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Health Insurance Scenario in India- Issues and Concerns KGPL Ramadevi Deputy Director IRDA : Hyderabad

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STRUCTURE STRUCTURE I.Introduction II.Milestones: Laws & Regulations III.A decade after opening up of Market IV.Issues and Concerns I.External Constraints II.Internal Hazards V.Pathways to the Future VI.Conclusion

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INTRODUCTION Complex Insurable characteristics : Health Insurance Property Loss exposure (Fire) Health Loss exposure Pure RiskYes FortuitousYesDepends on the cause of loss/ to certain extent Definite and measurableYesDepends on the cause of loss Large number of similar exposure units Yes Independent and not catastrophicYesYes. To certain extent Premiums are economically feasibleyesUsually

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Benefits Of Health Insurance Pay for SUDDEN losses Manage CASHFLOW Uncertainty Efficient use of INSUREDS RESOURCES Better PURCHASING Power Reduce social BURDEN Increase LIFE SPAN and Improve QUALTIY OF LIFE

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MILE STONES: Legal aspects of Health insurance Formation of IRDA. Priority in Registration: giving special thrust to health insurance under Sec. 2AA of the Insurance Act, 1938 that at the time of registration to carry on life insurance or general insurance business, it shall give preference on an application if it agrees to provide health cover to individuals or groups of individuals. 2000- Defined health insurance business or health cover under Reg. 2(f) of IRDA (Registration of Insurance Companies) Regulations 2000. Other relevant regulations: IRDA Third Party Administrators- Health Services Regulations, 2001 IRDA Protection of policyholders interests, 2002 IRDA Advertisements and Disclosures Regulations, 2002 IRDA (Micro Insurance) Regulations Constitution of various Groups/Sub-groups & their recommendations

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RECOMMENDATIONS OF SUB-COMMITTEES Sub-group on Health Insurance Data 1. Collection of existing data 2. Collection of future data in standardized formats 3. Training of personnel in ICD 10 coding Sub-group on Product Innovation & definition of pre-existing disease 1.Innovations in the product development 2.Distinction made between pre-existing disease and condition and common definitions recommended Sub-group on registration of stand-alone Health Insurers 1.Reduction in the Capital 2.Besides health, it was recommended that companies be allowed to write Personal Accident and Travel Insurance Sub-group on Health Insurance products for Rural sector 1.Inclusion of OPD and preventive care Various Working Groups on Health Insurance with stakeholders and industry bodies like CII, FICCI 1.Standardization of formats, definitions, procedures.

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A DECADE AFTER OPENING OF INSURANCE SECTOR Before YEAR 2000 Only 4 General insurers 1 Life insurer Only one mediclaim and a few CI riders After YEAR 2000 16 more general insurance companies 3 stand alone health insurers TPAs as Service providers Cashless facility across spectrum Innovative products Hospital cash Critical illness Top UP Comprehensive covers both on indemnity and benefit based

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A DECADE AFTER OPENING OF INSURANCE SECTOR (Cont) File and Use guidelines Group insurance and Advertisement guidelines Standardizing PED definition Standardizing policy definition & forms Circulars on renewability Circular on Senior citizens Circular on Free look period Circular on Portability

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DECADE OF BUSINESS GROWTH

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CURRENT STATUS- 2011

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CHANNEL-WISE PERFORMANCE 2011

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HEALTH INSURANCE IN THE LIBERALISED MARKET Growth in Health Insurance premium Product Development Customer Service Market share

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SOME ISSUES OF CONCERN Risk Pooling: Law of large numbers, Critical mass shall be available for sharing of losses Health care providers : No regulations Adverse selection vs risk selection IIB reports on Cashless facility utilisation Moral hazard versus induced demand Deductible & co-payment reduce to some extent Morale hazard The claim amounts are the cumulative savings of the policyholders and shall not be mis-utilised.

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EXTERNAL CONSTRAINTS FACED IN SPREAD OF HEALTH INSURANCE Adverse Selection Growing number of litigations Rising costs of Claims Unregulated health care providers Fragmented Insurance measures Changes in Government policy

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Internal Hazards of Health Insurance Responsible role of Intermediary Poor Underwriting norms Violation of the group insurance norms Challenges for Servicing High Risk groups Lack of spread, support & know-how for covering OPD & general/chronic illness Uncontrollable costs Legal & Regulatory changes raising expectations and costs of insurance Proper Products design and delivery of services

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DESIGN & STRUCTURE OF HEALTH INSURANCE PRODUCTS INFORMATION SYMMETRY: PROSPECTUS VS PROPOSAL POLICY DOCUMENT (PROMISE) DEFINITIONS (Meanings limiting/expanding cover) SCOPE OF COVER (Circumstances of payment) CONDITIONS (Steps needed to enforce the policy) EXCLUSIONS (Limitations) PRICING UNDERWRITING GUIDELINES CLAIM DOCUMENTS CERTIFICATIONS UNDER FILE & USE

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PORTABILITY What is Portability Option given to policyholder to switch from one insurer to another with continuing credits. What is the credit and How it helps? Standard Health insurance excludes PEDs upto certain waiting periods. Under portability, the existing credits of PEDs can be continued even when there is a switch over from one insurer to another. Is it guaranteed renewal? The policyholder must apply well in advance and the insurer must respond within the stipulated time period Whether premium remains the same? It may vary depending on the plan of the incumbent insurer

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THE PATHWAY TO FUTURE Winning the trust of policyholders Controlling unethical practices Efficient & Quick service Dynamic responsibility of regulator Role of Councils Rights & responsibilities of policyholder Role of Government 7.

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CONCLUSION Providing health insurance to more than billion population is only possible if all stakeholders come together. Act in a prudent and responsible manner so that there can be a gamut of possible solutions for health care financing viz. Govt. sponsored social insurance schemes for not so good risks Employee sponsored schemes as social security Voluntary Group Schemes for communities Individual insurance schemes on equitable principles By way of innovative Schemes for long term managed care Maintaining the financial health of insurers Protecting the interests of policyholders Growth of the industry with healthy competition & proper market conduct

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Thank You