc. would be excluded for first 2 years of coverage. This is similar to the General Insurance Health Products. 

- Waiting Period of 90 Days for Claims related to Sickness, as against 30 days in Indemnity based products. 

Final Take:

LIC Jeevan Arogya, seems to be the most comprehensive Defined Benefit Health Plan from any General or Life Insurer, till date.

Though it covers all surgeries, the claims would be limited to the fixed amounts defined in the list under the policy, whereas, in a good indemnity based Standard Health Insurance policy, there would be lesser limits and restrictions, ofcourse, subject to terms and conditions. Moreover, if there is a large claim under Other Surgeries (which are not listed), you would lose out substantially in such policies. Hence, as mentioned time and again, you could buy this as an add on product to your Standard indemnity based Health Insurance product sold by General Insurance Companies.

In case you have further queries do write to our experts at expert@medimanage.com

An open letter from a Health Insurance Customer

Dear Insurance Company,

Hi, I am your Mediclaim Customer. I am 30 years old, married, have a kid. I own a house in the suburbs of Mumbai and have recently bought a small car. I am well read, and hence fairly aware of basics of financial planning and securing my future. Yes, I believe in Insurance. I bought my first insurance policy (term life) when I was 23 years old. Yes, I know, I am the type of customer, who you vie for – I am the one who appears as “Sec A2” - target customer right at the top of all your sales spreadsheets and presentations. 

I have been your customer since 2007. It started off pretty well. I received fairly good service from your end. But…lately, I have been very uneasy with our relationship. In fact, I think I have lost trust in you. OK. Stop getting surprised; I know you are  part of a group valued in Multi billion dollars ; I know you have presence in 100s of countries worldwide, you surpass all the solvency norms set by the regulator, and yes, your claims settlements are improving . But I have still lost trust in you. Can you help? Please give me your 5 minutes to explain.

Health Insurance Advisor India

4 years back, when I was 26 years old, I decided to buy my own health insurance policy. I had a cover in my dad’s policy, but my calculations showed that I was not covered adequately. I therefore approached a health insurance broker. He did a good job, helping me compare various mediclaim policies available in the market, and took me through how this whole mediclaim thing works. I signed up for the most attractive one (the one which had the best features and the lowest price).  I was proud I had done my homework, just like my dad would.

2 renewals had passed, when I received the 3rd years' Renewal Notice. The renewal notice talked about increase in premium by a shocking 500%, with the reason “adverse claims ratio and Medical Inflation” mentioned on the letter. A premium of Rs. 3000 for 2 Lakhs coverage for a family of 3, has increased to Rs. 13000! OK, I understand Medical  inflation, but I am sure it wouldn’t have been grown more than 50%, then how was the remaining 450% increase in premium to be understood? Did I have a role to play in the adverse claims ratio you faced? Could I have helped avoiding it? At first, I was sure, the premium mentioned was a printing error, but when I realized it was correct, I felt cheated and went berserk. I called the Broker (who himself was shocked, and worried), set up con-calls with the Insurance Company’s representatives, escalated the matter to the regional office, all I received were templated/recorded answers....Phew...I finally gave up.

I refused to renew the policy with this company, and heroicly pledged not to deal with this organization ever. My Broker suggested I port my mediclaim policy to another player. This time, I made sure this player was an ethical, reliable name. I finally zeroed on to a large Insurance company which had an alliance with supposedly “the world’s largest insurance company”. 

I moved on.

Cut to today, I recently received a call from my Broker, the health insurance company had removed the No Claim Bonus of Discount completely from my renewed policy this year, without citing any reasons at all. I got this strange feeling of déjà vu.  Forget prior information, I was expecting some communication from this big brand, but there was none. 

In this world of extreme transparency and hyper competition, I am amazed at this unusual apathy shown by the best of world Health Insurance Companies in India.

When I called the Insurance Company representative, all he said is that Medical Insurance is a “yearly contract”, and terms are subject to change on renewal.  A yearly contract!??!!? Whoa? When this medical policy was sold (twice by different providers) to me, I was explained various clauses in details like 2 years waiting periods, 4 years continuous renewals and the USP – “lifetime guaranteed renewal”. How can a mediclaim which assures lifetime renewal be a yearly contract?? Isn’t this a classic paradox?

OK, I know you are busy….So let me stop complaining, forget the past, and give you one more chance, the last one. Let me plan for my all critical post retirement/old age Healthcare costs. So now I understand the mediclaim policy is a yearly contract. I understand, you are making losses, you are unable to control the claims in Health Insurance and you are “forced” to make these “small” changes in the contract, every year. And yes, I should feel fortunate, that second time on, you atleast did not increase the premium by 500%.

I understand all that, but looking at the rampant changes you have been making in the policy wordings and process, I am really in a fix. I am now not sure what the policy would evolve into when I reach my old age. The way things are moving, the one thing, I am sure of is that the policy would be gravely different from what it is today (I am sure, a money making product for you, by then)

So, How do I predict the policy conditions and plan my post retirement healthcare expenditure?

Till when, and to what extent you would keep changing the terms? How do I assure myself, that the terms would be favorable for someone like me who bought his policy at 26, paid you premium, without claims for 14 years, from someone who is 40 that time and is buying a fresh policy??

Now, I am getting really confused. When you sold the product you encouraged me to buy these, clearly calling them "long term investment", and now, on renewal you are calling it a “yearly contact”.

Would you continue to guarantee lifetime renewals, or would you add restrictions on co-pay, remove no claim bonus, remove all large hospitals from the cashless network or worse, spike the rates by 500% every year, when I am growing older?.

 Now, it's all boiling down to plain trust. How should I trust a selectively transparent, for-profit organization like you? 

Is Mediclaim a policy with long term commitments or is it a yearly contract?

Would love to hear an answer. Can you help?

 

Thanks,

Your Health Insurance Customer.

Though, the concern being raised is real, please do note that, this is a work of fiction by the writer.  The Insurance companies described in this post, do not add up to targeting any specific company.

Health Insurance Companies India

A few days back, IRDA, the apex regulator of the Insurance Industry released a circular giving guidelines on introduction of portability of Health Insurance/Mediclaim in India with effect from 1st July 2011.

(Note, there are certain companies which offer portability of benefits to their products even today, but this is as per their own guidelines and procedures. Inquire with us, if you are interested)

The initiative to bring in a process and guideline to enable portability is a welcome step by IRDA. The circular released displays great intent on the part of the regulator to free the customer from being stuck with the same insurer, fearing loss of benefits of continuity, thus kick starting a competitive health insurance environment.

Ofcourse, there are flip sides and apprehensions. Government Insurance Companies hold more than 60% of market share in Health Insurance. Even today, Most in the industry are aware, that Govt. Insurers, leave other complex issues, are not equipped to port their own policy smoothly from one intermediary to another even in the same divisional office!  Owing to empanelment of multiple TPAs at every divisional office of Govt. Companies, there doesn’t seem to be a global customer-wise health insurance database readily available to retrieve past claims information, even within the same company.

 What will be the process for a policyholder to port his policy?

-          The policyholder will apply in the usual process (like a fresh application) to the new Insurance Company, providing current personal and health details of the family members to be covered in the proposal form.

-          The proposal forms are likely to have a section to enable portability. Information regarding previous coverage would be captured. Customers may have to also attach proof regarding previous continuous coverage.

-          The usual underwriting process would be carried out by the Insurance Company to assess the risks in the proposal.

-          If the proposal is accepted by the Insurance Company, the Insurance Company will have to provide relief for waiting periods which the customer has already gone through in the previous insurer’s policy to the extent of the previous sum insured.  For instance, in case a policyholder has been continuously renewing his policy for last 4 years with a certain Insurance company and now wants to port to a new Insurance company which has a 4 year waiting period for a list of ailments, such waiting period would be waived for this customer, through a credit of 4 years from the existing insurance policy. 

 

How will portability help customers?

Portability will empower unsatisfied consumers to move to an Insurance Company of their choice. Especially in the Retail segment, Portability will bring in more competitive environment and better service experience.  In the current scenario, renewal of health policies is the headache of the customer. In the portability scenario in the long run, Insurance Companies will have to win their renewals through better service, responsiveness and claims experience. The no. of policies an insurer is able to retain will reflect the customer satisfaction.

What would be the impact on premiums?

There is a good chance of a price war in the younger age segment. Insurers could slash premiums in the lower age bands to attract portability of existing customers.  

On the other hand, portability are not likely to help policy holders in the older age bands (say, 50 and above) and policyholders who suffer from pre-existing ailments. As such proposals are likely to be denied by the new Insurance Company.

Sudhir Sarnobat says: “Remember, Coverage in Car Insurance factors in depreciation, which is not the case with Health Insurance”, here the new insurer will take the risk as a fresh risk with full coverage and only increase in premium without factoring something like the degeneration of the health.” For instance, a policyholder at the age of 65 would like to move to a new Insurance company accepting the premium of the new insurance company. The new insurance company taking up a case exposing itself to a significantly higher risk of claim, without enjoying premium for the past claim free period, which the earlier insurance company enjoyed. So in effect senior citizens and people with pre-existing ailments (especially chronic ones) would not benefit a lot from portability.

Would Insurers be bound to accept a proposal for portability to their product? Can they reject an application?

 Note, the proposal and underwriting processes of Insurance companies will not change due to portability. The sum insured in the expiring policy cannot be the basis of what the new insurer will be ready to accept. The acceptance of risk would depend on the normal risk underwriting process. In fact, due to an already existing policy being declared for portability, the underwriting could demand additional claims history information for the past policies from the customer.

Once and if the proposal is accepted, the waiting period credits would have to be given in the new policy. The underwriter of the insurance company continues to hold the discretion to deny a proposal.

What happens if the customer applies for an increased sum insured in the new ported policy?

For instance, if the customer has a policy been continuously renewed for the last 5 years and has a sum insured of Rs. 2 Lakhs, and now he/she wants to port the policy to another insurance company with a higher sum insured of say Rs. 5 Lakhs. The portability relief in waiting periods in the new policy would only be to the extent of Rs. 2 Lakhs sum insured.  The waiting periods for the additional sum insured of Rs. 3 Lakhs would similar to a fresh policy.

What are the important things to take care when applying for portability?

- A customer looking at moving out to another Insurer should start the application process atleast 45 days before the expiry of the existing policy. This will give ample time to the new Insurance Company to underwrite and accept the risk and then retrieve information from the earlier Insurance Company. 

- The customer should preferably employ a Broker. Since a Broker deals with all Insurance Companies, one would get good guidance and advise regarding the Insurance company to select.

How will sharing of data between Insurance Companies on a common platform affect the consumer/industry?

Firstly, Insurance companies, especially the government companies and many private players do not seem to have a CRM in place, which can retrieve Policyholder wise data across various years of renewal. Secondly, there is no unique id or account number across Insurance companies for the information for one policyholder to be consolidated. IRDA in December 2010 did talk about an unique Insurance Account no.  Only once this unique number issuance is effective across all companies, the consolidation and hence sharing of information would be possible.

Some questions which we expect answers in coming times:

 1.  Insurance Companies would have to make major changes in their processes and database infrastructure to be able to retrieve information of one customer across several years of renewal. In case the customer has moved from one divisional office to another, then the issue becomes even more complicated.  Most government insurance companies are not interconnected to retrieve information of one customer across divisional offices.

2. Till the unique Insurance Account no. becomes effective across all Insurance companies, there would be no consolidation of data possible. Insurance companies would have to share information on a case to case basis. This is going to be an extremely tedious process, with huge bottle necks.

3. We expect more clarity on binding the insurance company of the expiring policy to provide the required information to the new insurer in specified time limits, so that smooth portability can operate. Any mischief here could result in major hiccups in porting the policy.

4. The circular currently only talks about credit for waiting period for continuous renewals and not for credit related to No Claims Bonus or Discounts, which is fair as retrieving information regarding claims is even more tedious in the current data management infrastructure.

 

Star Health recently launched their new product – Star Health Unique, which covers select Pre-existing diseases/conditions after a waiting period of 11 months.

Highlights:

Apart from the standard hospitalization cover for accident and sickness, the main highlights of this health plan are:

  • Covers select Pre-existing diseases/conditions after a waiting period of 11 months, which is considerably low compared to the earlier lowest of 3 years waiting by Apollo Munich.
  • Covers Individuals upto 65 years without a Medical Check-up.

Important Conditions:

The important conditions you need to know before you buy Star Unique Health Insurance:

  • The premium of this product is higher than the premium of standard products including the ones from Star.
  • 30% Co-pay on all claims.
  • Select Pre-existing Diseases are covered for 50% of the Sum Insured.
  • Select Pre-existing Diseases are not covered.
  • Differential city-wise premium.
  • Sub-limit on various ailments
  • Mandatory cover for 2 years. If you claim in the first year, the second year's premium is deducted from the admissable claim amount.
  • Cover ceases at the age of 70 years, after which the insured has the option to move to any other existing product of Star.

Talk to our Expert to know more: Write to expert@medimanage.com with age details of your parents.

The pre-existing ailments which are included in the 1 year, 2 year and 4 year exclusions are mostly those which require a hospitalization treatment in the short term, even before the policy has been applied for. The ailments not part of the waiting period seem to be those which are generally controllable diseases like Hypertension and Diabetes, which do not have an immediate requirement for a treatment.

In a time where most other private insurers add a permanent exclusion in the policy on any treatment directly or indirectly related to Hypertension or Diabetes, Star Health’s inclusion of these diseases is a welcome step.

The policy opens up cover for an entire Indian population who has chronic but controllable health conditions like hypertension or diabetes (including those who have undergone a Bypass Surgery (CABG)

Talk to our Expert to know more: Write to expert@medimanage.com with age details of your parents.

Why a Declaration based Health Insurance underwriting system could work better, compared to a Medical Check-up one in India?

In absence of any civic medical records, Health Insurance Companies depend on Medical Tests for underwriting (pricing) the Health Insurance coverage for people beyond a particular age. Medical Tests come with their own flaws. Firstly they capture information only for the particular time period. So if I have climbed 3 floors to reach a laboratory and got my blood pressure checked immediately, it would show High Blood Pressure, and the lab test would conclude me as a Hypertensive.  Those who are from Healthcare would agree, that Medical Check-ups are also prone to errors. I have experienced a case in the past where the mother of a renowned doctor was denied coverage based on pus cells detected in her urine. The daughter put her mother on medication and contested the results with the Insurance Company demanding a check in another lab after a week. The new check-up reports did not show any trace of pus cells, and the mother was covered without any exclusions. This instance clearly deleted all my dependence on medical checks as the critical data point for underwriting.

On the other hand, a clear declaration of health conditions from the customer makes him/her responsible for entering all the information he is aware of.

Talk to our Expert to know more: Write to expert@medimanage.com with age details of your parents.

Bajaj Allianz as a company is best known in the health insurance industry for its focus on health insurance and quality servicing. It has set some good benchmarks for the industry including being the first company to introduce in-house claims processing for Health Insurance in India.

Very recently, in what seems to be a bid to cover the medical inflation (of around 12-15%) and sustained increasse in claims, Bajaj Allianz announced a revision in terms and conditions of their health insurance products - Bajaj Individual Health Guard and Bajaj Family Health Guard.

The changes made are as follows:

15-20% increase in premium.

Bajaj's Health insurance products have been around 10-20% more expensive than products from government companies (that are more restrictive on various conditions like room rent limits compared to products from private companies.) The new increase of 15-20% will make the products all the more expensive, unless other companies, especially Govt. Companies take cue.

Health Insurance being a yearly contract, Insurance companies can increase premiums at the time of renewals, subject to approvals from the Govt. Regulator - the IRDA.

Note, This premium change will also be applicable to existing customers on renewal.

Introduction of Loading:

Following the trend of Insurance companies introducing loading in their products, the revision envisages a premium loading clause against high claims as follows. A "premium loading" clause provides for jacking up premiums based on claims

Bajaj Allianz Family Health Guard:

"30% Loading applicable if 3 or more claims paid amounting to Rs. 50000 or more in previous 3 years. Loading will be applied at the policy level"

Bajaj Allianz Individual Health Guard:

" Loading will be applicable for policies where there are 3 claims (paid) or more in previous 3 years with total amount exceeding Rs. 50000/-. The applicable loading will be 50%. Loading will be applicable considering the expiring 3 policies (max 3 years) and will be applicable fresh on every renewal"

This simply means that if Mr. Shah who has covered his family of 4 with Bajaj Allianz Family Health Guard, has 3 claims in the past 3 years for any of their members, where the total of all claims is more than Rs. 50000/-, the premium on renewal of the health insurance policy would increase by 30% from Rs. 8000/- to Rs. 10400/-.


analyzing future of cashless mediclaim in India

Preamble

Last 3-4 days, we have been seeing a lot of news in various media about cashless network hospital list being brought down to fewer in numbers & this list does not have big hospitals where the treatment cost is high & hence, have a greater need for their presence in list. We fear that these news items have created confusion in our members’ mind & hence, here is small explanatory note from our team.

Genesis of the thought process

Insurance companies have been witnessing inflated, fraudulent & unwarranted hospitalisations claims when the patient had declared that he/she has insurance cover & wishes to go for cashless treatment. Also, an analysis of cashless claims brought out pointer that 80% hospitalisations (by amount) happen in only 25-30% hospitals. The advantages of curtailed list are envisaged as follows:

1). Limited hospital list (around 450 all over India) would offer better administrative control.

2). TPAs can drive more business to small number of hospitals & hence, can demand volume discounts.

3). With better administrative control, all bad claims (fraudulent, inflated & unwarranted) can be reduced to a greater extent.

Methodology adopted

New India Assurance Company (it’s the largest, has major Health Insurance exposure and their current CMD has good rapport with other PSU Insurers’ CMDs) had taken the lead & appointed four of its empanelled TPAs as nodal TPAs (one for each region i.e. East, West, South & North) & asked them to draw a list of around 100-125 hospitals in each region. Only these PPN (Preferred Provider Network) hospitals would qualify for cashless treatment. PPN is a very common concept in west & helps insurer have better control over claims without compromising the quality of care.

 How it impacts you?

1). Currently, this does not impact corporate members as this arrangement is meant for only retail / individual policy holders.

2). However, looking at the success of this arrangement, soon, this may get extended to corporate policy-holders too.  

3). Currently, only New India, Oriental Insurance & United India have agreed for following this network. National Insurance has their own ideas about how to implement this & hence, declined to be part of this network as of now (see news mentioned above).

What are the shortcomings of this system?

1). Cashless treatment becomes very useful when the treatment is costly. With no tertiary care hospitals in major cities being part of this Preferred Provider Network, members would be forced to raise the funds for cost of treatment before the treatment starts.

2). Cashless treatment has been one of the major attractions which has helped increased Mediclaim penetration in Urban & Semi-Urban India. With these kind of restrictions, the new policy sales may suffer an impact which is detrimental to overall claims experience. (New policies sale brings in premium without any claims in its initial years which help insurance companies improve their claims ratio.)

3). There is no proper methodology adopted for selection of these hospitals & many network hospitals are in dark about this change. Without any bench-marking, the quality of care may deteriorate & just for want of cashless, members may have to face inefficient service levels.

What should be done to implement this better manner?

  1. 1). A right mix of Tertiary, Secondary & Primary care hospitals should be ensured while finalising the city-wise Preferred Provider Network.

  2. 2). A stringent & transparent criterion should be adopted for selection of hospitals which should broadly look at following features:

    a). No. of Beds
    b). Infrastructure & Manpower quality
    c). Certifications & Statutory Compliances like minimum wages, PF etc.
    d). Published rates for various treatment & acceptance of Insurance Tariffs
     
  3. 3). A formal Third party annual audit & review methodology should be decided by the insurance company for these PPN hospitals.
  4. 4). In case of occurrence of fraudulent practices, the hospital should be banned for a period of three years and even reimbursement at such hospitals should not be allowed.

 

Summary

Though the initiative taken up by insurers has shaken up the hospital industry & made the consumers anxious, we have reasons to believe that this is a start of much needed changes in the Health Insurance industry. What we expect is well thought-out strategy derived out of data available with the insurers & then an efficient implementation of the same in phased manner to ensure that the consumer is not hassled unnecessarily. 

In case you have any queries, please feel free to connect with me at sudhir [at] medimanage.com


About Medimanage:

Medimanage is India’s first boutique health insurance broker, with an integrated service model which provides Unbiased Health Insurance Advisory, Technology based delivery and Professional Claims Assistance. To know more contact purandar [at] medimanage.com

 

More interesting news just today

Public sector insurers to push for a common claims settling agency (http://economictimes.indiatimes.com/personal-finance/insurance/insurance-news/Public-sector-insurers-to-push-for-a-common-claims-settling-agency/articleshow/6154912.cms)

  •  New Items for reference

Insurance Cos slash list of hospitals in Mumbai for making fraudulent claims(http://timesofindia.indiatimes.com/City/Mumbai/Insurance-cos-slash-list-of-hospitals-in-Mumbai-for-making-fraudulent-claims/articleshow/6145243.cms)

One PSU insurer stays with cashless Mediclaim

(http://timesofindia.indiatimes.com/India/One-PSU-insurer-stays-with-cashless-mediclaim/articleshow/6153259.cms)

 

 

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

Rashtriya Swasthya Bima Yojana

In 26 months, RSBY has enrolled more than 60 million people in 22 states; by next year that should double to 100 million. This is the first use, on this scale, of India's technology prowess to run a national socal-security programme. If RSBY succeeds, it could be the precursor for reforms in other schemes.

The scheme accepts five people per family — can walk into 5,000 public and private hospitals across India, produce the RSBY card and get healthcare. No paperwork. No cash. No questions asked.

It is India's first social-security scheme that embraces a profit motive, involving 20 insurance companies, private and public hospitals, state governments and the centre, each acting as a check on the other. The World Bank is bringing it to global attention as the largest use of smart cards to provide the poor with nationwide health insurance.

To read full news, click here

Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

RSBY has been one of the best things that has happened to micro health insurance field. Many poor families become debt ridden if bread winner of the family falls sick & need secondary or tertiary level treatment. RSBY provides much needed help for all such families.

The health insurance penetration in rural India is miniscule which would definitely go up with this initiative. The challenge is making affordable healthcare available to all these members as the limit of this scheme provides cover of just Rs. 30,000.

We hope that this penetration will increase multi-fold & thus risk spread better to ensure that the higher coverage / higher sum insured is offered to all members insured.

 

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

Health Plus Life Insurance Plan

Future Generali’s Health product is planned for a future launch date. Since the Insurance Regulatory and Development Authority (IRDA) decided to allow combination products of health insurance coupled with life insurance earlier in 2010, Future Generali is planning on having its health plus life insurance ready within the next two months.

The Chief Executive Officer of Future Generali India Life Insurance, Deepak Sood said “We are looking to launch a health plus term life insurance product, possibly in the next two months. I see this kind of product to steadily build over the next three to five years. It can lead to several other combinations, and set the ball rolling for more complex products.”

To read full news, click here

Experts from Medimanage.com give their opinion:

KS Sankar:

K S Sankar from Medimanage.com

‘The foremost advantage of Life Insurers also providing Health Insurance is that, Life underwriting processes are more robust than those of general insurance underwriting processes; primarily ‘cause general insurers insure a wider variety of risks – from pigs to pig iron plants, like I keep saying, and therefore, are not entirely focused on ‘people’ insurances. We all know Life Policies are mostly subject to medical underwriting, and even where there is no medical underwriting, there is differential pricing based on lifestyle – like smokers and non-smokers - and also gender. As against this, health policies of general insurance companies have hardly any differentiation between smokers/non-smokers or male/female. Only now some rudimentary beginnings are being made by insurers to differentiate pricing based on lifestyle. They still have a long way to go, however, to get anywhere close to life underwriting processes when it comes to recognizing such nuances.

Life policies being long term products unlike general insurance health insurances that are annual contracts, life insurers are more equipped – and have a greater incentive - to play a pro-active role towards betterment of the health of their policyholders. We all know of situations where someone fit as a fiddle one day ends up being diagnosed for a major illness the next day. While the health insurer can, and does, review the renewal premium post a year in which a claim is made, life insurer has contracted to continue the life cover at the pre-agreed premium through the term of the policy and cannot increase the premium even after knowing the life assured is not of completely good health anymore. It makes commercial sense for the life insurance companies, therefore, to invest in promoting pro-active health of their policyholders. Once they do it, they stand to gain from this on their health portfolio also by way of lower claims.

Question is, how can they do it? Afterall their strengths lie in insurance and underwriting and not healthcare.

Fortunately synergies are now possible to achieve this laudable end. Dedicated health insurance brokers with composite license from IRDA with robust processes and IT enablement have workable models to educate people on pro-active health management, to facilitate lifestyle management programs and help these people adhere to the recommended life style modification regimen through interactive communication modules. With knowledge and consent of these people, they can also provide comprehensive information to insurance companies on the health levels and practices of these people. It would as such make sense for life insurance companies to source the services of such entities.

This will indeed result in a Win Win for all; and, most importantly, pave way for a healthier India.’    

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

Life Insurance companies offering Health Insurance plan is recent trend in India & will definitely pick-up momentum in next 3-5 years. These types of products are good for those customers who take care of their health by exercise & good eating habits. As the reimbursement based product does not give any returns on the premium paid, such members don’t see much value in Mediclaim. Also non-lifestyle diseases based products provide focused coverage (like Cancer care) which have fairly good demand & the coverage offered is for higher amount too as most of the Mediclaim policies offer cover up to only 5 lakhs.

We can expect many more such healthcare based life insurance products in coming years.

Mahavir Chopra:

Mahavir Chopra from Medimanage.comWe are a country which believes in savings more than risk management. We are a country whose people believe only the neighbour can get critical ailments like Cancer etc. We are a country of people who want "paisa vasool" OR "paisa vaapas". Products which combine savings with health, therefore offer "money back" if there is no claim, has always been a unpublished requirement of the Indian market. In my interaction with customers, I have many a times observed newbie customers taken by surprise when the product explained does not have a "money back", and mind you this is not a rural, semi-rural india phenomena, its in the DNA of Indian customers.

From a financial management and health management PoV also this is a good product for customers, if priced better (both in terms of premium, and administrations/fund management costs). Healthcare costs are rising beyond the published inflation figures, and a mere health insurance, without review every 2 years, will almost be a defunct instrument going forward. Investing for Healthcare costs of the future does make sense in more than many ways.  

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, m.timesofindia.com

Health Insurance and Life Insurance for Teacher

NEW DELHI: In a move that could benefit more than 62 lakh school teachers in government, municipal and private unaided schools, the Centre plans to provide them with life insurance and health insurance at highly subsidized rates.

The health insurance would cover a family of six the teacher himself or herself, the spouse, two children and two parents. The maximum sum assured for family in a year could be Rs 1 lakh. There would also be a corporate buffer of about Rs 25 crore that would double the reimbursement in cases of need. It is estimated that with corporate buffer, the annual premium to cover a family of six would be Rs 15,860.

To read full news, click here


Experts from Medimanage.com give their opinion:

KS Sankar:

K S Sankar from Medimanage.com

I am restricting my responses to only the Health Insurance part of this piece.

The first concern with any such scheme is the issue of credibility and transparency. We live in a country where Government sponsored fund management schemes are cleverly bandied about as insurance schemes. Actually what happens in these schemes is that the Government apportions funds and creates a corpus for reimbursing hospitalization costs to a specified target group – say, farmers. The target group members enroll in such a scheme by paying a fee. This fee is ambiguously projected as though it is premium, and the corpus, as though it is insurance. All is fine initially, but once the corpus dries up the subsequent ‘claimants’ are left high and dry.

I would hope this would indeed emerge as an insurance and not get compromised into another fund management scheme.

The second concern is implementation. Educating and enrolling such a large population is in itself a mammoth task. Even within this article, the projected numbers for Life Insurance is 60 Lakhs, but for Health Insurance, it is 50 Lakhs! I am saying this just to drive home the magnitude of enrolling this many numbers. The dependants enrollment will have further challenges not alone because we are looking at 5 times more the number of teachers but also because it involves validation of actual dependency. And then comes claims management with all its complexities.

Will the Government be able to scale this? Go no farther than today (30.06.10)’s ET. In July last year, aping the banks, the Employees Provident Fund Organization introduced drop boxes in all their offices for employers filing returns and workers’ withdrawal requests. Obviously no receipts were issued. So, employers had no acknowledgement of having filed their returns and workers had no way to follow up on their withdrawal claims. Chaos ensued and the boxes were given an unceremonial burial recently.  

If this were not to become another model of implementation to be followed by a post haste withdrawal or where the cost of running the scheme exceeds the cost of actual benefits provided like ESIC, it would make sense for the Government to outsource it to a capable entity. Like I keep saying, an entity who has:

a)      Thorough knowledge of health insurance and health care processes and practices pan India.

b)      Strong interface with healthcare service providers.

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

d)      Interactive IT driven robust processes that will enable enrolments and claims management of such a large population. 

At a very nominal percentage of the total outlay, an entity with the above capabilities will be able to seamlessly manage this.

The third concern is the financial viability of the insurance scheme itself. The general insurance industry is currently reeling under claims far in excess of premium in their Health Insurance portfolio. If this scheme also ends up on the wrong side of the ledger, the burden would simply cripple the industry. At the same time, there could also be the temptation to see this Government sponsored premium base as a cash cow to subsidize and camouflage losses in the existing Health Insurance portfolio. Indeed a double edged sword. To ensure viability of the scheme, the scope of cover under the scheme has to be determined with due application of thought, and should be left to insurance veterans than the North and South blocks. And to act as a watchdog over the insurance company that will underwrite this scheme, these veterans should be from outside the current insurance industry executives. The entity I had referred to above will ideally have such veterans and will have to be involved from the drawing board level in the scheme.

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

It is interesting news & we wonder whether this will ever become reality.

The life insurance part is fairly simple & premium of Rs. 840/- per annum is affordable (but does not look cheap as the premium is turning out to be Rs. 420/- per Lakh. Looking at the group size & the nature of work of the insured, we definitely feel this premium rate is high. The break even morbidity ratio is turning out to be 0.42% which we believe is on higher side.) Government should look at inviting quotes from Private Insurers too who could bring the rates down for this scheme.

The health insurance or Mediclaim part is going to be tricky. The coverage of Rs. 1,00,000 for premium of Rs.15,860 is definitely very expensive. The premium for this scheme for 50 Lakh teachers is expected to be 8250 Crores which is around 120% of the current total Indian health insurance industry size (it’s around 7200 Crores now). The breakeven morbidity is around 8% which is reasonable looking at the group’s average age & keeping in mind the parental cover offered.

However, the sheer size of the proposal make it difficult to implement in one go. Also the part that expects teachers to pay 50% of the premium (Rs. 7930/- per annum or Rs. 660/- per month) is going to be difficult to implement.

Our take is that the Life insurance proposal may get implemented but the health insurance part will not be possible to bring into reality.

 
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