Recently, we came across news of a judgement in a leading online Publication, Zeenews.com
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.
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Experts from Medimanage.com give their opinion:
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!
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.
With the entire world observing 'World Hypertension Day' today, we are reminded that Hypertension or High BP still lives up to its 'Silent Killer' fame with almost 24-30% of India's urban population in its clasp.
What's more shocking is that, most of the individuals are clueless about their hypertensive state until it gets discovered in a routine check-up! Plus with the disease justifying its silent killer name by not showing any symptoms till it reaches an advanced state wherein it affects a person’s vital organs such as heart, kidney, liver, eyes and memory, which makes a BP check up necessary.
*A normal BP reading should read 120/80 with 120 being the systolic and 80 being the diastolic reading, one should always strive to keep their Blood Pressure close to the 120/80 margin or else they run the risk of a having a heart attack, stroke, vision loss and cognitive impairment*
To Know more about Hypertension, click here.
To get a different perspective on the possible causes of Hypertension, click here…
First the good news, Indian health care industry in the 1990s grew at a rate of 16% and today is worth more than $ 34 billion. Health insurance industry has registered a 20% growth in health insurance premium in December 2009 and is expected to cross a premium mark of Rs. 9000 crore in FY 2010 making health insurance industry one of the fastest growing industries in India.
Now, a string of bad news, the average health expenditure on a person per year is just $34, only 6% of India’s GDP is spent on health, number of hospitals per 1000 persons is 0.7 while the world average is 3.9, less than 10% of India’s population has health insurance while 80% of health infrastructure is provided by private sector making health care unaffordable to most.
So the current scenario has a growing population, poor State-owned infrastructure, no health insurance coverage for the majority, and due to over dependence on private health care, exorbitant medical expenses. Over and above this, increasing migration of people from rural areas to urban areas along with adoption of sedentary lifestyles, poor dietary choices and stress has led to the spate of lifestyle diseases in India. Today, there are 51 million diabetics in India and the number is set to rise to 73.5 million by 2025. Similarly there are 25 million people with heart disease in India and 15 million die of this disease every year. While the number of cardiac patients is decreasing in the world, 60% of heart patients in the world will be Indians.
The news is indeed grim but the cause of worry is not only the rate of increasing diseases but also the nature of these diseases, diseases like Heart disease, Hypertension and Diabetes are chronic diseases requiring a long term medication course along with the set of complications that they bring requiring expensive treatments. With a large population of Indians - rich and poor - suffering from these diseases, the total healthcare costs will skyrocket. In this scenario, we asked health insurance experts about their thoughts about the future of health insurance industry.
We spoke to K S Sankar, Member of Corporate Relations, Medimanage, with about 30 years of experience in Health insurance industry and Sudhir Sarnobat, co-founder, Medimanage, a ‘health insurance broking firm’ with ‘dedicated India centric health website’ about the future of Health Insurance in India in relation with the increasing lifestyle diseases.
How to cover the masses?
Even with the tremendous growth in the health insurance industry we find in a country of more than one billion people only 9.8% of people have health insurance. This leaves 90 % of the population to either depend on the Government hospitals with subsidized rates or paying on their own the expenses they incur in private health care clinics. With the public health care system failing, people have no choice but to depend on their own resources to pay for their health care.
Keys- Awareness and Affordability
K S Sankar says that health insurance can reach and cover the masses by being affordable and through awareness creation. He believes the first goal is taken care of; “The industry has demonstrated capabilities of creating affordable products like Universal Health Insurance, Jan Arogya Bhima, etc. So, making affordable products available is not quite a problem. The problem has been that of creating awareness and reach”.
These health insurance plans do have some very good benefits at a low price. The Jan Arogya Bima Yojana for instance - in a premium starting from just Rs. 70, reimburses expenses upto Rs.5000 in a year towards hospitalization as well as pre and post hospitalization expenses.
The issue, therefore, is more about creating awareness of such policies.
Brokers should market Health Insurance
For the lack of awareness about the health insurance policies Mr. K S Sankar, says the fault lies with outdated model of marketing still used by the insurance companies. The only saving grace he says is “introduction of professional intermediation through insurance broking”. However he adds “even this was kind of forced upon the industry than happening as an internally evolved strategy”. But he laments that, the current breed of brokers, except a few, are more interested in reaching into each other’s market than genuinely trying to create more awareness and create new markets.
Using Technology for Volumes
The job of creating awareness he thinks should be primarily the responsibility of the State and health insurance companies. The solution to the problem of reach, he feels, is to leave marketing of health insurance to the brokers, where the brokers choose to specialize in health insurance and hone their skills accordingly. And the key he feels is technology, he 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.”
Lifestyle Diseases and How health insurance Companies can cope with them
The recent health reports say that India is about to become the diabetes and heart disease capital in the world, it would be important to know how health insurance is adapting to it.
Sudhir feels that Insurance companies have not really looked at the issue, neither as an opportunity nor as a threat. He feels that a system which rewards good management of health and reprimands bad management of health can help because these diseases can be managed by an individual. He suggests, “Insurers should be linking the premium to maintaining the Wellness Score like say, maintaining Sugar Levels under control, providing discounts in premium for better health etc. Insurers could also look at product innovation for specific diseases and thus spread the risk to improve performance.”
Keeping health insurance affordable
It is speculated that with more lifestyle diseases like Diabetes with no cure and many complications, the health insurance companies might just increase the premium or additional loading in the policy, making it unaffordable. K S Sankar disagrees with this approach. He opines, “Insurance is to cover risks, not to simply transfer the risk back to the original risk bearer. Making the risk bearer participate nominally in the claim is fine, but it has to stop there. Otherwise, insurance will become meaningless. So, hopefully there shall not be a late-in-the-day kneejerk reaction from insurance companies to lifestyle diseases in terms of controls, controls and more controls.”
Sudhir on the other hand, feels that as long as there are more people buying health insurance, health insurance will remain affordable. With increasing health costs, he feels there will be more focus on cost efficiency and hence there will be a closer examination of the hospitals by the Insurance Companies and TPAs.
Mr. Sarnobat provides various methods that could help reduce the costs, “Disease Management Protocols, Bulk Purchases of consumables, rationalization of medicine brands and gate-keeper mechanisms for selection of type of Healthcare Provider in line with the ailment profile will help to bring down the prices.” He feels that even if the premium rises, people would prefer to pay it rather than bear the costs, he sums it up by saying, “My take would be that for next 10 years, health Insurance will continue to be affordable as there is huge opportunity to increase penetration and cost inflation is not going to be in line with the same.”
Health insurance and Preventive Care
With lifestyle diseases on the rise and treatments available to cure them becoming more expensive, the only way to tackle this problem is to prevent lifestyle diseases in the first place. With almost all of the health care systems catering to curative methods of treatment, it is to be seen if health insurance companies do something in preventive health care. K S Sankar is of the opinion that there is now a change in perception and it is the private participation in healthcare that has brought the orientation towards pro-active health or preventive health. He feels that the impact of this orientation will take time but will lead the society to healthier living. However he feels that health insurance products are still oriented only towards curative health.
What can be done?
K S Sankar, feels that health insurance companies should build incentives to the section of the population that is health aware and compliant to healthy living processes. The specialized health insurance brokers referred above can greatly help insurers by tracking and reporting such compliance, both as a tool to the insured persons and as data to insurers. He feels that health insurance companies should have a different pricing with incentive to those who ‘stay healthy’ rather than worry about those, who themselves spare no second thoughts to their health.
The way to do it
Mr. Sudhir Sarnobat feels that before giving out a policy, the insurance company should determine the healthy living goals to be achieved and give benefits through discounts in premium or bonuses through increase in sum assured once the goals are achieved. This way you incentivize good health and thus reduce the claims in the long run.
Health insurance is sure to be a big industry in some time but it will only truly become a giant, if it looks at the challenge of low penetration, high claims rate, increasing lifestyle diseases and comes up with innovative solutions that make it attractive for the customer at the same time focusing on reducing the losses. The solution that comes across through the discussion is ‘preventive health care’ and if the Government as well as the health insurance industry focus on this part, health and cost of health care will no longer be a cause of worry for the customer or for the Insurance industry!