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In the past few years, the growth in business and associated competition has resulted in an urgency amongst Insurance companies to ambitiously build large revenue, scale their distribution network, branch network and hence their operations. Quick scaling has its own disadvantages. Urgency of building a "quick" team has resulted in huge holes in the operations and responsiveness process with Insurance Companies. Google "Insurance Complaints India" and you will see that the pages wont end.

In addition to the existing Grievance Mechanism in Insurance Companies and the Ombudsman, IRDA has been continously working on creating a convenient infrastructure for Insurance Consumers to make complaints. In addition to the launch of the Grievance Call Centre (Phone no. 155255) almost a year back, with an email facility also (complaints@irda.gov.in), IRDA launched the Online Grievance Management portal - IGMS (Integrated Grievance Management System). This allows Insurance Buyers/Customers to complaint against Insurance Service Providers over the internet.

Ofcourse every Complaint that you make to IRDA through any of the medium provide, requires you to first lodge a complaint with the Grievance Cell of the Insurance Company.

Here's the Press Release from IRDA: http://www.irda.gov.in/ADMINCMS/cms/frmGeneral_Layout.aspx?page=PageNo1261&flag=1


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

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

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

Maximum Entry Age

65 Years. 75 years for Parents

Who can be covered? 

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

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

What are the Benefits?

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

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

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

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

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

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

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

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

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

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

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

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

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

Important Points to know before you sign up:

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

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

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

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

- Pre-Existing Ailments are excluded for life.

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

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

Final Take:

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

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

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

An open letter from a Health Insurance Customer

Dear Insurance Company,

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

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

Health Insurance Advisor India

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

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

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

I moved on.

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

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

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

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

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

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

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

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

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

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

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

Would love to hear an answer. Can you help?



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

We are observing a fast growing interest from Small and Medium Businesses/Enterprises for Group Health Insurance. Group Health Insurance in India has gradually become a benchmark benefit as well as a retention tool for every employer.

Here are some basic Do's and Don'ts created from our experience in managing Group Health Insurance for SMEs:

1.       Take a minimum 2 Lakh cover for employees:

Most policies now have a Room Rent limit of 1% and 2% for General and ICU Claims. In major cities, shared rooms in decent hospitals (and sometimes not decent ones too), cost anywhere close to Rs. 2000/-. A cover above Rs. 2 Lakhs will ensure your employees get a good room and enjoy the benefits.  The entire perception of providing benefits would change, if the employee would be required to pay half of the room rent from his own pocket.

2.       Linking of other expenses to the Room Rent:

Hospitals charge various expenses, like Surgery Costs, Doctor Consultations differentially according to the room the patient has selected. For instance, the doctor consultation fee for the same doctor is higher (mostly proportionate) to the kind of room you have booked. So, a Doctor consultation can cost Rs. 500 for a shared room and Rs. 1000 for a Private AC Room.  

Insurance Companies could cap such expenses with the room rent. So when you upgrade your room from a shared room which costs 1% of the Sum Insured, to a Private room which say costs 2%, the general impression is that only the difference between the room rent costs would be required to be paid from our pockets. Note, some insurance companies or policies limit their expenses to the proportion of room rent limit. In the given example, the limit could be restricted to 50% of such expenses. This could be a major blow to the insured/patient’s wallet.  

3.       Take abundant care before covering Parents:

“That’s mean!” one of our clients said, when we asked them to drop parents cover from the group cover.  The problem is yes, we do play mean (the geometric one) between the Insurance Company and the Insurance Client. Parents cover is not sustainable in the long run, since it has proven to be hugely loss making for the Insurance Company.  

If you must cover parents, the other options would be:

- Get the Employees to pay for it. [OR]

- Put a minimum co-pay of 30% on the claims from Parents.

4.       Opt for Photo-less cards:

Photo Cards maybe more attractive for you and your team, but the mess that it can create is unimaginable.  Having photo-less cards, ensures the right person gets the right card, on time, every time.

5.       Maintain Sufficient CD Balance:

In most SMEs (and in many large companies too), list of Additions & Deletions are provided once a month. In true benefit, the new recruits need to be covered from their date of joining. A sufficient premium balance, to debit and cover the new recruits should be available with the Insurer on that date of joining.  This will also take care of any claims on hospitalization that may occur between the periods.

6.       Pro-rata V/s Short Period Additions:

Unless specifically waived, some insurance companies (notably ICICI Lombard) calculate additions and deletions for SME accounts based on Short Period premium. The premium that gets debited at short premium method is much higher than the standard pro-rata method of debiting/crediting proportionate premium.  Get the short period calculation waived in favor of pro-rata.

7.       Insist on Printed, Signed and Stamped Policy Wordings:

Many offices of Govt. Insurance Companies in particular do not provide printed, signed and stamped policy wordings.  Insist on the same. Take an hour out and read it carefully.

8.       Know Time bound Claim Procedures:

In a bid to control claims, Insurance Companies, particularly the Govt. Insurance Companies have reinforced and tightened claims procedures, since June 2010. Claims are rejected on not meeting the claims procedures related to intimation and submission of the claims. Get a detailed download of claims procedures, particularly the time bound ones.

9.       Insist on Claim Reports. Keep a tab on them:

Ensure you get regular reports on claims from your Insurance Company or Health Insurance Consultant/Broker. Analysis always helps.  Understand the claims in detail, and if necessary explore tweaking the policy conditions to control the subsequent year’s claims. You need to manage your claims and balance the benefits to avoid abuse/misuse – this will help you keep your health insurance costs in control.

10.   Employing an expert does not cost you:

Employing a specialized Health Insurance Broker is very smart. It does not cost you as they are paid brokerage by the Insurance Company selected by you. On the other hand, it pays to have a good Health Insurance Broker, as they can help you:

-          Structure/restructure your employee health insurance scheme, making it more long term, without hurting the core benefits. 

-          Help you understand policy benefits, conditions and procedures.

-          Take away the pain of administering the policy, adding/deleting members.

-          Keep you updated on changes in procedures/policies. Help you manage the change.  

-          Educate & Assist your employees on Claims settlement – both cashless & reimbursement.


Medimanage is the only Dedicated Health Insurance Broker in India. It provides expert advisory, end to end processing and administration of the policy round the year, and professional claims assistance, including cashless claims coordination to Fortune 500 companies and home grown corporate giants since 2005. Know more about Medimanage.

-          Medimanage, itself being an SME, recently opened up a dedicated cell to provide its services to SMEs. Here's a brief presentation of the services. Group Health Insurance for SMEs

-          Fill in the the inquiry form for a customized quote.

The Indian spirit of enterprise has been celebrated across the world. India is home to the one of the largest Small & Medium Enterprises (SMEs), with an estimated 35 million enterprises, constituting 80% of the total number of industrial enterprises.

Entrepreneurs and Key executives running SMEs compete with larger companies to attract and retain talent are under great pressure to benchmark remuneration and benefits, including Group Health Insurance Benefits.

On the other hand, Health Insurance has become a necessity. With the healthcare inflation skyrocketing, it’s going to become increasingly difficult for employees to take the risk of wiping off their complete savings or worse get into debt for paying the hospital bills. Entrepreneurs can balance the financial risk by benchmarking employee benefits at the same time help encourage financial coverage and prudence.

So how do you go about it?

Insurance is all about pricing the probability of risk. Insurance Companies buy risk by foreseeing a smaller loss (claims) than the premium.

Group policies being less restrictive, the smaller the group the higher the probability of claims, hence smaller groups have more expensive per unit premiums. For example if an Insurance Company covers a group of 10 employees for say Rs.40000 per year, and does not have any waiting period for ailments. Given the high costs of healthcare today, just one accident or hospitalization can wipe out the premium paid.

If in the long term, an enterprise wants to get a good product and service – like any other vendor, it has to ensure that the Insurance Company makes money out of the product/service. 

Many large companies are paying the price for ignoring at the viability of the coverage. Premiums for most of the large companies in the last couple of years have grown by close to 50%.

SMEs could also fall in the same trap, and lose long term predictability of their employee benefits costs. Here are some basic level recommendations on the approach one should take when looking for a Group Health Insurance program for employees.

1.       Employee size of less than 20.

A Group plan is not recommended for such a firm or organization.

A better way to handle this is to sponsor the personal policies of your employees. Create premium limits like other employee benefits and encourage the employee to buy his, own personal health insurance.

By giving a fixed amount, you are giving flexibility to the employee to get a policy that he needs, at the same time the liability of the enterprise is fixed.

Though a 10% increase in limit is recommended, it still is a more predictable cost than a group plan. The personal policy being owned individually by the employee does not bind him with the organization. It’s more of a welfare tool, than a retention one.

Though it would depend upon company to company, A Limit of Rs.5000 per employee for ground staff and Rs.8000 limit for senior employees should suffice.


The organization should help identify a specialist health insurance firm which can give good advice and service (including claims assistance) to the employees.

Market: Currently no group plans are available for such organizations.

2.       Employee size of 21-50

Though Group Mediclaim Plans are available for such enterprises, it is very important to understand the long term impacts and structure them well. Everyone would agree that it is very convenient to launch a new employee benefit program, but, it is very difficult to withdraw or curtail one.  

For organizations, where the health insurance plan was not structured well, Health Insurance costs have spiraled by more than 50%

Some tips:

1.       Try to attempt, if you can convince the team about sponsoring the purchase of their personal insurance, similar to the less than 20 employees companies. It makes great sense. The point you need to sell is that they own the policy and can carry forward across their entire lives, unlike the group policies offered by large companies, but are not portable to be renewed independently.

2.       If point 1 does not work out, structure the plan very carefully. Employ restrictions and exclusions wherever necessary. For example, you shouldn’t provide a pre-existing, parent’s cover or maternity cover under such a small group else, your premiums would rocket every year by a minimum of 30%.  Since group plans being tailor-made, employing an expert in this field can help you understand how the structuring can happen, and have a clear tab on your future costs.

Market: Plans available with Apollo Munich, Star, Bharti etc. are available

 3.       Employee size of 51 to 100

Group Mediclaim Policies could be provided here, but again, these should be structured for the long term.  Such policies should not cover parents and maternity benefits. In companies of this size, an intermediary who is an expert in advising a tailor made program as well as more importantly managing claims and their grievances, is pertinent. The HR or Administration department of such companies is generally managed by one or 2 staff. It would be very difficult for such a department to handle enrollments into the program and claim. A specialized health insurance expert, who manages claims, could be ideal.

Market: Plans available with ICICI Lombard, Apollo Munich, Star etc. are available

Other Important tips:

1. Unlike Group Health Insurance which is a benefit, Group Personal Accident is a must for enterprise of every size. Enterprises are at risk of liability financially and morally for any employee who is disabled or loses his life while travelling for work. Thankfully in India, Personal Accident Insurance premiums are the cheapest globally. A Rs. 5 Lakh cover for one employee will cost around Rs. 700 annually.

2. Always, identify a good advisor (preferably an Insurance Broker) with demonstrated experience in Health Insurance Advisory and Health Insurance Claims. As the no. of insurance companies and products increase, there would be more benefits, conditions and procedures – a good consultant would more than pay for his costs.

2. When you are buying a Group Insurance for less than 200 employees, be open for restrictions, which are fair and help containing unnecessary expenditure. For instance, Room Rent Limits applied (Limits on per day costs of Room Rent) are good. It has been observed that employees start taking more luxurious rooms when there is no limit. Few would know that a change in the room increases the cost of all expenses incurred. A Doctor visiting you is charged differentially in different rooms.

3. Remember you can add/delete employees by paying/getting credit of proportionate premium for the remaining year.  

4. Keep a tab on the claims, and try to understand them. This will help you understand the economics of Health Insurance better, tailor a better program, and negotiate a better deal next year


Medimanage is the only Dedicated Health Insurance Broker in India. It provides expert advisory, end to end processing and administration of the policy round the year, and professional claims assistance, including cashless claims coordination to Fortune 500 companies and home grown corporate giants since 2005. Know more about Medimanage.

Medimanage, itself being an SME, recently opened up a dedicated cell to provide its services to SMEs. Here's a brief presentation of the services. Group Health Insurance for SMEs

FIll in the the inquiry form for a customized quote.


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.

New India Assurance Launches premium Mediclaim product

MUMBAI: Leading state-run general insurer New India Assurance Company today said it will soon launch a new premium Mediclaim product as a part of its efforts to resolve the issue over the cashless health cover, which the state-run players had discontinued early July alleging inflated billing by hospitals.

The move is also aimed at bringing corporate hospitals under its fold, Ramadoss said, adding it is adding three Delhi-based leading corporate hospitals-Gangaram, Max and Medicity to its empanelled list of hospitals for this scheme.

The IRDA Chairman's remarks came a day after the Delhi High Court asked the insurance regulator to sort out the imbroglio over the cashless facility to policyholders in major hospitals across the country. The regulator, however, held the view that it could do nothing in this regard.

"We have long moved away from the administered price regime and it is for the market forces to determine the price of their products," Narayan further said, adding there might be co-payees or higher premium products for these five-star hospitals, which the insurers should decide.

Clarifying on the PSU insurers' recent decision to discontinue cashless policies, Ramadoss said, the company was never against cashless claims but wanted some clarity on the tariffs being charged by most of the hospitals empanelled, which the insurance industry felt were inflated.

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Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:  

Sudhir Sarnobat from Medimanage.com

Though the idea may sound promoting the Free Market regime, there is inherent flaw in the thought process.    

  • In India, when the insurance is still not reached to masses, we are already jumping to provide benefit for Class. This way, we are also promoting the thought of luxury lifestyle in healthcare when thousands of people do not have basic access to healthcare.


  • How an ordinary person will know when he will need treatment at “Premium Corporate Hospital” hospital? The basic mistake is in classifying these hospitals as “Big Corporate Hospital”. They are tertiary care hospitals & are competent to handle complex cases. A person cannot predict when s/he will have disease that can be treated only at such hospitals. Then how such person will decide in life whether to buy such product or not.

The insurers should classify the ailments as primary, secondary & tertiary care and then accredit the hospitals on same basis. Then insurer could define the rates at such hospitals & ensure that quality treatment is made available at such hospitals for given price. If the customer still wishes to go to Tertiary care hospital (as per insurers, Big Hospital), s/he can do so but should be paid only the amount that one would spend at secondary or primary care hospital.

Mahavir Chopra:

Mahavir Chopra from Medimanage.com

I agree with Sudhir.

When does a common man like you and me take decision of going to a Corporate Large Hospital. It’s in most cases when the case is complex or an emergency. Like Purandar once said, If someone suffers from a stroke he needs to be taken to a place where an MRI can be carried out. He cannot avoid going to a large hospital just because his policy does not cover this hospital.

The mass population does not look at going to a large hospital for small surgeries like a cataract of a hernia operation, he/she would go to a local nursing home through reference of his/her general physician. What is being done here is penalizing everyone for some people with hideous intentions to misuse the insurance for cashing the best out of the coverage. More scientific caps/limits to common treatments would help in getting control over such claims. In addition to room rent limits which already brings in some amount of control, the associated costs increase due to higher room rent should be brought under capping under the policy wordings.

TPAs plan to double the service charges

Come October 1 and third party administrators (TPA) that service health insurance claims will double the service charges they claim from non-life insurance companies. This may lead to a hike in health insurance premiums if insurers choose to pass it on to consumers.

At present, TPA charges 5.25 per cent of the premium paid by policyholders as service fee. This is the amount insurance companies are charged for processing health claims, storage of data, issuing pre-authorization for cashless hospitalisation and checking fraudulent claims.

“We will be asking public sector insurers to double service charges from 5 per cent to 10 per cent of the premium, as we will be out of business once public sector non-life insurance companies launch their own TPA. Since we are paid on a quarterly basis, in case the insurers refuse to pay, we will stop servicing new policies from January 1,” said the chief executive officer of a leading TPA who attended the EGM.

SK Mahapatra, a spokes­person for the TPA association, confirmed the development.

TPAs have also sought a meeting with the Insurance Regulatory and Development Authority (Irda) to present a comprehensive report, containing proof and details of wrong underwriting practices used by the public sector insurers, which are causing them losses in the health business. Similar facts were highlighted in a recent report of the Comptroller Auditor General (CAG) of India as well.

“The report will contain names of 200 companies which were charged lower premium on renewals despite bringing huge claims in the previous years. The report will also show employees of insurance companies have been consciously selling health policies to sick people. We will submit this report to the government and the media as well,” said a CEO of a TPA.

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Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

TPAs are asking for hike in fees because they are expecting a loss in revenue when all four PSU insurers would come out with their own TPA. This cannot be the reason for fee hike. They should justify the value brought in OR should bring forward the components of various costs incurred by them and show the deficit between value/cost versus remuneration received by them. Loss in business or insurer’s faulty underwriting cannot be the basis for hike in fee percentage.

We are surprised to know that TPAs are making these comments & bringing out issues of wrong underwriting prctices only now when their existence is questioned. This shows that despite of being custodian of insurance company’s claims money (which means outflow), they did not share these concerns then & adopted an attitude of appeasement of insurers. TPAs should introspect & check what has brought them to this position. They will find that their own disregard for insurer’s interest & sloppy claims processing are major reasons why they are being blamed for overall mess in health insurance field.

Hospitals in Mumbai against insurers

Healthcare providers in Mumbai formed a core committee on Friday to deal with the controversial preferred provider network (PPN) programme unilaterally introduced by public sector general insurance companies under the cashless mediclaim facility.

 “The rate for a procedure of cataract is about Rs24,000 under the PPN,” said Dr Sujata Rao, president of the AMC. Thus the maximum reimbursement that a hospital can claim for a cataract procedure would be Rs24,000. “This is not acceptable as only the lens used in the procedure costs that much.”

Because of this discrepancy, 75 of the 120 hospitals withdrew from PPN. “However, the insurance companies are not reporting this,” added Rao. According to Dr Nayan Shah of Paramount Health Services, about 25-30% of a hospital’s occupancy consisted of insurance patients, and hence the insurance companies would soon have to design an array of programmes to address their concerns.

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Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

The hospitals have come to defend their rights however; they also need to bring in discipline among their members who exploit the insurance system. Its fact that hospitals have been charging differential tariff & exploiting the facility meant for common good. While fighting for rights, they also need to build a code of conduct & suggest reprimands for incorrect behaviour. Else, it will become a typical trade unionist approach where power of group is used to extract benefits where ultimately the consumers bear the brunt.

Hospitals, proactively, should build & forward the categorisation criterion (they know healthcare the best & can comment on classification themselves) & ask TPAs to follow that. This kind of self-regulation will help the healthcare industry which is currently not regulated by anybody.

Purandar Bhavani from Medimanage.com

All kinds of news are currently floating in the media and the industry regarding the Cashless Mediclaim. After PSU Insurance Companies taking a stand to stop Cashless at some high ended hospitals in top cities, as a reverse salvo Hospitals in Mumbai have united against Insurance companies and decided to refuse cashless hospitalization.

There is always a danger of adverse reactions against unilateral decisions. A PPN can be successful only if it is a buyer’s market. Else there has to be a genuine consensus between the carriers and the providers. Here are some facts to get a perspective:

  • Currently India has beds to population ratio of 0.9 : 1000. The recommended WHO beds to population ratio is 3 : 1000 and in India, the recommended ratio is 2 : 1000. This deficit is over 50%. Critical care beds are generally 20% of the total beds. In India apart from the new breed hospitals most centers have up to 10-13% so one can imagine the paucity of critical and life saving beds in India.
  • Insurance penetration is mostly in the urban and semi urban sector and among the middle class and above population.

  • Internationally, in the USA the current government is looking at 85 cents per dollar claim out go. Brazil, an economy similar to ours also has a similar outgo. In comparison, Indian health insurance claims are about 130%.
  • All the beds are not equitable. A general ward in a government hospital is crammed beyond capacity and sometimes over 1 one patient per bed. The nurse to patient ratio is probably 1 nurse for 15 patients. As opposed to this the private hospitals have a better nurse to patient ratio and super-specialty hospitals have close to 3 nurses per patient.
  • In the absence of a concerted governance mechanism, all the players (Carriers, TPAs and Providers) are pulling in their own direction stretching this social measure to break point.


  • India is clearly not a buyer’s market and the healthcare providers will continue to dictate the price at least for some time.
  • Insurance companies are here to making profits albeit marginal on this portfolio, but certainly losses are not acceptable.
  • With over 80% of the paid claims being for private hospitals, the preference of the customer is very obvious. This is a reality and hence a consensus most desired. One of the methods to do this is the RBRVS. This is the Resource Based Relative Value System. Giving a layman perspective, in this system, the pricing is done based on the resources used for a particular procedure. The insurer could identify a hospital well know for quality and ethics as the bench mark. In tandem with this hospital, the insurer could identify various procedures, the complexities involved, the resources utilized and the costing. This should cover the entire spectrum of hospitalization. Once this is done a tariff card can be brought out. This tariff is a relative value and will change with the type of hospital and the region.
  • A strong governance mechanism should be put in place (this is the responsibility of the health ministry) to ensure that at the end of the day the average citizen is not taken for a ride.
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