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Honey contains antibiotics

CSE or Center For Science and Environment has again done it. Their study conducted on major brands of Honey in India (Dabur, Baidyanath, Himalaya, Patanjali Products etc) showed that 11 out of 12 contain disturbingly high levels of antibiotics. Not only this, the imported brands (NectaFlor from Switzerland and Capilano Pure from Australia) also contain high levels of anti bacterial compounds which would be unacceptable in their country.

What really is startling is that we don’t have standards for checking the levels of antibiotics in the honey sold in India but have a strict code for checking it for domestic honey which is to be exported. Even foreign brands are taking advantage of this fact and selling honey with antibiotics which would have been rejected abroad.

Why does Honey have antibiotics?

From smaller farmers, honey producers are now large cartels who push for more production and higher profits. Honey producers use antibiotics to prevent diseases among honey bees. This antibiotics are then passed on their honey.  

What does ‘antibiotics’ in Honey affect us?

Exposure to antibiotics over a period of time creates many health problems. One of the antibiotics found in the studied brands honey is known to cause blood disorders and liver ailments. Also long term exposure creates antibiotics resistant bugs which creates large scale problems.

Read the findings here

Worried about health insurance?

“Insurance Cos slash list of hospitals offering cashless services in Mumbai for making fraudulent claims”

“Medical insurers curb cashless facility”

“Mediclaim crisis looms, hospitals seek way out” 

“No more cashless mediclaim? Common man suffers”

Reading these headlines in local dailies, you, as a customer, both prospective and existing, must be really worried. After all, you had counted on health insurance to ride through the tough times of cash flow problems in event of hospitalization especially when medical inflation is so high. But all you see are hapless customers being denied first – the cashless claims and then- in some cases, even claims in general. Health insurance companies, you have found out, seem nice when you are buying a policy but when you make claims, they deny claims or double the renewal premium or discontinue the policies on renewal……

Before you think of your health insurance troubles more anxiously, we will try to give you a more balanced perspective about the scenario. All the headlines in dailies are not quite accurate about the situation. After all news is more about the unusual than the usual and media ends up talking about the rarities than the standard cases. As Health insurance experts, we give you our take on the current health insurance scenario.

You ask: Is Cashless Service no longer available? Have all Insurance Companies stopped Cashless facility? What’s the latest update on that front?

Cashless Service was discontinued by the four health insurance PSUs (Oriental, New India, United, National) from 1st of July 2010 from most of the hospitals in their network hospitals in the metros of Delhi, Mumbai, Chennai and Bangalore. The reason cited was - overcharging by most Hospitals and lack of standardized rates. Meanwhile, the PSUs were paying the reimbursement claims as usual. After weeks of hue and cry raised in media and inconvenience to the patients and negotiations, the hospitals and the health insurance PSUs have agreed on standardizing the rates based on the infrastructure available in respective hospitals. The hospitals have thus been divided into three groups based on the facilities.

It is agreed that cashless service will resume in 450 hospitals for 42 medical procedures that covers almost all common ailments from 20 August 2010 and there are talks of adding 350 more hospitals in the list.

The Bottom line:

  • Only the Public Sector Health insurance companies have discontinued the Cashless service in the four metro hospitals, you can still avail of cashless service in other cities or in private companies’ policies.
  • Cashless service is available for emergency and accidents cases in all the originally enlisted hospitals
  • Also, you need to check with your TPA to know the details of the cashless availability under your health insurance policy in the hospital you plan treatment in.
  • The Cashless service issue may be sorted out even further in few days.
  • Meanwhile all health insurance companies are accepting reimbursement claims.

You ask: Why all these sudden changes?

Health insurance cover

In the past 5 years, Health Insurance has grown to become the 2nd largest part of the total portfolio of insurance companies in India. Losses in this portfolio that could be ignored earlier have therefore now come significantly into picture.

In 2008-09 itself, Insurance companies paid 20 Lakh Health Insurance Claims worth Rs. 4087 Crore!  With overall Claim Ratio being 103%, Health Insurance companies paid more claims than the premium they took from their customers. Other expenses involved in managing the portfolio were adding to these losses. Since Government companies (PSUs) have 80% share of the health insurance market in India, they also bear the largest share of these losses. Also note that these losses are funded by ‘premium payers’ including people like you and me. In a predictable move, the Government companies are now under pressure from the Ministry of Finance to take active steps to get the health insurance business out of losses.  

Bottom line: These changes are made now because it is in recent times that health insurance has grown to such large proportions and become what it is, critical to the financial health of general insurance companies

You ask: How can insurance companies discontinue Cashless Facility? Is it legal?

Cashless facility has been incorporated in your health insurance for the convenience of the customers who find it difficult to arrange for large amounts of cash, required for hospitalization, especially in times of emergencies. However it has to be noted that it is an added service and not a core offering of the health insurance companies. The health insurance companies cannot change conditions in the policy without your consent; but they can modify features and benefits not forming part of the policy conditions. Also the PSUs did not discontinue the Cashless service; they only delisted some hospitals from their existing network and created a fresh PPN or Preferred Provider Network list. The list of hospitals does not form a part of your core policy conditions and hence the health insurance companies have arguably not done anything illegal.

Also you can still send your claims for reimbursement after you pay the hospital bills. You are still getting the core benefit of health insurance.

Bottom line: Cashless is not the core product, it is a payment mechanism. You can still avail of reimbursement claims and get your claim settled subject to policy coverage.

Health insurance claim

You ask: Are Genuine Claims also not paid?

Again this is misinterpretation by most, how can health insurance companies survive if they do not pay genuine claims? Plus, the entire cashless service controversy was a result of the soaring claims ratio (between 115%-130) for health insurance. That means for every 100 rupees you pay as premium, the company ends up with an outgo of 115 rupee.  This means that health insurance companies are slipping into losses because they are paying more than they are getting.

And unlike what the news that is circulating would like to tell you, in reality more than 95% of the claims submitted are passed with very small deductions. In order to get your claims settled without any hitch, read your policy document carefully to understand the conditions, keep the documents properly and submit the claim documents on time (for reimbursement claims). If you feel that your claim is being denied without proper reason, you can refer it back to the insurance company, then to insurance ombudsman and finally pursue the matter in consumer court.

Bottom line: If you have a genuine claim, it will be paid!

You ask: Are deductions made in an ad hoc manner?

There are times when you will find that TPAs/health insurance companies will not reimburse you the entire amount in the bill. But there will always be reasons for it- it may be because you have already made one or more claims in a year and the cover amount is spent (for ex. If you have already claimed  50,000 from your 2 lakh cover, you will be left with only 1.5 Lakhs during the remaining period of policy; and if you have a subsequent claim in the same policy year exceeding 1.5 Lakhs, you will naturally be paid only 1.5 Lakhs), there may be sub limits on the specific treatment (for ex: the cost of cataract should not exceed Rs. 25,000), there also may be some expenses that are not covered in your policy for ex. Service charges, admission fees, surcharges levied by the hospitals). In these cases the TPAs/Health insurance companies rightly deduct some amount from the final bill.

However, if you find that the health insurance companies have deducted an amount without valid explanation or reason, you may question them and even pursue the matter further.

Bottom line: TPAs/Companies cannot make deductions in an ad hoc manner as companies are bound by the insurance contract as contained in the policy, and TPAs, representing the Companies, need to process claims as per word and spirit of these contracts. While there are valid reasons for some deductions, you can fight them if you are not satisfied about the validity of any deduction.

You ask: If Insurance Companies can take such ad hoc decisions; they may do the same in the future.

Insurance companies cannot change terms of a contract, without your consent. Only features/benefits which were provided as customer service and don’t form a part of the terms and conditions can be revoked.

For instance,

-           From the informally accepted 30 days, recently many insurance companies reinforced the policy wordings clause of 7 day limit for submitting documents. This was a part of the policy wordings; only now this is being implemented rigorously.  

-           Hospital list does not form part of the core terms and conditions. Hence change of list of Hospitals is under the power of the Insurance Company.

-           Your feeling cheated is because any such change in the process does not get conveyed to you before such change is effected.


Bottom line: In such a scenario, you need an expert in Health Insurance who would be able to inform, answer or provide you alerts on change in the “Value added, out of contract” benefits. And, for that matter, on all matters relating to Health Insurance.

Health insurance claims denied

You ask: Don’t the TPAs and Health insurance companies care about the customers?

In the entire cashless facility issue, if there is one party that was at the losing end, it was the customer. For more than a month now, they are forced to arrange for large sums of money to fund their treatments as Cashless was unavailable, some had to travel a great deal to reach the hospitals that remained in the PPN or Preferred Provider Network. It may look like Companies only care about their finances and that is the image that has been portrayed so far.

TPAs’ reputation is also getting a beating since they are primarily responsible for settling the claims. Health insurance companies are blaming the TPAs for being ineffective in curbing the losses and customers are angry that TPAs are being unfair to them. Abhitabh Gupta, CEO, Paramount TPA says “ TPAs cannot be blamed for the losses primarily because, most of the PSU Insurance companies had underwritten health insurance at an extremely low cost sometimes even selling Re. 1 policies, so it is but natural that they would suffer from losses. Further medical costs have been increasing at a rate of 10-15 % while the premiums are not increasing at the same rate.” He says that the TPAs weren’t given the rights to interfere on the line of treatment and unless there is some change in their role with more empowerment in these areas, TPAs can’t do much.

Here is how, this current cashless chaos will benefit you in the long run

The four PSUs chose to control the losses ahead of other insurance companies; otherwise the claims trend would put the fate of the entire health insurance industry at peril. Now that the hospitals have agreed to standardize their rates, the insurance companies will save at least 20-25% on their losses which will help the customers in the long run in terms of premiums not shooting through the roof.

Sudhir Sarnobat, founder of Medimanage Insurance Broking Pvt. Ltd, says, “Current churning in the market will make life very difficult in short term for all the parties involved, but once this phase passes, we are sure that the changes would be of long-term effect and would help the consumer”. He believes that the focused network with negotiated rates would improve the commercial feasibility of insurance and improve the quality and service delivery of hospitals. He says, “Once the losses are tamed, the journey is always upward in value and what is currently happening with the health insurance industry in India marks the beginning of this”.

Also, another point we need to consider is that premiums of health insurance companies have not risen in the ratio of medical inflation which has created the divide between claims and premiums earned, so health insurance essentially remains quite affordable and inexpensive in comparison, even after these changes. Thus buying a health insurance policy for yourself and your family even now seems a very good idea.

Bottom line: Irrespective of the controversies, health insurance policy is a must investment for every family, it is the only savior during difficult times and even now, considering all the recent changes and available options, it remains a safe investment.

Cashles Chaos: Making sense of it all

News Flash:  “The General Insurance Public Sector Association consisting of four major state-run insurance companies - United India, New India, Oriental Insurance and National Insurance have decided to stop cash-less hospitalization in most hospitals”

Shock and outrage are the two words that describe the reaction of most of the customers and media reports on this piece of news.  We demanded to know how insurance companies could take such a decision one fine day, and what would the customer do. 

Before creation of PPN (Preferred Provider Network  by the Public health insurance companies, media and the industry experts were congratulating the sector for the phenomenal growth. It is this decision which has caused a huge backlash from all around- ustomers, hospitals, media and other insurance experts.

Cashless Chaos: The Blame Game

Let’s understand the issue:

There have been various reports about overcharging by the hospitals and the lack of standard pricing. The TPAs as well as the hospitals have been blamed by everyone for being the perpetrators for the huge losses faced by the insurance industry in their health portfolio. And now, without as much as a warning, the public health insurers have delisted most of the hospitals from their existing network of hospitals, creating PPN.

Insurers’ Stand: Insurance industry faces losses amounting to  thousands of crores each year now. Last year the losses further skyrocketed  and for these losses the Insurance industry is blaming the lack of standardized pricing in hospitals along with the trend of hospitals to overcharge the insured patients.  GIPSA has also criticized the TPAs overall efficiency in keeping the claims down.

Hospitals’ Stand: The corporate hospitals believe that they are being unfairly targeted by the health insurance companies., They argue that the price they charge is proportional to the quality of care they provide. Since the kind of care in a 100 bed hospital with latest technology will be different from that in a 15 bed hospital, cost of healthcare in a large, private hospital is more.

TPA’s Stand: TPAs are being blamed of everything from inefficiency to not controlling fraudulent claims. There is immense amount of pressure on TPAs to bring down the claims and there is talk that the PSUs may opt for a single common TPA. Abhitabh Gupta, CEO, Paramount TPA says “ TPAs cannot be blamed for the losses primarily because, most of the PSU Insurance companies had underwritten health insurance at an extremely low cost sometimes even selling Rs. 1 policies, so it is but natural that they would suffer from losses. Further medical inflation has been increasing at a rate of 10-15 % while the premiums are not increasing at the same rate.” He says TPAs weren’t given the rights to meddle with the treatment and unless there is some change in their role, TPAs can’t do much.

Customer’s stand: Customers are caught in the crossfire between Hospitals and Health insurance companies and they feel cheated. Since Cashless facility is now limited to extremely small number of hospitals; customers have to pay the medical bills from their own pockets and then claim reimbursement.

With Brokers being the neutral catalysts in the health insurance domain, we sought theopinion of Sudhir Sarnobat, Founder of Medimanage Insurance Broking Pvt. Ltd on this issue:

Whether Health insurance companies are justified in delisting the hospitals in the middle of the policy:“The policy periods are of one year and at any point you take a decision, itwill be mid-term for some members and hence, we cannot hold insurer responsible for this. People look at benefit of insurance claim and that’s the core product which insurer is not refusing. If insurer finds issues with non-core benefits, they have the right to tinker with them.

Also, Health Insurance in India is currently in nascent stage and hence, the stable decision making would take a little time. One MUST not forget that this portfolio is loss-making and hence, under pressure to reduce losses, insurers are taking some sudden decisions as they are not too worried about consumer reactions”  

Blame game between insurance companies and hospitals

On Corporate Hospitals taking advantage of the system:I think that these corporate hospitals have taken advantage of the system and not offered negotiated rates when insurance is their single largest customer. It’s actually clash of egos and I think after 3-6 months, both Insurers as well as Hospitals will come to sense and will resolve this in an amicable manner when the industry bodies will act as mediators. I think IRDA may also step in”.

 On Grading of Hospitals: “The grading is a very common concept and it will help manage the cost of treatment well and will help in creation of centers of excellence. Why should a person go to Lilavati (Premium hospital in Mumbai) hospital for Hernia just because he has bought 5 Lakh or 10 Lakh cover. It’s a secondary care procedure and hence, should be managed in a  secondary care hospital.”

On the impact of this move on the customer: This (move) may bring the malpractices and over-billing to check. However, I would maintain that you need to have tertiary care hospitals in network as smaller hospitals do not have the facilities, infrastructure and manpower to manage complex procedures. “

On 10.3% of Service tax for Cashless Facility: “That’s not fair as its an additional burden. It’s discriminatory as it’s meant for Cashless Insurance patients only. But as it’s a decision by Union Government, the consumer forums/bodies should take it up with Government.”

On whether this move to curtail hospitals in the Network list will make Health insurance unattractive:
“It’s a need of the hour and once the insurance penetration and clout increases, hospitals will try to be compliant with Insurers’ requirements. This would bring in cost consciousness along with customer focus. The churning what we are seeing now is good for long term sustained development of the industry and hence, one should not look at this as negative or unattractive”


Timeline for Cashless Hospitalization issue:

July 1: GIPSA (General Insurance Public Sector Association) delists most of the Private hospitals in Delhi, Mumbai, Bangalore and Chennai from their PPN (Preferred Provider Network) list. (Of the 800 hospitals in Mumbai only 90 remained)

July 13: Insurance Company leaders and Top Corporate hospitals met to increase the number of hospitals in the list.

  • It was decided that there would different grades of hospitals depending on the quality of health care provided; there would also be a common rate card across the hospitals.
  • It was decided to revive the cashless facility on a case to case basis.

July 15: A Public notice by Public Insurance companies made it clear that Cashless Facility will only be resumed once the hospitals adhered to the conditions of the Insurance companies. 

July 18: There is news that even Private insurance companies are looking at joining the PPN Network.


Why Thin people are not Fat

Haven't you heard of thousand studies and papers dissecting obesity and weight gain? But here is one that talks about why some people do not gain weight no matter how much they eat. Being an anmoly in a world of overweight people, it will be interesting to know what exactly helps them stay in shape while others around them struggle to put off weight.

In BBC's Horizon documentary, they found 10 skinny people and put them on extremely high calorie diets with restriction on activity to observe how their bodies reacted to excess calories. The results were shocking while some participants put on weight, there were some, whose bodies increased their metabolism and they hardly put on any considerable weight, one participant whose body had rather than increased fat levels, had increased muscle mass. After the experiment, all the participants lost the excess weight without much efforts.

This convinced reasearchers that weight loss is not as simple as consumption of fats versus activty. There are lot of factors involved like- genetics, metabolism and psycological conditioning. They also found out that there is a biologically determined 'normal weight' that our bodies recognize and try to maintain by altering the metabolism and other functions.

Having trouble viewing the video, click here

Financial losses by health insruance company

Health insurance companies are trying to salvage the losses which are just increasing each year and here is another of their moves. Public Health insurance Companies (Oriental, New India Assurance, United, National) have announced that they are taking down large number of the hospitals from their list of network hospitals to access Cashless service. From the 800 hospitals which were in the Preferred Provider Network in Mumbai, only 90 remain, all others have been delisted.

Even some of the most reputed hospitals- Breach Candy, Bhatia Hospital, Jupiter, Lilavati and Hinduja have been removed from their lists. There are similar names which have been omitted from other metros like Chennai, Bangalore and Delhi.

So what caused this move?

fradulent claims by health insurance companies

Cashless service is offered by health insurance to the customers to avail hospitalization in select hospitals without paying any fees. The customers show their TPA card, fill a form and the hospital then receive the amount from the TPA, which is an intermediary between Health Insurance Company and the customer. Since the TAT or the Turn Around time, for the entire transaction is just few hours, there is less- than-effective examination of the documents and the some hospitals and some customers manage to file fraudulent claims. Most of the times, hospitals used to inflate their bills and in absence of rate cards could charge different rates for the same treatment.

Since the losses faced by health insurance are now running into hundreds of crores, health insurance companies are tightening the reins around the TPAs and hospitals. After examining the claims they found many Hospitals had filed fake claims and some TPAs were also hands in glove in the exercise. General Insurance Public Sector Association (GIPSA) has come decided to take stringent measures and delist all hospitals which are guilty of these practices as well as have implemented a rate card for treatments across all the hospitals.

This move is surely going to affect the consumers who had many options to choose the hospitals to avail cashless service. Now they will be forced to travel far or go for reimbursement claims. We ask our experts about this move and its impact on the customer.

Sudhir Sarnobat, co-founder of Medimange Health Insurance Broking Ltd, agrees that this move seems to be a knee jerk reaction to the losses faced, he says “Though TPAs have identified some incidences where over charging has happened, one cannot ignore the fact that the Tertiary care treatment facilities are available in these(big) hospitals only.”

He says that the basic essence of Mediclaim is to take cover against large, unforeseen health risks which are being treated at such hospitals. “Raising Rs. 10,000-20,000 is possible but the cashless really becomes useful when the claim amounts are large. Insurance companies are hitting that part and creating major inconvenience (for the customer)” he rues.

As a solution to the problem of overcharging, he suggests that Insurers should have created a list of diseases which can be treated at such hospitals and negotiated rates based on the Sum Insured.

Should there be Talks?

Reports suggest that the hospitals are still not aware of their status in the network hospitals, which suggests that there were no talks between the hospitals and the health insurance companies. So we asked the experts whether there should have been discussions between the parties.

Mr. Sarnobat replied, “As the insurers are essential for health market to grow, so are the healthcare delivery institutions (read Hospitals and Nursing Homes). Currently, the insurers view the hospital with antagonized view which needs to be altered.” He feels that Association of the hospitals should take a pro-active measure and self regulate and engage in a dialogue with the insurers to get a fairer deal.

He thinks it is the individual ego that is stopping the two parties from an honest dialogue and the decisions are based on few incidences more than wide spread activities.

Customers- the ultimate losers

While taking the policies, most customers were told that they had plenty of options to choose their network hospitals from (many boosted as high as 4000 hospitals), suddenly they will find themselves in a soup where either they need to travel far for Cashless or pay from their own pockets through the reimbursement route.

So for now, it’s bad news for the Hospitals and even more so for the Customers!

Loss in health insurance industryWhat!? But you’ve heard that health insurance industry was growing like never before, didn’t it just record a growth of 20% in premium collected last year and there was also news of more foreign health insurance companies coming to India… While all you heard is true, it is also true most of health insurance companies which are general insurance companies, in are in fact in losses, the underwriting losses which states the premium collected against claims, for New India Assurance was a whopping 117% this year.  A similar story follows for other health insurance companies too. 

The other side of the story

The reason for the losses is the amount claimed, is higher than the amount of premium collected, in fact, according to health insurance officials, the claims to premium ratio is 180% in group health insurance. Which means that claims are 180 percent of the total premium collected, with such a loss rate, it is surprising to see rosy pictures represented in the newspapers.

The reason why this side of the story wasn’t gaining importance earlier is because most of the general insurance companies make investments that offset some of the underwriting losses but last year’s recession took its toll and the underwriting losses of general insurance industry increased by 37 per cent to Rs 5,326 crore against Rs 3,899 crore in 2007-08.

Heavy Losses

For the Public sector companies (National, United, New India and Oriental), the underwriting costs increased by 28 % and investments fell by 23%. For the private insurers, the losses were a whopping 84% which was offset by a growth of 47% in investments in the year 2008-2009 according to a report in Hindu Business line.

The Reasons behind the losses

Bad Pricing is the reason for the health insurance industry suffering losses

Most of the Insurance companies see the group health insurance as the reason behind the losses. They claim that few limits and conditions on group health insurance as well as clauses like coverage of pre-existing diseases have added to the high claims ratio of health insurance policy.

The PSUs assert that large volumes and large share of group health insurance as the reasons for the losses. The other cause which is often stated by health insurance companies is that, TPAs, the representatives of the Insurance companies which are responsible for settling the claim, are not doing a good job managing the costs.

We asked health insurance experts K S Sankar with more than 30 years in Health Insurance industry and Sudhir Sarnobat, founder and director of Medimanage health insurance Broking firm, about their take on this trend. 

Are the Hospitals to blame?

K S Sankar feels “No regulation/standardization of the rates charged by health service providers or hospitals” is to be blamed for the losses.  Another reason he states is that the current system allows hospitalization in any hospital which fulfills a very basic definition of a hospital like having minimum number of beds, basic amenities available.

The solution he thinks by enlisting a restricted number of health service providers to whom the insured population will be given access. He also suggests that there be a reward and deterrent process where in you reward by having less or no co-pay in network hospitals (hospitals in which insurance company have a tie up) and deterrent by not offering  cashless in non network hospitals.

Health insurance companies can better negotiate with these hospitals now that larger volumes will flow in the hospitals. Insurance companies can also review the service of these hospitals to bring in fresh hospitals and delist those who fall short of the standards, he reasons.

Bad Premium Pricing also plays a part!

Sudhir Sarnobat, however disagrees with the statement that hospitals are to be blamed for the losses suffered; he draws parallels with the hospital expenses abroad and in India to compare the premiums.  He says that since the hospitals’ major cost are equipments and consumables and taking the cost of living, the hospital expenses aboard would only be higher marginally however the premium rates in India are very low compared to other nations. He gives the example of US and says “In US, an individual pays around 600-800 US dollars per month for coverage, In India, for a cover of 5 lakh; the annual premium is around USD 500. That is less than 1/10th whereas the cost of care is not 1/10th.”

Thus, he thinks that the losses faced by the health insurance companies is not just due to non- standardized rates in the hospitals but also due to wrong premium pricing.

How to control the losses?

K S Sankar feels that if the health insurance companies charge the premiums according to compliance of the insured to remain healthy, (less premium if you are healthy and loading if you are not), they could effectively tackle the situation.  He thinks that health insurance companies can get the inputs through IT driven health insurance broker to drive this reform.

Sudhir feels that the health insurance companies should start by refraining from pricing the current year’s premium based on last year’s claim amount. He says that they should do what any other manufacturing company would do, that is, by looking at the cost of inputs, spending capacity of the market and cost of marketing initiatives. The lack of scientific methods to decide the pricing of the premium is what he claims is the reasons behind the losses.

When would the correction happen?

About when the correction of premium pricing will occur, K S Sankar feels that insurance companies till date have a knee-jerk reaction to new challenges and it requires efforts of outsiders with close association to insurance industry like brokers to drive a change. Sudhir Sarnobat feels that the correction is currently happening in the corporate sector and will come in the retail industry at least 5 years down the line.

We would hope for the industry to start correcting the premium prices because another bad financial year would again throw the insurance companies into losses which in the end would affect the customer!

Reference: http://www.thehindubusinessline.com/2010/01/09/stories/2010010952010600.htm



Health insurance industry as early as 10 years back was in its infancy with only public sector companies who were also life insurance players.  It was after the year 2000 that privately owned general health insurance companies came to India like HDFC, Tata, Max life, Kotak and Birla but it was only in year 2005 with Star health that a dedicated health insurance company came in India. It was followed with Apollo DKV now known as Apollo Munich and now Max Bupa which has launched in March.

foreign health insurance companies are coming to India

There are more coming!

Max Bupa health insurance Company which is launched in March 2010 is a tie-up between Max health care and UK based Bupa. There is news that there will more 3-4 more pure health insurance companies that will come in the next few months. Most of these companies are international insurance

companies with a tie up with a company in India. Among these there is Discovery of South Africa and Cigna and Aetna of United States who are in talks with Religare for a tie-up. Some other international giants have also expressed their interest to form a joint venture with Axis Bank which is India’s third largest money lender.

What’s bringing them here?

population in india

K S Sankar of Medimanage Insurance Broking Private Ltd says, “The primary reason is the largeness of the market with low insurance penetration.” What with a middle class of about 300 million people and growing, and only about 10 % of Indian population covered in health insurance that leaves around a potential market of 270 million people. Sudhir Sarnobat, Founder of Medimanage agrees with Sankar and says it is the growing number of people who can afford health insurance which is driving this trend.

Just a look at the numbers tells the whole story, health insurance premiums amounted 66.25 billion rupees in 2009 from 32.09 billion rupees just two years back, it is more than 50% hike in just two years.

K S Sankar also points out that the health infrastructure in India, though unregulated is better than other economies in the world. He also gives other factors that make investing in India a good idea for foreign companies like better regulated insurance environment, lower capital investment requirement, smoother and relatively less corrupt processes with a population that is young hence a good risk and the factor that health insurance in India means only hospitalization costs that drop the overall costs considerably.

Mr. Sarnobat also sees an improvement in the industry that will interest the foreign players, “The premium rates are hardening which can provide a sound profitable business model for health insurance companies in next 3-5 years. These companies can bring in innovation in product structuring which is lacking in India and thus the heightened interest by foreign players.”

What will it mean for us?

Sudhir answers this question in two words, “Innovative products and better service.” K S Sankar feels that since these companies will solely concentrate on the health sector, their in-depth knowledge of health will help us. He says, “Their knowledge will initially make their processes more customer friendly and in the long run, rein in the health service providers from the perspective of cost standardization and right pricing of health services – not by sheer force of volumes but through more scientific benchmarking”.

Mahavir Chopra, founder of online health insurance broking in India, says "Customer will be spoilt for choice. The flip-side is there are chances he will get overwhelmed and confused. Brokers have an opportunity here. Look at a parallel of the now highly competitive cellular mobile service market, its pretty difficult to know which company or plan is good. Even though there is innovation, lack of any IPR on the innovation, results in the new service being copied by other companies in a couple days of the launch. Cellular service is almost a commodity."

Pashupati Davella, Insurance IT entreprenuer says, " Foreign players will bring process innovations so that the client can take treatment wherever he or she is, with minimum hassles. Also, because of greater integration between hospitals and insurers and reduced fraud, the cost of buying Health Insurance products go down and we may get long term care products, lifelong cover and features which are customer friendly like portability."

Currently in India, there is no standardization of health care cost, one procedure may cost Rs. 20,000 in one hospital and may cost over Rs. 50,000 in other. Mr. Sankar hopes that the ‘health only’ insurers will bring to the table independently validated bench marks.

Will they survive?

profits for health insurance companies

The scenario though seems to be very bright seeing the growth in premium, the reality is that health insurance is a loss making industry, the claim rate is about 120-150%. The underwriting losses of United India increased from 541 Crore last year to 880 Crore this year, a whopping growth of 63%. The reason why most of health insurance companies are still showing profits is that they have a life insurance subsidiary that is making money or if they have invested in the market.

K S Sankar also believes that it is the non-health insurance activities that will keep them running. He says of the purely health insurance companies in India; Star Health has been successful because it is sponsored by the government in some states. He points out that of Max Bupa, Max is already into Life and Bupa is primarily a service provider for international insurances and this combination again will have synergies to sustain them. “It is not without reasons that they did not rush in (before) but are coming in only now. All these players are using these models for immediate sustenance hoping right pricing of health insurance in India will happen sooner than later.”

Sudhir Sarnobat also feels that things will become better now, he thinks that as the premium rates are hardening, there is possibility of creation of innovative products in retail spectrum which can provide profits. He says “Till last year, the retail Health Insurance portfolio of all insurance companies was profitable hence, this business, if done properly, can provide profits.”

Last words

Having more dedicated health insurance companies in India means more good news than bad news to us- the end users, it means more choice, better service and better products and innovations in the field. “The more the merrier” says the Indian middle class customer, for sure!

Soy has been hailed as a good source of protein and as a replacement for dairy products. Soy is also recommended to be a part of post menopusal women's diet. But recent research tells a different story about Soy altogether. It has been linked to a number of health problems. Here is the whole story.

Dr. Kaayla T. Daniels, renowned nutritionist and PhD, believes that with the majority of today’s highly processed and genetically modified soy products, people of all ages are experiencing a myriad of health problems.

  Here are five reasons why soy may not be as healthy as we’re told:

  • Estrogen Issues: Soy has naturally occurring plant estrogens that are not identical to human estrogens, but close enough to fool the body. These estrogens cause a myriad of health problems in people and are potentially linked to early onset puberty, thyroid problems, infertility, as well as many other side effects, depending on the person.
  • Pesticides/Contamination: Since WWII, the processing methods of the soybean have involved extremely high temperature and high-pressure extrusion of the soy protein using hexane solvents and other industrial methods, which are very dangerous for the environment. The average vegetable is sprayed with pesticides/herbicides/fungicides on average 10 times! A very large percentage of soy is genetically modified (GMO) and also has one of the highest percentages of contamination by pesticides of any of our foods.

To read more, click here

lisa ray cancer

The dreaded disease can no longer just be shushed into silence. It is increasing been written and talked about, take Lisa Ray for example who suffered from Cancer of white blood cells who actively blogged and tweeted about it, even posting bald pictures of herself !

It is important that we become more about this disease because number of people suffering from cancer is predicted to reach epic proportions. Currently there are 30 lakh people suffering from cancer today, by 2020, WHO predicts that this number is going to triple and then grow at the rate of 20% each year, double that of our GDP, if you notice.

Here is why you must take note of cancer,

  • Pollution, sedentary lifestyle, unhealthy diet and irregular habits and stress increase the risk.
  • Early detection can lead to recovery (Lisa ray had a  blood cell transplant is much better today)
  • It affects people of all age. Incidents in young Indians are increasing.
  • Cancer treatment is expensive and can severly affect the finances of your family

To read more about the India’s Cancer epidemic, read this article in TOI Crest, http://bit.ly/9zTQq3

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!





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