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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?



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

Cashless Mediclaim row debated in Parliament.

NEW DELHI: “More and more hospitals will join the network (Preferred Provider Network) in coming days," said minister of state for finance Namo Narayan Meena while replying to a calling attention on the issue, raised by BJP member S S Ahluwalia, in the Rajya Sabha.

He said public sector insurance companies had to resort to rationalization of rates for cashless facilities as they suffered a loss of Rs 2,000 crore because of overcharging by hospitals in Mumbai, Delhi, Chennai and Bangalore. If the hospitals were allowed to overcharge, it could result in "serious consequences" leading to insolvency of the insurance companies, he added.

Citing an example, he said while the private hospitals were billing Rs 1.35 lakh from an insured for Caesarian operation, the rate was Rs 55,000 for uninsured and the CGHS rate was only Rs 15,000.

Raising the issue, Ahluwalia earlier said there was no standardization of rates. "The government was leaving the people at the mercy of hospitals. Patients should not suffer because of overcharging by hospitals and some cases of manipulation," he said.

Clarifying the issue during his reply, Meena said: "It may be noted that the Standard Health Insurance Policy does not provide for any assurance of cashless facility to the insured. However, in cases where a mention of cashless facility has been made it has been mentioned that the claims in respect of cashless facility will be through the agreed list of Network Hospitals/Nursing Homes/Day Care Centers and is subject to pre-admission authorization".

To read full news, click here

Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

The minister has raised couple of important points which are at the heart of this issue.

It’s important to note that the cashless is not a service in itself but a way to ensure claim settlement. This is subject to “pre-authorisation” by TPA & hence, should not be taken for granted as right of insured. Also the insurer has right to add/remove hospitals from the network & hence, the network would always be dynamic. However, the insurer have been clearly declaring that they pay 5.5% to TPA for their services & the same is loaded on the basic premium. This has led to interpretation that cashless is right of insured as he/she has paid for that service.

The hon. Minister has brought forward the urgency & important of this issue by communicating about the losses made by insurers under Mediclaim portfolio & if the same are not reined in on time, insurance companies may become insolvent (will not be in position to pay claims for policies sold). This is very important for long term sustainability of insurers & for the larger interests of the policy holders who have paid the premiums for many years without claims & would have claims now. If the insurance company that they have trusted for years can’t pay the claim, they would be left high & dry. This would also be detrimental for policy-holders confidence in a developing insurance market like India where the insurance penetration is high & breach of trust can bring down the sales numbers which are direly needed for better spread of the risk.

Insurers may expand the list of hospitals for cashless facility.

NEW DELHI: Locked in a battle with big healthcare firms over censoring cashless health insurance claims, state-run insurers on Thursday asserted that the facility would be extended only to those hospitals that agree to their rates for medical expenses.

"The purpose of working out such package rates and stabilising the hospitalisation costs, will benefit the insured in many ways," the four state-run general insurance companies -- National Insurance Co, New India Assurance Co, Oriental Insurance Co and United India Insurance Co -- said in a joint public notice.

The selected list of hospitals in Delhi and National Capital Region, Mumbai, Chennai and Bangalore, does not include big chains like Fortis and Max Healthcare and was prepared on the basis of those accepting rate packages prepared by the insurance firms for medical procedures and hospitalisation costs.

To read full news, click here

Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

This was the resolve & will that was expected from all PSU insurers. Now that all the PSU insurers have come together & demanding the rates negotiations, the cost of treatment for Primary & Secondary treatment would reduce. However, I am not sure about how the Tertiary care is going to be managed without taking in consideration the requirements of top hospitals. They are the only ones which offer the super-speciality treatment for complex medical problems. The hospitals need to look at Cost Plus model where they must find out the cost of procedure & then decide the price. Without having rational thought process of cost & pricing, all debate would be an exercise of demands & rejection of demands.

Mahavir Chopra:

Mahavir Chopra from Medimanage.com

Though, we have always suggested Insurers lobbying against Hospitals for their inconsistent billing menace, this sudden delisting (without any prior meetings, correspondence or warnings to Customers as well as Hospitals) was clearly uncalled for.

Customers are provided the network hospital list at the start of the policy, which they rely on for the entire policy period.Customers have not been prior informed regarding the delisting of hospitals.

Moreover, Government Insurers have not foreseen how this can adversely impact the confidence of future Mediclaim customers. For instance, How would Insurance Companies ensure their future wary customers, that they won’t suddenly delist hospitals again? How do we brokers assure this?

Quality Customers of Health Insurance we have interacted with, do look at the hospital list, to check if it includes hospitals in their locality or the ones they would use in case of an unfortunate need of hospitalization.

I personally feel, Government Insurers should toy with the idea of including the PPN List as a part of the terms and conditions of the policy and promise no ad hoc delisting of hospitals, without prior notice. This will bring in much needed customer confidence.

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

Health insurance policyholders may face problems as I-T dept seals TPA accounts

Several health insurance policyholders may face problems in getting cashless hospitalisation as the income tax department has sealed accounts of several third party intermediaries (TPAs) for non-payment of tax deducted at source (TDS).

Industry officials say TPAs whose accounts have been sealed are Mumbai headquartered Pa­ramount Health Services, United Healthcare Services, Dedic­ated Health Care Ser­vices and Health India TPA.

Industry sources said sealing of accounts means that the TPA cannot render its services till the issue is settled. TPAs are inte­rm­ediar­ies between the ins­ured, ho­spital and the insu­rance fi­rm and facilitate hospitali­sation of the insu­red by pay­ing the hospital from fu­nds allocated to them by insurance firms.

To read full news, click here

Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

This is purely the area of failure to fulfil the obligation of deducting the TDS from the payments made to Hospital.

Though the insurance claims pay-outs to individuals are not treated as income, the pay-outs to hospital are treated as income by the hospital & the TDS should have been applied. This was not done by the TPAs & hence, the Income Tax department has taken this action.

As the TPAs in South have been able to manage a Stay on the order, there is a precedent & the issue should get resolved without any major disruptions. Also as IRDA (which regulates TPAs) & Income Tax Dept. both report to same ministry, an amicable solution can be identified to ensure that policy holder is not hassled unnecessarily.

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, businesswire.com

The economic downturn has barely touched India healthcare, says AMI

Healthcare Sector to spend more on IT

KOLKATA, India-- With the growth of the India middle class, there is a shift toward private healthcare services. And the health insurance sector is maturing, offering greater scope and reach. India’s medical tourism is also booming. “In other words, the stage is set for establishing greater operational efficiencies, compliance with government regulations and uptake of latest technologies,” says Chakravarty.

Computing spending drives over half the overall IT spending for this vertical. As hospitals build and upgrade their IT infrastructure, spending on basic computing products will increase. As the healthcare industry matures, there will be a need for enhanced communication amongst doctors for collaboration and information exchange. Not surprisingly, Internet usage has grown over the years, and internet spending makes up approximately 13% of this total market.

To read full news see, click here

Experts from Medimanage.com give their opinion:

KS Sankar:

K S Sankar from Medimanage.com

Purely from the customer (read, patient) perspective, I see this as a double edged sword. The burden of US$250M will certainly get passed on to the patients; The investment, going by the report, seems to be going primarily into improving efficiencies of internal managerial processes than healthcare delivery per se. Eventually when economies out of these improved computing methodologies, etc. accrue, I see every chance of the advantages of these being retained by the healthcare providers than being passed on to/shared with the patients, if the healthcare industry’s past behavior is anything to go by.

In one sentence, therefore, I see this causing only a spurt in healthcare costs.

Corporates, prepare yourselves to pay even higher health insurance premiums next year. And you individuals may not be an exception to this soothsay.

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

In India, earlier the outlook towards hospital was that of a Philanthropic Initiative. This has now changed to as profitable business. With business at core, the customer has become important (but we still see this industry majorly lacking in customer service & the reason is Demand-Supply imbalance and patient fear/loyalties) & so is the business efficiency. World over, technology is being used for better customer service (thru understanding the behaviour which is captured thru data) which results in better revenue OR for improving efficiencies which helps an institution to lower cost &/or cater to larger groups at same cost.

Hospitals are following the same rule & embracing technology like fish takes to water. This will also increase the capex for all hospitals & thus the healthcare cost would definitely rise initially (more than 80% of healthcare in India is paid out-of-pocket & delivered by Private sector). This would result in more demand for health insurance products like Mediclaim.



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.

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 an online Publication, news.yahoo.com

Switching Health Care Provider

New Delhi, June 13 (PTI) Mediclaim policyholders, who are not satisfied with the service of their existing service providers, will be able to switch to another insurer soon without any change in the premium outgo. However, this facility will be available to those policyholders who are insured for a sum of Rs 1 lakh and above, to begin with

The policyholders will be able to switch their health insurance providers with the same benefits retained once they have bought this cover. At present, a policyholder is given health cover for a year and the same has to be renewed every year.

To read the full news, click here

Experts from Medimanage.com give their opinion:

KS Sankar:

KS Sankar from Medimanage.com

Don’t see much value in this.

Pl don’t get me wrong. I see huge value in portability. It’s just that I don’t see much value in the Council contemplated portability.

Even as of now, quite a few private players offer much wider portability – due to business considerations, of course. It is easier to convert the converted. Read, it is easier to poach on PSU health policy holders than reach out and cover the uncovered masses. And if you want someone who has a PSU health policy to migrate to you during health insurance renewal, you need to have portability.

The key words are ‘widen the cover’. Will the widened cover be wide enough to match the wide open portability existing with private players now? My serious doubts on this are validated by a later set of key words ‘accumulated bonus is not carried forward’. Somehow every time I read it, I read it as ‘even accumulated bonus is not carried forward’ though the word even is not physically there. I would believe carrying the bonus forward is a minimum portability requirement.

The concept of guaranteed minimum covers is being carried in by the Westerly winds. What lands on Mother Earth and what remains in the winds needs to be seen.

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

This is a good news for all those Mediclaim members who are not happy with the services of their current company. There could be broadly three reasons why one would like to shift a policy.

  • After a claim, the renewal premium is hiked by the insurance company disproportionately which may dissatisfy the insured member wherein he/she may feel that just because he/she made a claim in expiring policy year, their Mediclaim premium is increased heavily.
  • They may not be happy with the actual claim processing (denial, short payment or abnormal delay in payment) which actually is a function of a Third party Administrator but as the retail Mediclaim buyer does not have choice of selecting the TPA, they may change the insurer.
  • The services during the renewal may not be satisfactory. This again is a function of an agent but if you have experienced bad service by an agent, one generally tends to change the insurance company & not just agent.

The portability would help the consumers but the rules need to be clearer. We also believe that like Terrorism Pool, a portability pool should also be set up & the qualifying cases should be paid from such pool than by the insurer which would bring in better consumer orientation & reliability.  

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.

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