HEALTH INSURANCE: “IDENTIFYING AWARENESS …
Transcript of HEALTH INSURANCE: “IDENTIFYING AWARENESS …
HEALTH INSURANCE: “IDENTIFYING AWARENESS PREFERANCES, AND BUYING PATTERN IN MUMBAI.”
Dissertation Submitted to the
Padmashree Dr. D.Y.Patil University Department of Business Management
In partial fulfilment of the requirement for the award of
The Degree of
MASTER IN PHILOSOPHY (BUSINESS MANAGEMENT)
Submitted by:
MISS. SWATI DATTATRAY KEDARE ENROLLMENT NO: DYP M.PHIL- 106110021
Research Guide:
DR. R. GOPAL
DIRECTOR & HEAD OF THE DEPARTMENT
Padmashree DR. D.Y. Patil University
Department of Business Management
CBD Belapur, Navi Mumbai400614
November 2012
HEALTH INSURANCE: “IDENTIFYING AWARENESS
PREFERANCES AND BUYING PATTERN IN MUMBAI.”
DECLARATION
I herby declare that the dissertation” HEALTH INSURANCE: “IDENTIFYING
AWARENESS PREFERANCES, AND BUYING PATTERN IN MUMBAI.” submitted
for the Degree of Master in Philosophy (Business Management) at Padmashree Dr.
D.Y. Patil University’s Department Of Business Management is my original work
and the dissertation has not formed the basis for the award of any degree,
associate ship, fellowship or any other similar titles.
Place : Mumbai Signature of the Student
Date : SWATI DATTATRAY KEDARE
CERTIFICATE
This is to certify that the dissertation entitled “HEALTH INSURANCE:
“IDENTIFYING AWARENESS PREFERANCES AND BUYING PATTERN IN
MUMBAI. is the bonafide research work carried out by Ms. Swati D. Kedare,
student of Master in Philosophy (Business Management), at Padmashree Dr. D.Y.
Patil University’s Department Of Business Management during the year 2011-2012,
in partial fulfilment of the requirements for the award of the Degree of Master in
Philosophy (BUSINESS MANAGEMENT) and that the dissertation has not
formed the basis for the award previously of any degree, diploma, associate
ship, fellowship or any other similar title.
Place: Mumbai Dr.R Gopal Date: Director
Padmashree Dr.D.Y.Patil
University, Navi Mumbai
Department Of Business Management
ACKNOWLEDGMENTS
Written words have an unfortunate tendency to convert genuine gratitude into stilted
formality. However, I feel this is the best way to express my appreciation for
everyone concerned.
Working on this project on has been an incredible experience for me. For this very
wonderful experience I would like to thank a lot of people without whose co-operation
and support working on this project would not have been so pleasurable and
interesting.
Firstly, I would like to thanks the University Padmashree Dr. D Y Patil Department of
Business Management which has accepted me for M.Phil program and I feel great
pride and pleasure in putting on record a deep sense of gratitude Dr.R.GOPAL,
Director, Department Of Business Management, During my research If it was not his
encouragement and support, this project would never have been possible. I would
have been deprived of a vast treasure of knowledge.
These acknowledgements are one way where I can say actually thanks to my family
and friends who have supported me in the making of this project. Without their help
and guidance it would be a very difficult task for me to try and plan this project and
actually prepare it.
I would sincerely like to thank customers and employees of various Health Insurance
Companies for giving me some of their valuable time from their busy schedule to
answer my queries regarding the project.
Place: Navi Mumbai Signature of Student
Date: SWATI D. KEDARE
TABLE OF CONTENTS
CHAPTER NO. PARTICULERS PAGE NO.
List of Tables List of Figures List of Abbreviations Executive Summary
viii ix x 1
1 INTRODUCTION
7
2 Review Of Literature
17
3 Objective of The Study, Research Methodology
25
4 HEALTH INSURANCE
30
4.1 Meaning of Health Insurance
31
4.2 Background of Health insurance
33
4.3 Features Of Health Insurance
40
4.4 Main Function of Health Insurance
44
4.5 Importance
45
4.6 Types Of Health Insurance
48
4.7 Essential Guidelines Availing Health Insurance Policy
51
5 HEALTH INSURANCE IN INDIA
53
5.1 Main Health Insurance Plans In India
54
5.2 Current Status of private Health Insurance
63
5.3 Awareness of Health Insurance
67
5.4 Need to Spared Health Insurance
69
6 REGULATORY FRAMEWORK
74
6.1 IRDA 75
6.2 Rules For Health Insurance Claim settlement by IRDA
77
6.3 TPA 79
6.4 Role Of TPA
80
6.5 Standard Health Insurance Model
85
6.6 Structural and Operational working Of Health Insurance
87
6.7 Claim Management
88
7 INDUSTRY TREND AND DRIVERS
94
7.1 Value Chain
95
7.2 Distribution Channel
97
7.3 Insurance Portability
99
7.4 Insurance Portability Gaps And Improvement Area In Health Insurance
109
8 HEALTH INSURANCE MARKET ANALYSIS
111
8.1 Indian Health Insurance Market
112
8.2 Growth Drivers
113
8.3 Market Drivers
118
8.4 Market Restraints Company wise Gross Direct Premium
120
8.5 Company wise Gross Direct Premium
122
8.6 Non Life Insurance Claim settlement facts-figure
124
8.7 Budget 2012
125
9 HEALTH INSURANCE ISSUES
126
9.1 Reasons For Poor Penetration Of Health Insurance
127
9.2 Major Issues In Health Insurance
130
9.3 Major Issues in Handling Of Health Insurance
132
9.4 Fraud In Health Insurance 135
10 INSURANCE GUIDELINES
139
10.1 Guidelines to meet the Need of Customers
140
10.2 SWOT Analysis
141
10.3 How to choose best Health Insurance Plan
143
11 KEY PLAYERS
145
11.1 ICICI LOMBARD
146
11.2 BAJAJ ALLIANZE
149
11.3 STAR ALLIED AND HEALTH INSURANCE
152
11.4 NEW INDIA ASSURANCE
154
11.5 OTHERS 156
11.6 Comparison of Health Insurance companies
157
12 DATA ANALYSIS AND FINDINGS 160-181
13 CONCLUSION AND RECOMMENDATION
182-187
REFERENCE SECTION
189
Annexure 1 - Reference And Bibliography 191
Annexure 2 - Questionnaire 193
Annexure 3- Articles 197
LIST OF TABLES
TABLE
NO
TOPIC PAGE
NO
4.2.1 Socio Economic Indicator 35
8.2.1 Great future of Health Insurance Industry 116
8.5.2 Company Wise Gross Direct Premium
Income In India : Non Life Insurers
122
8.6.3 Non- Life Insurance claims settlement
facts –figure
124
Viii
LIST OF FIGURES
Figure
No.
Topic Page
no.
4.6.1. Main kinds of Health Insurance 48
5.1.1 Health Insurance plans in India 54
6.4.1 Conditions defined by IRDA for TPA 84
6.5.2 Standard Health Insurance Model 85
6.6.3 Structural and operational working of health
Insurance
87
7.1.1 Value Chain 95
7.2.2 Distribution channel in India 97
8.1.1 Indian Health Market Analysis 112
8.3.2 Market drivers 118
8.4.3 Market Restraints 120
9.2.1 Major Issues in Health Insurance 130
9.3.2 Major Issues in Handling Health Insurance 132
9.4.4 Fraud in Health Insurance 136
11.6.1 Comparison of Health Insurance companies
157
ix
LIST OF ABBREVIATIONs
HI- Health Insurance
PHC - Primary Health Center.
BPL - Below Poverty Line.
OOP – Out Of Pocket.
PSU – Public Sector Undertakings.
ESIS – Employee State Insurance Scheme.
CGHS – Central Government Health Scheme.
TPA – Third Party Administrator.
HMO – Health Maintenance Organization.
PPO – Preferred Provider Organization.
POS – Point Of Service.
HSA – Health Saving Account.
SEWA – Self Employed Women’s Association.
NGO – Non Governmental Organization.
NIC – National Insurance Company.
VHS – Voluntary Health Services.
GIC – General Insurance Corporation.
IRDA – Insurance Regulatory Development Authority.
RTA – Road Traffic Accident.
PPN – Preferred Partner Network.
x
1
EXECUTIVE SUMMARY
2
EXECUTIVE SUMMARY
This Research work is totally focusing on the consumer behavior towards
different types of Health Insurance Policies, and as well as consumer‘s
awareness, Preference and consumption patterns. Also opinion about the
determinants of image of a Health Insurance in Mumbai.
As today many Health Insurance Companies are coming in the city, For
selecting sample sampling technique was used. Sample consists of all those
people who are above 18 year age in Mumbai.
This project has been made on the research on HEALTH INSURANCE:
“IDENTIFYING AWARENESS,PREFERANCES AND BUYING PATTERN IN
MUMBAI” . Purpose of this project is to identify the characteristics of different
variables which are mostly responsible for taking health insurance policy by the
people of city of Mumbai, also the main aim of research work is to find out
buying behavior of the people before purchase insurance policy and to find
out what are the factor behind it.
Health Insurance is Insurance that pays for medical expenses. It is sometimes
used more broadly to include Insurance covering disability or long term nursing
or custodial care needs. It may be provided through a governments Sponsored
social Insurance program, or from private Insurance companies. It may be
purchased on a group basis (e.g., by a firm to cover its employees) or
purchased by individual consumers. In each case, the covered groups or
individuals pay premiums or taxes to help protect themselves from high or
unexpected healthcare expenses. Similar benefits paying for medical expenses
may also be provided through social welfare programs funded by the
3
government. By estimating the overall risk of Healthcare expenses, a
routine finance structure (such as a monthly premium or annual tax) can
be developed, ensuring that money is available to pay for the healthcare
benefits specified in the insurance agreement. The benefit is administered by a
central organization such as a government agency, private business, or not for
profit entity. The most important thing which is learned from this project is how
to conduct a research on a particular problem by using different research
methodology techniques.
The health insurance market covers very smaller part of the total population
(about 10%) in India. Presently, schemes like Voluntary health insurance
schemes or Private for profit schemes; Employer-based schemes; Insurance
offered by NGOs / community based health insurance, and Mandatory health
insurance schemes or government run schemes (ESIS, CGHS) are found in
India.
The Health Insurance market in India is unique and has developed a strong
growth potential in the recent years with the entry of many foreign players in the
market. The health Insurance market in India was worth INR 5,125 crores with
a compounded annual growth rate of 37 percent between 2002 and 2008.
While the penetration of the Health Insurance market is still quite small, it is one
of the fastest growing Industries in India.
This Research analyzes this growing industry in its research report Health
Insurance Industry in India. The report analyzes the whole industry in terms of
growth rate, market segments, and the major players in the industry.
The growth will be supported by stand alone Health Insurance companies and
new players entering healthcare market with improved healthcare infrastructure
4
across the country motivating a larger section of population for better
healthcare services through various healthcare insurance policies. Currently
State owned health insurance companies constitute about 70% of the market
and the rest is occupied by private companies. However private companies are
growing fast and aims to occupy a larger hare in the Health Insurance market in
near future.
This report has attempted to discuss the vital scenario in healthcare and Health
Insurance market in India. A brief about global insurance industry in 2006,
Indian Insurance industry and Health Insurance industry overview are
discussed. Growth drivers and issues of the industry are also covered. Major
public and private players are covered in terms of their performance, products
and out look. Future outlook of the industry is also discussed. The report will be
useful for insurance companies (both Indian and global), other intermediaries
associated with the industry, industry analysts, companies aspiring to be TPAs
and students in the field of Insurance.
Since the liberalization in 2000, the Insurance industry in India has been
growing considerably driven by multiple favorable economic and demographic
factors. The Indian health insurance market grew at a CAGR of 34.00% during
the review period and is expected to grow at a CAGR of 23.51% over the
forecast period to register the fastest growth among all the Insurance sectors.
Factors such as robust economic growth, changing demographic patterns such
as the rise in ‗double income no kids‘ families, increased FDI limits and the
expansion of distribution channels are expected to contribute to the market
growth in the forecast period. Of the overall healthcare expenditure in India,
only 26% comes from the local, state and central government authorities, while
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nearly 71% is paid by the patient‘s family. Insurance accounts for just 3% of
overall healthcare expenditure in India, indicating a substantial opportunity for
the Health Insurance sector. The Health Insurance market is dominated by
public-sector companies, while the private sector has made gradual progress
in the sector.
SCOPE
This report provides a comprehensive analysis of the Health Insurance
market in India:
• It provides historical values for India‘s Health Insurance industry for the
report‘s 2007–2011 review period and forecast figures for the 2012–2016
forecast period
• It offers a detailed analysis of the key sub-segments in India‘s Health
Insurance industry, along with market forecasts until 2016.
• It covers an exhaustive list of parameters, including premium per capita,
incurred loss, loss ratio and paid claims
• It details the competitive landscape in the Indian Health Insurance industry
along with the product innovation and customer targeting strategies followed
• It analyses the various distribution channels for Health Insurance products
in India
• It profiles the top health insurance companies in India along with snapshots of
their major products and services.
Today many of the Insurance Companies not only provides Products but also
provides very good Services. There is mixture of Product and Services. The
first major competitor is ICICI Lombard Gives an attractive Products plus
Services. For example, Health Hazard ,Risk cover and many more services.
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Most of the peoples aware about ICICI Lombard company. It has been
successfully able to sustain in this competitive market. The company offer
attractive products as per expectations of the customers .Although the premium
amount is high but customers still opt this companies Insurance product. It has
created as his own brand image. Only because of quality services. In case of
New India Assurance Company the most target audience are middleclass and
lower middle class, as the companies premium amount is less than other
insurance company. In India opting for Health Insurance is secondary factor,
as they are not much aware about Health Insurance, the middle class people
always consider less premium amount which suits there budget & they are able
to pay regular premium amount. Star Health Insurance company is newly enter
in the market but in very less period this company capture most of the market
just because of there excellent services, like maximum number of hospitals
associated with this company, gives very good medical services, risk cover. As
it shows that many of the customers wants something new in the market and
many of the always welcome for the new changes. So it gives very good idea
about Awareness, want, need, preference of the customers. Insurance
company came with new service, Insurance Portability This new service helps
to increase buying pattern of customer.
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INTRODUCTION
8
CHAPTER 1
INTRODUCTION
HEALTH INSURANCE
How many accident you need to realise that you need Health Cover? It takes
just one visit to a hospital to make us realize how vulnerable we are, every
passing second. For the rich as well as poor, male as well as female and young
as well as old, being diagnosed with an illness and having the need to be
hospitalized can be a tough ordeal. Heart problems, diabetes, stroke, renal
failure, cancer – the list of lifestyle diseases just seem to get longer and more
common these days. Thankfully there are more speciality hospitals and
specialist doctors – but all that comes at a cost. The super rich can afford such
costs, but what about an average middle class person. For an illness that
requires hospitalization/ surgery, costs can easily run into five digit bills. A
Health insurance policy can cover such expenses to a large extent. Read why
Health Insurance is more important these days compared to Old days Health is
a human right, which has also been accepted in the constitution. Its
accessibility and affordability has to be insured. While the well-to-do segment of
the population both in rural & urban areas have acceptability and affordability
towards medical care, at the same time cannot be said about the people who
belong to poor segment of the society. It is well known that more than 75% of
the population utilizes private sectors for medical care unfortunately medical
care becoming costlier day by day and it has become almost out of reach of the
poor people. Today there is need for injection of substantial resources in the
health sectors to ensure affordability of medical care to all. Health insurance is
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an important option, which needs to be considered by the policy makers and
planners. As mentioned earlier, the cost of Health Insurance depends on the
sum assured , age, current health condition and your previous medical history.
Higher the sum assured, higher the premium. So what is the ideal health
insurance cover requirement? There is no standard answer or thumb rule for
this. If we agree that health insurance is important, one has to look at his/ her
own lifestyle, health condition, age/ life stage, family history of illnesses and
affordability. Keep in mind that most insurance companies limit the sum
assured to a maximum of 5 lakhs. Also note that many health insurance
policies ―provide additional benefits‖ such as daily allowance, ambulance
charges, etc. for hospitalization. Not only are such ―benefits‖ superfluous, they
tend to drive the premiums higher. So it is best to avoid such plans and stick to
something basic and simple.
Health insurance is a form of group insurance, where individuals pay premiums
or taxes in order to help protect themselves from high or unexpected healthcare
expenses. Health insurance works by estimating the overall "risk" of healthcare
expenses and developing a routine finance structure (such as a monthly
premium, or annual tax) that will ensure that money is available to pay for the
healthcare benefits specified in the insurance agreement. The healthcare
benefit is administered by a central organization, which is most often either a
government agency, or a private or not-for-profit entity operating a health plan.
The concept of health insurance was proposed in 1694 by Hugh the Elder
Chamberlen from the Peter Chamberlen family. In the late 19th century,
"accident insurance" began to be available, which operated much like modern
10
disability insurance. This payment model continued until the start of the 20th
century in some jurisdictions (like California), where all laws regulating health
insurance actually referred to disability insurance. Patients were expected to
pay all other health care costs out of their own pockets, under what is known as
the fee-for-service business model. During the middle to late 20th century,
traditional disability insurance evolved into modern health insurance programs.
Today, most comprehensive private health insurance programs cover the cost
of routine, preventive, and emergency health care procedures, and also most
prescription drugs, but this was not always the case. Insurance may be
described as a social device to reduce or eliminate risk of life and property.
Under the plan of insurance, a large number of people associate themselves by
sharing risk, attached to individual insurance plan that exclusively covers
healthcare costs and is called Health Insurance. Since the past two decades,
there has been a phenomenal surge in acceleration of healthcare costs. This
has compelled individuals to have a re-look on their actual monthly
expenditures, spending patterns and simultaneously allocate a proportion of
their income towards personal healthcare. This has resulted in individuals
availing healthcare insurance coverage not only for themselves but also for
their family members including their dependants. In short, healthcare insurance
provides a cushion against medical emergencies. The concept of insurance is
closely concerned with security. Insurance acts as a shield against risks and
unforeseen circumstances. In general, by and large, Indians are traditionally
r i s k - a v e r s e r a t h e r t h a n r i s k l o v e r s b y n a t u r e .
Some major health insurance companies in India include National Insurance
Company, New India Assurance, United India Insurance, ICICI Lombard, Tata
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AIG, Royal Sundaram, Star Allied Health Insurance, HDFC standard life,
Bajaj Allianz Apollo, AG Health Insurance Company among others.
India‘s fast growing demand for affordable health cover is attracting greater
business attention, with both life and non-life insurance companies now
entering the market with innovative new protection and savings medical
insurance products. This intense competition for health insurance customers
has only intensified in recent months, with the introduction of new savings-
linked and investment-oriented health insurance schemes by some of the
country‘s largest insurance groups.
India‘s insurance sector first opened up to private and international investors in
2001. Over the past ten years coverage rates across the populous South Asian
country have doubled and the domestic insurance industry has overtaken
several more developed financial markets in the process. The overall number
of insurance policies sold has increased several times over, and combined
premium income is now projected to reach between US$350 to US$400 billion
by 2020. Health insurance, in particular, has become as one of the country‘s
fastest growing insurance lines, accounting for almost a third of new written
premiums last year. Sales of medical insurance products have been driven by
three key factors: a low penetration rate of about 5 percent at present, surging
treatment costs, and a lack of other social safety options across most of India.
With total expenditure on healthcare, through both Indian government schemes
and private sector activity, expected to exceed US$200 billion by 2015, even
more significant opportunities for the country‘s health insurance sector will likely
emerge. Over the next three years, health insurance has the potential to
12
become an INR300 billion market (US$6 billion), according to industry
observers.
The introduction and increased proliferation of private sector players in India‘s
health insurance sector has worked to both develop innovative new coverage
products and increase service standards for clients in the domestic market. Of
particular note has been how the entrance of several major life insurance
brands, including Life Insurance Corporation of India, Aviva Life Insurance and
Max Life Insurance, has affected the market recently. These life insurers offer
largely savings-based health plans that provide lump sum compensation to
clients in case of a critical illness or other malady specifically defined by a
specific policy. These long-term products have tenures that can last up to 20
years. When the policy expires, customers are entitled to receive the fund value.
Normally this is not a cashless process as payment is reimbursed on
submission of medical bills. Most of these health insurance plans sold by life
insurance companies are unit-linked insurance products (Ulips), whereby
returns are determined by the performance of the stock market.
While life insurer health plans are tied to equity returns, medical insurance
policies sold through non-life companies tend to provide cashless
hospitalization cover for policyholders in the event of an illness or accident.
These plans, with premiums reviewed and renewed annually, also offer
customers a variety of additional value-added benefits such as hospital cash
allowance, home nursing allowance and recovery grants. Some insurance
companies offer these outpatient services as add-on covers with their
hospitalization plans, while others provide discounts through certain affiliated
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hospital networks. These products have so far proven to be the most popular in
India. Health insurance policies sold through non-life and dedicated medical
insurers currently dominate the market, accounting for roughly INR100-120
billion (US$1.9-2.3billion) of the country‘s INR150 billion (US$3 billion) health
insurance sector. It is expected that increased intra-market competition going
forward will enable successful insurers to meet the country‘s changing
healthcare needs.
Despite the positive growth indicators, India‘s health insurance market still has
many problems to contend with in order to match its true potential going
forward. The most important challenge for insurers remains the low level of
awareness concerning the value of obtaining adequate coverage as a valuable
savings and investment tool across much of the country. This problem is slowly
being addressed as more insurers develop their product and distribution
platforms to reach previously untapped regions and client bases with more
innovative and affordable coverage products, including micro insurance and
local bank.
Indian consumers already aware and enrolled in health insurance schemes, the
industry faces the continuing challenge of keeping them happy. Customer
satisfaction levels for health insurance in India have consistently ranked below
comparable levels elsewhere, with critics frequently citing the low coverage of
plans in terms of both the diseases and number of hospitals covered. Unlike
other homogenous general insurance products, premiums for medical plans are
based on the health of an individual policyholder and this had lead to confusion
14
and fraud in the Indian market and increased policy cancellations from
customers who do not find any value in their health insurance policies.
The Insurance Regulatory Authority of India (IRDA) has come to the forefront in
tackling these service standard issues recently. Speaking at the first meeting of
the India Health Insurance Forum in Hyderabad last Thursday, IRDA chairman
J Harinarayan said the industry must now work to improve communication with
its customers, particularly with regard to health insurance policy documentation,
as a third of all consumer complaints this year have been directed towards
health insurers. According to IRDA data, of the 92,898 complaints levied at the
non-life sector so far in 2012, 38,891, or 37.5 percent have been focused on
health insurance issues. ―If one-third of complaints are from the health side, I
will conclude that the nature of communication on health insurance policies and
the understanding of the policy by the consumer are areas of concern.
Probably, the lack of clarity is reflected in the increasing number of complaints,‖
IRDA chairman J Harinarayan said, adding that ―good communication is the
responsibility of the insurance company and not of the policy holder. An
insurance policy, as a contingent contract, has to be specific and unambiguous.‖
With a reach of just about 2% of the country‘s 1.2 billion population, India offers
a huge potential in health insurance market. There are over 30 health
insurance products in the category offered by both life and non-life insurers.
While ICICI Lombard, Bajaj Allianz and Reliance General are some of the
prominent general insurers in the health insurance space, Apollo DKV, Star
Health & Allied Insurance are the standalone players. Health insurance‘s
annual premium collections are over Rs 6,000 crores. Despite the high growth,
15
the business is a huge challenge for insurers because of the high losses over
soaring medical expenses
A survey showed massive dissatisfaction with the healthcare system in India.
The interesting find about health insurance in India was how people perceived
health insurance in India. It is seen as an instrument to protect savings. It is not
aimed at protecting the asset that is health. This is probably common to
developing markets, where people tend to place wealth ahead of health. On a
macro level, very few households in India have contingency plans to meet their
health expenses. Health risks in India are perceived differently than the western
population. Prior planning in health issues is yet to be a major priority
The industry is also becoming tech-savvy with facilities to buy certain types of
insurance products online and payment of premium through Internet. The
insurance penetration level in India is very low when compared with the global
average. This has brought about a plethora of distribution channels such as
agents, brokers, bancassurance (bank insurance model) avenues, soliciting
insurance through Internet or direct mailing. Many banks, financial institutions
and insurance intermediaries saw a huge opportunity in marketing insurance
products. Insurance brokers play a vital role in bringing together insurance
companies and the insured, and their role assumes importance when a claim
arises. Research includes awareness of health insurance , preference of health
insurance consumption pattern ,new services offered by insurance sectors,
claim settlement procedure, and major issues of health insurance.
Health insurance policy does not always cover every possible health problem
someone might encounter in the future. There are certain terms and conditions
16
agreed to by the insured (person who is taking the plan), and the insurer (entity
that is providing the plan) and the entire procedure happens according to what
has been agreed to in the contract .
The best time to avail a health insurance plan is when the insured is still in a
good physical condition. The normal logic among young people is that since
they are rarely afflicted by physical ailments they do not need such a plan.
In reality people can fall prey to a disease or other physical problem at any time
- nobody can be absolutely sure of a life fully free of such issues. Normally as
someone gets older the problems increase and the possibilities of some major
disease are always there. A problem with trying to get a medical insurance
during old age is that since there are more chances of a medical condition the
premium is often high or the insurer is not ready to cover the individual in
question.
17
LITERATURE REVIEW
18
CHAPTER 2
LITERATURE REVIEW
When a person experiences a bad shock to health, their medical expenses
typically rise and their contribution to household income and home production
(e.g. cooking or childcare) declines (e.g. Wagstaff and Doorslaer, 2003; Gertler,
Levine & Moretti, 2003; Gertler and Gruber, 2002). According to the WHO,
―Each year, approximately 150 million people experience financial catastrophe,
meaning they are obliged to spend on health care more than 40% of the
income available to them after meeting their basic needs.‖ (WHO Factsheet
N°320, 2007)Low income and high medical expenses can also lead to debt,
sale of assets, and removal of children from school, especially in poor nations.
A short-term health shock can thus contribute to long-term poverty (e.g. Van
Damme et al, 2004; Annear et al, 2006). At the same time, because
households often cannot borrow easily, they may instead forego high-value
care. When they do access care it will often be of low quality (Das, Hammer
and Leonard, 2008), which can lead to poor health outcomes.
Theory suggests that health insurance can address some of these problems.
By covering the cost of care after a health shock, insurance can help to smooth
consumption, reduce asset sales and new debt, increase the quantity and
quality of care sought, and can improve health outcomes.
Unfortunately, rigorous evidence on the impact of insurance is scarce, and
there are even fewer studies on the effects of insurance in developing
countries. One reason for the lack of evidence is that it is difficult to find a valid
control group for the insured. We cannot simply compare the outcomes of
19
insured and uninsured households, since health insurance status is typically
strongly correlated with other household characteristics. For example, rich and
well educated households typically have both better health (Asfaw, 2003) and
better health insurance coverage (Jütting, 2004; Cameron and Trivedi, 1991),
but the positive correlation between health and insurance status tells us nothing
about the impact of insurance. On the other hand, those in poor health may be
more likely to pay for health insurance (Cutler and Reber, 1998; Ellis, 1989),
but finding that the insured tend to be sicker would not imply that insurance
causes illness.
Below we review past evidence on the impacts of health insurance, focusing on
studies where health insurance status is plausibly exogenous, or where studies
have attempted to eliminate bias due to self-selection. A majority of the
rigorous studies are based on United States data. We follow Levy and Meltzer
(2004, 2008) in both our choice of U.S. studies and in our main conclusions.
SELECTION OF HEALTH INSURANCE:
Understanding who chooses to purchase voluntary health insurance is
important for understanding both how well targeted the insurance product is
and the financial viability of the insurance program. As explained below, the
latter will be particularly sensitive to the existence of adverse versus positive
selection. The extent of adverse selection or positive selection into insurance
has important repercussions for an insurance provider‘s ability to cover its
costs. Standard insurance theory predicts that insurance markets will suffer
from adverse selection, which occurs when less healthy people or people who
are more risky with their health are more willing to purchase health insurance
20
because they know that the amount they spend on healthcare will be larger
than the premium they will pay. (e.g., Rothschild and Stiglitz 1976; Akerlof,
1970) Voluntary health insurance cannot be financially sustainable if adverse
selection is severe, since only the most costly patients would find it worthwhile
to purchase insurance, and premium levels will not be able to cover the high
costs of care.
Some studies in wealthier nations find evidence that people with higher
expected medical expenditures (measured in a variety of ways across studies)
are more likely to buy insurance or pay for health insurance at higher premiums
than those with lower expected medical expenditures (e.g. Cutler and
Zeckhaus, 1998). However, the extent of adverse selection in health and other
insurance is often found to be minimal (e.g. Wolfe and Goddeeris, 1991;
Finkelstein and Poterba, 2004) or non-existent (e.g. Finkelstein and McGarry,
2006; Cardon and Hendel, 2001; Cawley and Philipson (1999). There is also
some recent evidence of positive selection into health insurance (e.g. Fang et
al., 2008).
The literature review suggests that income is one of the important
determinants of purchase of health insurance (Scotton 1969, Cameron,
Trivedi et al. 1988, Savage and Wright 1999). Income has been found to
be having a positive association with health insurance purchase decision
consistently in different studies conducted in different countries Propper
(1989) in UK; Cameron, Trivedi et al. (1988)in Australia and Hurd and McGarry
(1997) in USA, Healthcare expenditure is another important variable
affecting health insurance purchase (Kronick and Gilmer 1999). Relation
of health insurance purchase decision and health expenditure is based on
21
the premise that families which have higher chances of requiring
hospitalization will have higher probability of buying health insurance.
Some other socio economic factors like age, education etc. have also
been found to be important factors affecting health insurance purchase In
India knowledge and awareness about health insurance could be
important factor for health insurance purchase decision. Very few studies
have tried to analyse reasons for low penetration of health insurance in
India (Wadhawan 1987, Ellis 2000, Bhat and Mavalankar 2001). Some
studies have tried to analyse community based health insurance in India.
(Devadasan, Ranson et al. 2004, Ahuja 2005. Rao (2004) discusses the
issues and challenges for health insurance sector in India. These and
other studies have tried to analyse health insurance sector in India, but
not much systematic empirical work has been done and this area is largely
unexplored.
The theory of risk has been applied extensively to the literature related to
health insurance decision (Arrow 1963; Feldstein 1973). Under conditions
of consumer rationality and risk averseness, the decision to purchase
insurance is made on the basis of expected utility gain.
Health Insurance choice essential decision - whether or not to purchase
private health insurance (Barrett and Conlon 2003). Binary discrete choice
models using either legit or probit has been used to analyze determinants of
this type of purchase decision. Cameron and Trivedi (1991) specified a
conditional expected utility function that is associated with alternative
health care regimes. The consumer chooses the regime that maximises
expected utility The utility gains, expected from the purchase of private
22
insurance are related to the expected medical need of the people in the first
instance. Some individuals face greater risk vulnerability than others due
to their age, pre-existing health status, job profile and marital status.
For example, Hopkins and Kidd (1996) suggest that the probable
probable distribution of future health states is based on present and past
Health status, Health care expenditure of the household may be anther proxy of
health status of the household this view of the role of education in Health.
Health status of the household This view of the role of education in health
decision-making has been well documented by Grossman (1972) and
Muurinen (1982). The implication is that not only is a better educated person
likely to be healthier which would lower the probability of insurance, but also
he/she is likely to be better informed about both the services available in the
public hospital system and the benefits of joining a private health insurance
fund. The indirect effect of education is and the benefits of joining a private
health insurance fund its impact on income.
Education and income are generally positively correlated (Van De Ven and Van
Praag 1981). Higher income generally decreases the opportunity cost
associated with the purchase of private health insurance. Overall, increases
in both income and education would be expected to lead to an increase in the
probability of buying the insurance.
Another set of factors which are found important in the literature of
health insurance are demographic and economic variables. These variables
are employment, age, marital status and gender. The available evidence
suggests that socioeconomic variables act on choice in the expected
ways. Those who are employed and those in executive positions are
23
likely to purchase insurance (Butler 1999; Savage and Wright 1999).
Married respondents are more likely to take out coverage (Cameron &
McCallum 1995), though family size apparently has been of little influence
on the purchase decision (Cameron and Trivedi 1991).
PERCEPTION OF CUSTOMERS
The perception of individuals towards the risk is also an important factor.
A consumer‘s knowledge of being at risk by being a member of a particular
group of people with high-risk characteristics (e.g., those who know they
have high cholesterol) likely to influence their insurance decision. Hopkins
and Kidd (1996) and Butler (1999) found that smokers are less likely to
purchase insurance. Smoking behavior is viewed in these studies as a
proxy for risk-aversion. Of the other possible determinants of the decision to
purchase insurance, an obvious factor is price. However few studies have
attempted to estimate price elasticity of demand. This is because of lack of
price information and also because of limited variation in price in highly
regulated health insurance market. To overcome this problem Butler
(1999) constructed ‗effective prices‘ from information on insurance fund
premium revenue (averaged over policies sold) and the expected benefits
paid out by age category.
The studies in Indian context on health insurance are scanty. Several recent
papers and reports have critically reviewed the Indian health delivery and
financing system (Bhat and Mavalankar 2000, Berman and Khan 1993,
World Bank 1995, Planning Commission 1996, etc). These studies have
documented issues and challenges the system faces in terms of
24
accessibility, efficiency and quality of the health care delivery.
RESEARCH GAPS
The research was based on primary collection of data, there may be
chances of human error and bias.
The research was dependant on the information provided by the
respondents who were very reluctant in providing right information and
were careless.
As associated with every project, time and money were the major
limitations with project.
Due to unwillingness of providing any information, the respondents filled
the questionnaire casually..
The projection is purely based on verbal meetings with the respondents.
Non-co-operative behaviour of respondent was a big problem in this
survey.
While studying the report the above facts should be taken into
consideration.
25
OBJECTIVES OF THE
STUDY & RESEARCH
METHODOLOGY
26
CHAPTER 3
RESEARCH OBJECTIVE AND RESEARCH METHODOLOY
STATEMENT OF PURPOSE
The purpose of this study is to find out the Awareness, Preferences and
Buying patter of Health Insurance, in four main Health Insurance companies .
Health Insurance is viable solution to ensure access to basic Health care
services to the masses, the number of people with Health Insurance coverage
is low in India. There are some structural issues with system. The present study
is an attempt to find the cause for low Health Insurance coverage. The study
address the awareness and buying pattern of Health Insurance and scope of
the private Health Insurance companies schemes. Given the growing interest
on the importance of Health Insurance , the outcome of the present study is
considered useful in guiding policy making and to help to knowing the complete
process of Health Insurance.
OBJECTIVE OF THE STUDY
To assess the individual awareness about Health Insurance.
To know the preference of individual regarding health insurance.
To evaluate consumption patterns of health insurance.
To assess the effectiveness of company services
Research methodology
D.Slesinger and M.Stephenson in the Encyclopedia of Social Sciences define
the research as “the manipulation of things, concepts or symbols for the
27
purpose of generalizing to extend, correct or verify knowledge, whether that
knowledge aids in construction of theory or in the practice of an art.”
In short, the research for knowledge through objective and systematic method of
finding solution to a problem is research. The systematic approach concerning
generalization and the formulation of a theory is also research.
Research design provides the glue that the research project together. A
designed is used to structure the research to show how all of the major parts of
the research project, the sample or group measurement ,treatments and
methods of assignment work to gather try to central research question.
Hence, it is clear that research design is the blueprint for researcher it lays down
the methodology involved in the collection of information and answering at
meaningful conclusion from the same.
This classification are made according to the objective of the research ,in some
causes the research will fall in to one of this category but in other cases
research will fall in to two categories.
There are two types of methods of collecting data
1. PRIMARY
2. SECONDARY
PRIMARY DATA: The main purpose of collection of primary data was to
prepared questionnaire. The researcher tried to find out the awareness and
Buying pattern of Health Insurance Through :
28
Personal Approach
Surveys
Mails
questionnaires
articles ,magazines
telephone ,discussion meeting with Managers, Agents of all the four Health
Insurance companies &customers etc. for this project personal interviews was
conducted for collection
SECONDARY DATA consists of published data collected through
Books
websites
news papers
journals
magazines
research papers
SAMPLE SIZE: 300
COMPANY NAME SAMPLE SIZE
ICICI LOMBARD 80
STAR ALLIED HEALTH INSURANCE 60
BAJAJ ALLIANZE 50
NEW INDIA HEALTH ASSURANCE 50
OTHER COMPANIES 60
TOTAL 300
29
A comparative study health Insurance has been done in ICICI Lombard ,Star
Allied Health Insurance, Bajaj Allianz,New India Assurance, and other
companies , the respondents were Senior manager , middle level manager,
agent, broker, customers . the sampling technique was Quota sampling , The
research tool are questionnaire .
THE STATISTICAL TOOL :
The statistical analysis has been done using Microsoft excel.
30
CHAPTER 4
HEALTH INSURANCE
4.1 Introduction of Health Insurance
4.2 Background of Health Insurance
4.3 Features of Health Insurance
4.4 Main Function of Health Insurance
4.5 Importance
4.6 kinds Of Health Insurance
4.7 Essential Guidelines Availing Health
Insurance Policy
31
CHAPTER 4
HEALTH INSURANCE
4.1 MEANING OF HEALTH INSURANCE
Health insurance in a narrow sense would be an individual or group
purchasing health care coverage in advance by paying a fee called premium In
its broader sense, it would be any arrangement that helps to defer, delay,
reduce or altogether avoid payment for health care incurred by individuals and
households. Given the appropriateness of this definition in the Indian context,
this is the definition, we would adopt. The health insurance market in India is
very limited covering about 10% of the total population Health insurance
guarantees payments to a person in the event of sickness or injury. and works
as protection scheme. Health insurance is protection, scheme to take care of
health of a person and works it works by buying a policy from a company or an
insurance agent. Depending on the premium paid the health insurance policy
will pay specified amounts for the medical expenses incurred to overcome the
health problem. Currently the trend of some of the reputable companies seems
to be to build in a health insurance policy as a benefit to an employee. Some
countries offers free health insurance to their citizen. In India certain sectors
like railways, army and the employees working with the central government are
covered in a health scheme provided cover to almost 20million
people in different part of country.
Health like education should be essential and should be freely available to all
the citizens of a country. Some developed countries realizing the importance of
the health of the nation spend as much as 6% to 8% of their GDP on it and
32
have advanced facilities in their government run hospitals. Some examples
include the United Kingdom where the National Health Services hospitals
provide all the health requirements to majority of their citizens. Sweden and
Norway follow similar government run health schemes. As per the census of
USA in the year 2004, it was noted that 245.3 million people had health
insurance coverage; however 45.8 million lived without an insurance cover. In
response to some of these stats Senator John Kerry said.
"Great physicians and nurses, skilled, caring and unparalleled in their training,
intervened in my life and probably saved it. I was lucky but other Americans are
not. It is time to speak again and stand again for the ideal that in the richest
nation ever on this planet, it is wrong for 41 million Americans, most of them in
working families, to worry at night and wake up in the morning without the basic
protection of health insurance." Developing countries like India have priority of
spending in other sectors like the army and the infrastructure development and
barely 2% of the GDP is spent on the health and results in the government
hospitals lack in facilities especially for any advanced procedure such as heart
surgery or hip placement .Health insurance schemes are particularly important
for individuals from the lower income group to provide them and their family
members with adequate cover in event of any mishap or illness. The escalating
medical costs are due to the advanced diagnostic and therapeutic procedures
that have become the hallmark of modern medical care. An insurance scheme
will guarantee that no compromises are made in your treatment for wants of
funds. Remember when negotiating a policy you ask for adequate cover as the
provided by the health insurance will depend on the type of policy purchased.
Before you ask for the best health insurance quote or plan to buy a health
33
insurance plan become an informed consumer. Find definitions of commonly
used health insurance terms in this health insurance glossary. It serves as a
dictionary to help consumers understand common terms used in health
insurance.
“Health insurance aims that one can access to the best health care
without fearing the financial strain, it help people to have peace in mind
rather than to have fear”.
4.2 BACKGROUND OF HEALTH INSURANCE: CURRENT SCENARIO
The health care system in India is characterized by multiple systems of
medicine, mixed ownership patterns and different kinds of delivery structures.
Public sector ownership is divided between central and state
governments, municipal and Panchayat local governments. Public health
facilities include teaching hospitals, secondary level hospitals, first- level referral
hospitals (CHCs or rural hospitals), dispensaries; primary health centers
(PHCs), sub-centers, and health posts. Also included are public facilities
for selected occupational groups like organized work force (ESI), defense,
government employees (CGHS), railways, post and telegraph and mines among
others.
The private sector (for profit and not for profit) is the dominant sector with 50%
of people seeking indoor care and around 60 to 70% of those seeking
ambulatory care (or outpatient care) from private health facilities. While
India has made significant gains in terms of health indicators
demographic, infrastructural and epidemiological (See Tables 1 and 2); it
34
continues to grapple with newer challenges. Not only have communicable
diseases persisted over time but some of them like malaria have also
developed insecticide-resistant vectors while others like tuberculosis are
becoming increasingly drug resistant. HIV / AIDS has of late assumed
extremely virulent proportions.
The 1990s have also seen an increase in mortality on account of non-
communicable diseases arising as a result of lifestyle changes. The country is
now in the midst of a dual disease burden of communicable and non-
communicable diseases. This is coupled with spiraling health costs, high
financial burden on the poor and erosion in their incomes. Around 24% of all
people hospitalized in India in a single year fall below the poverty line due to
hospitalization. An analysis of financing of hospitalization shows that large
proportion of people; especially those in the bottom four in come quintiles
borrow money or sell assets to pay for hospitalization This situation exists in
a scenario where health care is financed through general tax revenue,
community financing, out of pocket payment and social and private health
insurance schemes. India spends about 4.9% of GDP on health.. The per
capita total expenditure on health in India is US$ 23, of which the per capita
Government expenditure on health is US$ 4. Hence, it is seen that the total
health expenditure is around 5% of GDP, with breakdown of public
expenditure (0.9%); private expenditure (4.0%). The private expenditure
can be further classified as out-of-pocket (OOP) expenditure (3.6%) and
employees/community financing (0.4%). It is thus evident that public health
investment has been comparatively low. In fact as a percentage of GDP it has
declined from 1.3% in 1990 to 0.9% as at present. Furthermore, the central
35
budgetary allocation for health (as a percentage of the total Central budget)
has been stagnant at 1.3% while in the states it has declined from 7.0% to
5.5%.
SOCIOECONOMIC INDICATORS
Land area 2% of world area
Burden of disease (%) 21% of global disease burden
Population 16% of world population
Urban : Rural 28:72
Literacy rate (%) 65.38
Sanitation (%) Rural – 9.0; Urban – 49.3
Safe drinking water supply (%) Rural – 98; Urban – 90.2
Poverty (%) Below poverty line – 26
Rural – 27.09; Urban – 23.62
Poverty line (Rs.) Rural – 327.56; Urban – 454.11
Table no.4.2.1 socioeconomic indicators
Achievements: 1951-2000
Demographic
changes
1951 1981 2000
Life expectancy 36.7 54 64.6(RGI)
Crude birth rate 40.8 33.9(SRS) 26.1(99 SRS)
Crude death rate 25 12.5(SRS) 8.7(99 SRS)
Infant mortality
rate
146 110 70(99 SRS)
Table no.4.2.2 Achievements: 1951-200
36
In light of the fiscal crisis facing the government at both central and state levels,
in the form of shrinking public health budgets, escalating health care costs
coupled with demand for health-care services, and lack of easy access of
people from the low-income group to quality health care, health insurance is
emerging as an alternative mechanism for financing of health care.
During the last 50 years India Has developed a large government health
Infrastructure with more than 150 medical collages, 450 district hospitals,3000
community Health centers 20,000 Primary Health care centers and 1,30,000
sub- Health centers . On the top of this there are large number of this there are
large number of private and NGO health facilities and practitioners scatters
throughout the country.
Over the past 50 Years Indian has made considerable progress in improving its
health status. Death rate has reduced from 40 to 9 per thousand, infant
mortality rate reduced from 161 to 71 per thousand live birth and life
expectancy increased from 31 to 63 years. However, many challenge remain
and these are: life expectancy 4 years below world average, high incidence of
communicable diseases, increasing incidence of non- communicable diseases,
neglect of women‘s health, considerable regional variation and threat from
environment degradation. It is estimated that at any given point of time 40 to 50
million people are on medication for major sickness in India. About 200 million
workdays are lost annually due to sickness. Survey data indicate that about
60% people use private health providers for outpatient while 60% use
government providers for in-door treatment. The average expenditure for care
is 2-5 times more in private sector than In public sector.
37
India spreads about 6 percent of GDP on Heath expenditure. Health Care
expenditure is 75 percent or 4.25 percent of GDP and most of the rest
(1.75percent) in government funding. At present, the insurance coverage is
negligible .Most of the public funding is for preventive, promotive and primary
care programs care expenditure has grown at the rate of 12.84 percentage per
annum and for each one present increase in per capita income the private
health care expenditure has increased by 1.47 percent number of private
doctors and private clinical facilities are also expanding exponentially. Indian
Health financing scene raises number of challenges, which are increasing
health care cost , high financial burden on poor eroding their incomes,
Increasing burden of new diseases and health risks and neglect of preventive
and primary care and public health function due to underfunding of the
government Health care.
Given the above scenario exploring health- financing options become critical.
Health insurance is considered one of the financing mechanisms to overcome
some of the problems of our systems.
POTENTIABILITY OF THE MARKET India is about 1.2 million of population and granting that not all may not be
insurable for various season , it makes a strong case for potentiality of at least
50 crore plus people to be under some health insurance scheme apart from
government schemes for the weaker sections. Unfortunately , even after
opening of market the penetration has been poor and roughly only about 3.5
crore people are covered under various insurance scheme as mentioned above
making the market quit big ,only being scratched at the surface without being
properly tapped. However, since last 2/3 years health insurance has picked up
38
with aggressive selling coupled with awareness making it the second largest
portfolio after motor Insurance.
IMPACT OF HEALTH INSURANCE ON STRUCTURAL AND QUALITY OF
PRIVATE PROVISION
The experiences in liberalizing the private health insurance suggest that it has
undesirable effects on the costs of health care. The costs care generally goes
up. Given the present system of fee for service and current scenario of health
infrastructure in private sector, the development of insurance will need
improvements in the quality and change in structure. The new investment to
improve quality will result in to high cost and therefore increase in prices of
Insurance products. There would be development in the direction of exploring
options of managed care, which would help in reducing the costs. The
developments would be needed in the direction of exploring options of
managed care, which would help in reducing the costs. The developments
would be needed in the directions of strong information base accreditation
system for providers. The structure of the health sector will have to change
from multi-single doctor hospitals and clinics to large hospitals and polyclinics
which provide services of multiple specialties and can operate at larger scale.
This will aloe them to provide high quality professional care at competitive
prices. As one of the responses to these Third Party Administrator (TPA) are
rapidly emerging in India. Here we can learn from the models, which we have
emerged elsewhere. but their applicability to Indian situation needs to be
examined carefully. These aspects of the health sector will need detail study.
Lack of adequate information base to operate insurance schemes at large
scale. The insurance mechanism prevalent in many developed countries has
39
their history. Health reforms experiences in many countries are replete with the
suggestion that the systems cannot replicated easily
ADVANTAGES OF HEALTH INSURANCE:
Now a days there are different insurance policies coming in the market like life
insurance, vehicle insurance, but the importance of health insurance seems to
be growing at a very fast rate. Health insurance is mainly taken to protect a
person from any unexpected medical expenses incurred due to any illness.
With the present condition, it is observed that with the latest technologies or the
advancements taking place, the health care has immensely improved but so
has the expenses. The treatments are becoming more and more expensive
with each passing day. It is required that every individual gets a financial
security related to any unexpected medical expenses coming his way. The
main merits observed in health insurance are;
1. Medical cash benefits- this benefit entitles you to get cash benefits, if you
are hospitalized. All the financial expenses incurred would be covered in this
plan. The amount provided to you will be on per day basis and the amount
depends upon the plan you have opted.
2. Cashless facility- in this benefit, you can get hospitalized on the basis of
this plan without paying a penny. But this benefit can be availed only in some
special cases. Sometimes the amount paid by you, is reimbursed within 24
hours.
40
3. Before and after expenses- as per this policy all the expenses related to
illness incurred 60 days prior to 90 days after hospitalization would come under
the cash benefits that you can avail.
4. Floater benefits- this is an add-on benefit for the health insurance policy
holders. In this policy, an individual can take a single policy for the whole family
which would cover the entire member in a single sum assured.
5. Other benefits- the policy holder is entitled to a 5% of bonus amount of the
sum assured every year as a bonus. This policy includes, all the expenses
including the ambulance charges, health checkups to the maximum limit of Rs
1000 per family. It even provides tax benefits as per income tax act.
Considering all the aspects, health insurance has advantages which could be
availed very easily. The health insurance is needed now more than ever due to
skyrocketing medical expenses, the increasing possibilities of diseases. So, if
you still don‘t have a good health care plan, just go for it at the earliest.
4.3 MAIN IMPORTANT FEATURES OF HEALTH INSURANCE:
Though the features may vary from insurer to insurer, some basic features are: 1. Reimbursement for Hospitalization due to illness/disease/ surgery. 2. Reimbursement for Domiciliary Hospitalization expenses in lieu of Hospitalization 3. Pre-hospitalization Expenses 4. Post-hospitalization Expenses 5. Ambulance Charges 6. Cashless Access
41
7.Income Tax Benefit etc
Insurance may be described as a social device to reduce or eliminate risk of life
and property. Under the plan of insurance, a large number of people associate
themselves by sharing risk, attached to individual insurance plan that
exclusively covers healthcare costs and is called Health Insurance.
Since the past two decades, there has been a phenomenal surge in
acceleration of healthcare costs. This has compelled individuals to have a re-
look on their actual monthly expenditures, spending patterns and
simultaneously allocate a proportion of their income towards personal
healthcare. This has resulted in individuals availing healthcare insurance
coverage not only for themselves but also for their family members including
their dependants. In short, healthcare insurance provides a cushion against
medical emergencies. The concept of Insurance is closely concerned with
security. Insurance acts as a shield against risks and unforeseen
circumstances. I
Some major health insurance companies in India include National Insurance
Company, New India Assurance, United India Insurance, ICICI Lombard, Tata
AIG, Royal sundaram ,Star allied health insurance, cholamandalam ,DBM,
Bajaj Allianz ,Apollo, AG Health Insurance company among others .
Categories
Indian Health Insurance is primarily classified into 2 categories:
•Cashless Hospitalization
• Medical Reimbursement
42
a) Cashless Hospitalization
Cashless hospitalization is a specialized service provided by an insurer wherein
an individual is not required to pay the hospitalization expenses at the time of
discharge from the concerned hospital. The settlement is done directly by the
insurance company (or insurer). However, prior approval is a must from the
TPA (Third Party Administrator) before availing the benefits under this option.
CASHLESSLESS HOSPITALIZATION CAN BE OF TWO TYPES
• Planned hospitalization: This is a planned hospitalization wherein the
insured is aware of the hospitalization in advance. This duration period may
vary from case to case. Examples include: FTND (Full Term Normal Delivery),
Chemotherapy treatment for carcinoma (cancer), for cataract
surgery, tonsillectomy (removal of tonsils).
• Emergency hospitalization: It is a sudden hospitalization that may be either
an emergency or due to unforeseen circumstances. In short, hospitalization is
not anticipated in advance. Examples include RTA (Road Traffic Accident),
Myocardial infarction (heart attack), Acute Appendicitis.
b) Medical Reimbursement
Re-imbursement means to repay or to compensate. Thus, Medical Re-
imbursement means to repay the products/services availed during
hospitalization more importantly after the completion of the treatment. Under
this procedure, the insured has to bear the entire expenses incurred during
hospitalization. After getting discharged from hospital, the insured/policy holder
can claim medical reimbursement. For availing benefits under this option, the
insured has to approach the concerned TPA under which he/she is covered, fill
43
the requisite form and satisfy all the requirements as mentioned. This includes
submission of TPA card, policy paper, discharge summary, prescriptions,
diagnostic laboratory reports, OPD treatment details etc. A sum
is granted as reimbursement for treatment expenses.
A recent survey conducted in 2008 showed that only 3% of the entire Indian
population has availed some sort of insurance policy and enjoys benefits
included under its coverage. This miniscule percentage constitutes both –
PSUs (Public Sector Undertakings) and Private Insurance Companies. Since,
the general public are by and large ignorant about the benefits of availing
healthcare insurance policies, there lies an urgent need to educate the masses
regarding the importance of Health care insurance and the benefits derived on
account of it. There are numerous reasons for not availing health insurance.
There is a lack of knowledge regarding the existing insurance products/services
in the markets. On top of it, there are numerous misconceptions about
Insurance prevalent in the Indian Markets. In India; public funded healthcare is
available only to a miniscule section of BPL (Below Poverty Line) groups, low-
income groups and to government employees. The Indian Government has
formulated Employee State Insurance Scheme (ESIS) that focuses on the
public healthcare policy for low-income groups. The government employees
can avail Central Government Health Scheme (CGHS) that offers
medical treatment at a subsidized cost.
With the opening up of insurance sector for private participation, numerous
players have entered the healthcare segment, but inspite of the entry of private
sector, penetration of insurance coverage in India is abysmally low. Recently a
44
legislature has been passed in the Indian Parliament allowing 49%of FDI in
Insurance Industry.
4.4 MAIN FUNCTIONS OF HEALTH INSURANCE
The primary function of Health Insurance is to pay those covered expenses, as
outlined in the policy, incurred as a result of an accident or illness. It often has
two elements, one being hospitalization expenses and the other being for the
medical care rendered by a physician or other health care professional. The
vast majority of health insurance is employer-based, meaning that people have
access to it through their employment. Not all employers offer it, and for those
whose employers do not, they are free to obtain individual/family policies on
their own.
Health insurance comes in a variety of types. These include traditional
indemnity plans, which are becoming less common, and an array of managed
care plans, including Health Maintenance Organizations and Preferred Provider
Organizations. Both of the latter provide medical care on a prepaid basis, but
differ in their delivery models, including by the degree of choice of provider that
the member retains.
Most health insurance plans have deductibles and co-payments, although
different terminology may be used. A deductible is an amount that the
insured/member must pay before the insurer's liability for payment is triggered.
A co-payment is a form of cost-sharing such that the insurer pays a percentage
of a covered expense, and the insured pays the remainder. The size of the
deductible and co-payment has an impact on premium. Insurance may be
described as a social device to reduce or eliminate risk of life and property.
45
Under the plan of insurance, a large number of people associate themselves by
sharing risk, attached to individual insurance plan that exclusively covers
healthcare costs and is called Health Insurance Since the past two decades,
there has been a phenomenal surge in acceleration of healthcare costs. This
has compelled individuals to have a re-look on their actual monthly
expenditures, spending patterns and simultaneously allocate a proportion of
their income towards personal healthcare. This has resulted in individuals
availing healthcare insurance coverage not only for themselves but also for
their family members including their dependants. In short, healthcare insurance
provides a cushion against medical emergencies. The concept of Insurance is
closely concerned with security. Insurance acts as a shield against risks and
unforeseen circumstances. In general, by and large, Indians are traditionally
risk averse rather than risk lovers by Nature.
4.5 IMPORTANCE OF HEALTH INSURANCE
The importance of Health Insurance can never be undervalued for the following
reasons:
• Provides security to human life which is of prime importance to any individual.
• Closely bonds Insurance Companies, Hospitals, Policyholders and TPAs
together for the benefit of Indian masses.
• An answer to the solution of uncertainties and risks that are prevalent and
ever-pervading in human life.
• Access to quality healthcare.
• Means of savings and a safe investment option.
46
• Provides financial stability in life.
• A tax-saving instrument that significantly contributes in reduction of tax
deductions.
•Reduces tensions and stress caused on account of hospitalization.
• Greatly contributes in leading a stress-free life.
The health insurance schemes marketed by insurance companies
face some other challenges worth noting, for example :-Absence of
accreditation of providers and a rationalized cost structure.-Adverse claims
experience / high loss ratio.-High moral hazard at various levels of service.-Non
regulated market and no control through state machinery.-The limited
government funding of healthcare programmers.-Lack of propagation of health
insurance as a health insurance among masses.-Rising medical costs and
imbalance in cost structure among service providers.-Servicing through third
party administrators (TPA) introduced with cashless entry to hospitals meeting
with limited success.
47
MAIN IMPORTANT TYPES OF COVERAGE OF MEDICLAIM
A) HMO (Health Maintenance Organization).
You go to your family doctor for any health services. If there is urgency in going
to a specialist, your family care doctor will help you in referring one. Mediclaim
companies will not insure you without the referral from your family doctor and
therefore, you will have to pay yourself for such specialist services.
B) PPO (Preferred Provider Organization Plan).
Through this plan you can analysis to any primary, specialist, or medical facility
without referral and get totally covered. It is the Mediclaim companies that
cover you when your child breaks a bone accidentally and you approach
directly to the orthopaedic doctor, without consulting your primary doctor.
C) POS (Point of Service).
This plan essentially includes both an HMO and a PPO plan. Mediclaim
companies give you the option from the two plans for every medical case. The
plan offers extra covered preventative programs, however, you may have to
pay more from your pocket, if you choose a doctor outside your plan.
D) HSA (Health Savings Account).
This plan is much more superior than the above mentioned mediclaim plans.
The plan covers eyeglasses, dental, cosmetic procedures, over-the-counter
medications, etc. It is a tax-deferred savings account as long as withdrawals
48
are concern for medical expenses. Funds outstanding at the end of the year
are carried forward into an IRA account
4.6 MAIN KINDS OF HEALTH INSURANCE
Source – Researcher Analysis
Figure no.4.6.1 Health Insurance Types in India
DIFFERENT KINDS OF HEALTH INSURANCE
1. Individual Mediclaim Policy
This is the plain vanilla mediclaim or health insurance policy for an
individual protecting this person from the expenses incurred due to disease or
injury.
Kinds of Health
Insurance
Individual Health
Insurance Policy
Floater Policy
Overseas Mediclaim
policy
Critical Illness Policy
Student medical policy
Tax Saver
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2. Floater Policy
A floater health insurance policy covers your entire family under one policy with
one sum insured and one premium. It covers all the expenses as covered
under mediclaim only the cover is now extended to the family instead of one
person. This cover can be used by any member of the family any number of
times. The advantage of this policy is that saves money by spreading the cover
across family members
3. Critical Illness Policy
Insurance companies define certain specified illness or diseases as ―critical‖. If
you have a critical illness policy, then the insurance company will pay you a
lump sum payment if you are diagnosed with a critical illness as defined by the
insurance company. Some of the diseases/conditions which are usually
deemed critical are Cancer ,Heart Attack, Kidney Failure, Major Organ
Transplant, Stroke, Paralysis and Heart Valve Replacement Surgery. (For a
more comprehensive list check with your insurer)
Unlike other general insurance policies, these policies come with multiple
options in terms of sum assured and term of the policy. For example ICICI
Lombard provides critical cover for 5 years for a Rs. 12, 00,000 coverage.
These policies are also available with disability coverage to ensure that you are
also covered for loss of income during that critical period.
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3. Overseas Mediclaim Policy
An Overseas Mediclaim Insurance policy provides cover for medical expenses
incurred abroad for treatment of illness and diseases contracted or injury
sustained during the insured period of overseas travel. Anyone who is
travelling abroad for business or pleasure or for educational purposes should
have this policy.
4. Student Medical Insurance
Student Medical insurance covers the cost of health care while studying abroad.
It is an essential requirement of many foreign universities for its overseas
students. Students are generally advised to buy it in India as it is substantially
cheaper than buying it abroad.
6 . Tax Saver
This is a new class of insurance launched to take full advantage of the income
tax benefit under section 80 D of the Income Tax Act 1961. The premium is
fixed at Rs 15,000 for all plans. For Senior Citizens aged 65 and above, the
premium is Rs. 20,000 This plans includes reimbursement of OPD expenses
upto Rs. 10,000. This includes diagnostics tests, dental treatment and related
expenses. This insurance is suitable for people who are looking to cover all
their medical expenses in a tax free manner
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4.7 ESSENTIAL GUIDELINES FOR AVAILING HEALTH INSURANCE
POLICY :
The following points should be borne in mind while purchasing an
individual health policy:
• Understanding the policy coverage: The policyholder should be able to
clearly comprehend the extent of medical coverage being offered under the
particular health insurance policy before opting for it. The individual should
check whether pre-existing diseases and its resultant complications are
covered or not, as well as the extent of the coverage under that particular
policy.
• Keeping an eye for medical expenses that are not covered/re-imposable
under the policy: Before availing a particular health insurance policy, the
prospective policyholder should note the medical expenses not covered under
that Insurance policy. It is important to note that deductibles are a part and
parcel of any insurance coverage and the expenses incurred as part of the
medical treatment need to be borne by the individual. Generally this list
includes aprons, sterilization charges, gloves, Dettol, gloves etc.
• To understand whether it is a co-insurance policy: Before availing a
health policy, the prospective customer should understand whether it is a co-
insurance policy or not. It is advisable to get an individual health insurance
policy with a co-insurance payment option. The maximum amount does not
exceed 15% of the entire medical coverage for a particular disease.
• Understanding and updating oneself about expiry period regarding the
policy cover: An individual health insurance cover entails regular premium
payments on a monthly, half yearly or annual basis before the expiry of a
52
particular policy. Non-payment of premium within the stipulated time results in
the lapsing of the policy with subsequent break in the policy coverage of the
concerned individual. Even though the concerned individual holds policy with
an Insurance company for many years together, a break in the policy coverage
(Which generally does no exceed more than 15 days is treated as fresh policy
cover.
53
CHAPTER 5
HEALTH INSURANC IN INDIA
5.1 Current status of private Health Insurance
5.2 Awareness of Health Insurance
5.3 Need to spread Health Insurance
54
CHAPTER 5
HEALTH INSURANCE IN INDIA
The escalating cost of medical treatment today is beyond the reach of a
common man. In case of a medical emergency, cost of hospital room rent, the
doctor's fees, medicines and related health services can work out to be a huge
sum. In such times, health insurance provides the much needed financial relief.
An investment in health insurance scheme would be a judicious decision. The
health insurance scheme could either be a personal scheme or a group
scheme sponsored by an employer. Some of the existing health insurance
schemes currently available are individual, family, group insurance schemes,
senior citizens insurance schemes, long-term health care and insurance cover
for specific diseases.
Figure no.5.1 Types of Health Insurance plan
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HEALTH INSURANCE IS DIVIDED INTO THREE TYPES IN INDIA
1) SOCIAL
a) ESIS( Employees state Insurance Scheme)
b) Central Government Health Scheme (CGHS)
C) Self-Employed Women‘s Association (SEWA)
2) COMMUNITY BASED HEALTH INSURANCE
3) PRIVATE
a) Individual policy
b) Group Mediclaim policy (also known as GMC).
1) INSURANCE OFFERED BY NGOS / COMMUNITY-BASED HEALTH
INSURANCE
Community-based funds refer to schemes where members prepay a set
amount each year for specified services. The premium are usually flat rate (not
income-related) and therefore not progressive. Making profit is not the purpose
of these funds, but rather improving access to services. Often there is a
problem with adverse selection because of a large number of high-risk
members, since premiums are not based on assessment of individual risk
status. Exemptions may be adopted as a means of assisting the poor, but this
will also have adverse effect on the ability of the insurance fund to meet the cost
of benefits. Community –based schemes are typically targeted at poorer
populations living in communities, in which they are involved in defining
56
contribution level and collecting mechanisms, defining the content of the benefit
package, and / or allocating the schemes, financial resources (International
Labour Office Universities Program 2002 as quoted in Ranson K & Acharya
A2003).
Such schemes are generally run by trust hospitals or nongovernmental
organizations (NGOs). The benefits offered are mainly in terms of preventive
care, though ambulatory and in-patient care is also covered. Such schemes
tend to be financed through patient collection, government grants and
donations. Increasingly in India, CBHI schemes are negotiating with the for profit
insurers for the purchase of Custom designed group insurance policies.
However, the coverage of such schemes is low, covering about 30-50 million.
A review by Bennett, Cresses et al. indicates that many community-based
insurance schemes suffer from poor design and management, fail to
include the poorest-of-the poor, have low membership and require extensive
financial support. Other issues relate to sustainability and replication of such
schemes.
SELF-EMPLOYED WOMEN’S ASSOCIATION (SEWA), GUJARAT :
This scheme established in 1992, provides health, life and assets insurance to
women working in the informal sector and their families. The enrolment in the
year 2002 was 93 000. This scheme operates in collaboration with the National
Insurance Company (NIC). Under SEWA‗s most popular policy, a premium of
Rs 85 per individual is paid by the woman for life, health and assets
insurance. At an additional payment of Rs 55, her husband too can be covered.
Rs 20 per member is then paid to the National Insurance Company (NIC) which
provides coverage to a maximum of Rs 2 000 per person per year for
57
hospitalization. After being hospitalized at a hospital of one‗s choice (public
or private), the insurance claim is the responsibility for enrolment of members,
for processing and approving of claims rests with SEWA. NIC in turn receives
premiums from SEWA annually and pays them a lump sum on a monthly basis
for all claims reimbursed.
1)THE VOLUNTARY HEALTH SERVICES (VHS),
Chennai, Tamil Nadu was established in 1963. It offers sliding premium
with free care to the poorest. The benefits include discounted rates on both
outpatient and inpatient care, with the VHS functioning as both insurer and
health care provider. In 1995, its membership was 124 715. However, this
scheme suffers from low levels of cost recovery due to problems of adverse
selection.
2)SOCIAL INSURANCE OR MANDATORY HEALTH INSURANCE SCHEMES
OR GOVERNMENT RUN SCHEMES (NAMELY THE ESIS, CGHS)
Social insurance is an earmarked fund set up by government with explicit
benefits in return for payment. It is usually compulsory for certain groups in the
population and the premiums are determined by income (and hence ability to
pay) rather than related to health risk. The benefit packages are
standardized and contributions are earmarked for spending on health services
The government-run schemes include the Central Government Health Scheme
(CGHS) and the Employees State Insurance Scheme (ESIS).
3) CENTRAL GOVERNMENT HEALTH SCHEME (CGHS)
Since 1954, all employees of the Central Government (present and retired)
some autonomous and semi-government organizations, MPs, judges, freedom
fighters and journalists are covered under the Central Government Health
58
Scheme (CGHS). This scheme was designed to replace the cumbersome and
expensive system of reimbursements. It aims at providing comprehensive
medical care to the Central Government employees and the benefits
offered include all outpatient facilities, and preventive and promotive care in
dispensaries. Inpatient facilities in government hospitals and approved private
hospitals are also covered. This scheme is mainly funded through Central
Government funds, with premiums ranging from Rs 15 to Rs 150 per month
based on salary scales. The coverage of this scheme has grown
substantially with provision for the non-allopathic systems of medicine as well as
for Allopathy. Beneficiaries at this moment are around 432 000, spread across
22 cities.
The CGHS has been criticized from the point of view of quality and
accessibility. Subscribers have complained of high out-of-pocket expenses due
to slow reimbursement and incomplete coverage for private health care
(as only 80% of cost is reimbursed if referral is made to private facility when
such facilities are not available with the CGHS).
4) EMPLOYEE AND STATE INSURANCE SCHEME (ESIS)
The ESIS programmed has attracted considerable criticism. A report based on
patient surveys conducted in Gujarat found that over half of those covered
did not seek care from ESIS facilities. Unsatisfactory nature of ESIS
services, low quality drugs, long waiting periods, impudent behavior of
personnel, lack of interest or low interest on part of employees and low
awareness of ESI procedures, were some of the reasons cited.
5) OTHER GOVERNMENT INITIATIVES
Apart from the government-run schemes, social security benefits for the
59
disadvantaged groups can be availed of, under the provisions of the Maternity
Benefit (Amendment) Act 1995, Workmen‗s Compensation (Amendment)
Act 1984, Plantation Labour Act 1951, Mine Mines Labour Welfare Fund Act
1946, Beedi Workers Welfare Fund Act 1976 and Building and other
Construction Workers (Regulation of Employment and Conditions of Service)
Act, 1996.
The Government of India has also undertaken initiatives to address
issues relating to access to public health systems especially for the
vulnerable sections of the society. The National Health Policy 2002
acknowledges this and aims to evolve a policy structure, which reduces
such inequities and allows the disadvantaged sections of the population a
fairer access to public health services. Ensuring more equitable access to health
services across the social and geographical expanse of the country is the main
objective of the policy.
6) Voluntary health insurance schemes or private-for-profit schemes
In private insurance, buyers are willing to pay premium to an insurance
company that pools people with similar risks and insures them for health
expenses. The key distinction is that the premiums are set at a level, which
provides a profit to third party and provider institutions. Premiums are based on
an assessment of the risk status of the consumer (or of the group of
employees) and the level of benefits provided, rather than as a proportion of the
consumer‗s income.
In the public sector, the General Insurance Corporation (GIC) and its four
subsidiary companies (National Insurance Corporation, New India Assurance
Company, Oriental Insurance Company and United Insurance Company) and
60
the Life Insurance Corporation (LIC) of India provide voluntary insurance
schemes.
The Life Insurance Corporation offers Ashadeep Plan IIand Jeevan Asha Plan
II. The General Insurance Corporation offers Personal Accident policy, Jan
Arogya policy, Raj Rajeshwari policy, Mediclaim policy, Overseas Mediclaim
Policy, Cancer Insurance policy, Bhavishya Arogya policy and Dreaded
Disease policy. Of the various schemes offered, Mediclaim is the main product
of the GIC.
The Medical Insurance Scheme or Mediclaim was introduced in
November 1986 and it covers individuals and groups with persons aged 5
–80 yrs. Children (3 Months – 5 yrs) are covered with their parents. This
scheme provides for reimbursement of medical expenses (now offers cashless
scheme) by an individual towards hospitalization and domiciliary hospitalization
as per the sum insured. There are exclusions and pre-existing disease clauses.
Premiums are calculated based on age and the sum insured, which in turn
varies from Rs 15 000 to Rs 5 00 000. In 1995/96 about half a million Mediclaim
policies were issued with about 1.8 million beneficiaries. The coverage for the
year 2000-01 was around 7.2 million.
Another scheme, namely the Jan Arogya Bima policy specifically targets the
poor population groups. It also covers reimbursement of hospitalization costs up
to Rs 5 000 annually for an individual premium of Rs 100 a year. The same
exclusion mechanisms apply for this scheme as those under the
Mediclaim policy. A family discount of 30% is granted, but there is no group
discount or agent commission. However, like the Mediclaim, this policy too has
had only limited success. The Jan Arogya Bima Scheme had only covered 4 00
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000 individuals by 1997.
The year 1999 marked the beginning of a new era for health insurance in the
Indian context. With the passing of the Insurance Regulatory Development
Authority Bill (IRDA) the insurance sector was opened to private and foreign
participation, thereby paving the way for the entry of private health insurance
companies. The Bill also facilitated the establishment of an authority to
protect the interests of the insurance holders by regulating, promoting and
ensuring orderly growth of the insurance industry. The bill allows foreign
promoters to hold paid up capital of up to 26 percent in an Indian company and
requires them to have a capital of Rs 100 crore along with a business plan to
begin its operations. Currently, a few companies such as Bajaj Alliance, ICICI,
Royal Sundaram, and Cholamandalam among others are offering health
insurance schemes. The nature of schemes offered by these companies is
described briefly.
3) PRIVATE-:
a) Individual policy-
One may obtain a health insurance policy through two different ways:
individually or through group insurance. In individual insurance, a person gets
to talk with the health insurance providers one-on-one, in order to get
themselves a deal that would have most of their requirements fulfilled.
Individual health insurance is such that one is able to choose what s/he wants,
and is not saddled with any and everything. Many people prefer to go for
individualized health insurance because they get to choose what they want to
be covered for. In complete honesty they have surrender any knowledge of
62
their family history in terms of illness so that their cases can be assessed
thoroughly. In the case of an individual policy, the risks of being rejected before
commencement of the policy are higher. This is because of the possibility of the
smallest of things affecting any clause in the policy. Sometimes insurance
companies do this to save on expenses and payments that may not really be
required.
b) Group Health Insurance Policy
In contrast to this is a group insurance policy because there are fewer chances;
insurance companies do not usually reject paying up dues to people in a group
insurance policy. Group insurance policies tend to be more successful and less
prone to obstacles; often in-depth checkups are not conducted as they are with
individual health policies. The reason behind this is that insurance companies
are suspicious of individuals who approach them; they feel that there must be a
particular reason for them approaching them. This is sometimes true, and so,
individuals tend to be scrutinized much more than group members.
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5.2 CURRENT STATUS OF PRIVATE/PUBLIC HEALTH INSURANCE IN
INDIA
India has lessons to learn from the experience of Chile. India too has a dual
system of care—a private fee-for-service based sector where the money
is paid out-of-pocket by individual households and a tax-based public
sector where the providers are salaried. Utilization of insurance under both
these systems is partly restricted and rationed by the affordability of the
individual household and availability of the budget. On the other hand,
insurance as a means of financing is a far more sophisticated mechanism,
requiring a comprehensive understanding of the failures that characterize
health insurance markets.
For example, a problem such as asymmetry in information puts the patient and
the insurer at a disadvantage due to their inability to resist or challenge medical
opinion regarding an existing condition or future treatment. Besides, in the
absence of knowledge of prices, the provider can short change the two by
overcharging. Second, cashless insurance creates disincentives to control
costs as it appears to be a free‗ good for the patient and the provider, often
resulting in excessive treatment by the provider (induced demand) and
frivolous use by the patient taking treatment even for a condition which he
would normally have ignored or cured with a home remedy (moral hazard).
Third, it is only the patients who know their health status. Since it is normally
those in need of health care who tend to subscribe to health insurance, this
puts the risk on insurance agencies to resort to extensive processes of
risk selection, such as medical examination, before being given admittance as
an enrollee and focusing on low risk groups, such as the young or healthy. Risk
64
selection in individual- based policies however results in increasing the loading
fee and consequently the cost of premium. This is one reason for the attractive
group discounts being as high as 67%. For these reasons, private commercial
health insurance is known to select its customers—the young, healthy,
rich, males—leaving the bad risks to the government—old, poor, young
women in the reproductive age group, and the ill.
Health insurance in India is usually associated with the Mediclaim policy of the
GIC, which was introduced in 1986 as a voluntary health insurance
scheme offered by the public sector. The premium based on the age, risk and
the benefit package opted for, ranged from a minimum premium of Rs 201 for
those more than 25 years of age, to a maximum benefit of Rs 15,000 with
discounts for group memberships. In 2001, there were 78 lakh persons covered
under Mediclaim. The subscribers are usually from the middle and upper class,
especially since there is a tax benefit in subscribing to Mediclaim.
The standard Mediclaim policy covers only hospital care and domiciliary
hospitalization benefits. Most medical conditions are reimbursed though there
are important exclusions, such as pre-existing diseases, pregnancy and child
birth, HIV/AIDS, etc. Hospitals with more than 15 beds and registered with a
local authority can be identified as providers.
The Insurance company (or the TPA, where applicable) administers the
scheme. Being an indemnity scheme, the patient pays the hospital bills and
submits the necessary documents to the company. The company in turn
reimburses the patient.
There is also uncertainty about the amount reimbursed, there are times when
the patient is reimbursed only partially, the usual reason being the
65
insufficiency of documentation. The policy is not renewed automatically and is
dependent on the timely payment of premium. Ellis et al. observed that the GIC
was more interested in whether the claim pertained to an existing disease or
whether the facility was qualified or not, but spent little time on detecting fraud.
With claims exceeding 30% a year, more than the household spending, it
reflects the problem of moral hazard which requires close monitoring.
Second, it was also observed that the GIC sets premium on the filing of claims
and not actual amounts settled, giving it a cushion year on year as
settled claims amounts are always lower than those filed, an amount that
remains unadjusted. During 1994, 4.4% of the insured persons made a claim, of
which only 75% of claims were settled. The claims ratio was 45%. However, of
late, the claims ratio is growing at a fast rate, allegedly because of
collusion between the patients, insurance agents and hospitals.
From the above discussion, five features that characterize the Health
Insurance system in India emerge:
1. By and large, the system offers traditional indemnity, under which the insured
first pay the amount and then seek reimbursement. Under indemnity, all known
diseases or health conditions are excluded and therefore such policies typically
have a large number of exclusions. This also means that those most in need of
insurance, i.e. The sick, get excluded for any financial risk protection against
the diseases they are suffering from.
2. It is a fee-for-service-based payment system. Such a system of payment
is advantageous for the provider since he bears no risk for the prices he
can charge for services rendered by him. Combined with the asymmetry in
information, such a system usually entails increased costs.
66
3.Policies provide a ceiling of the assured sum. Such a system, and that
too within a fee-for-service payment system, results in short changing the
insured as he gets less value for money, as the provider and the insurer
have no obligations to provide quality care and/or over provide/over charge
services so long as the amounts are within the assured amount of the insurance
policy.
4.The system is based on risk-rated premiums. This again puts the risk on the
insured as the premium is fixed in accordance with the health status and age.
Under such a system, women in the reproductive age group, the old, the poor
and the ill get to pay higher amounts and are discriminated against.
5.The system is voluntary, making it difficult to form viable risk pools for
keeping premiums low.
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5.3 HEALTHCARE INSURANCE AWARENESS IN INDIA
Insurance may be described as a social device to reduce or eliminate risk of life
and property. Under the plan of insurance, a large number of people associate
themselves by sharing risk, attached to individual insurance plan that
exclusively covers healthcare costs and is called Health Insurance.
Since the past two decades, there has been a phenomenal surge in
acceleration of healthcare costs. This has compelled individuals to have a re-
look on their actual monthly expenditures, spending patterns and
simultaneously allocate a proportion of their income towards personal
healthcare. This has resulted in individuals availing healthcare insurance
coverage not only for themselves but also for their family members including
their dependants. In short, healthcare insurance provides a cushion against
medical emergencies.
The concept of Insurance is closely concerned with security. Insurance acts
as a shield against risks and unforeseen circumstances. In general, by and
large, Indians are traditionally risk-averse rather than risk lovers by nature.
Categories
Indian Health Insurance is primarily classified into 2 categories:
•Cashless Hospital ize
• Medical Reimbursement
A) CASHLESS HOSPITALIZATION
Cashless hospitalization is a specialized service provided by an insurer wherein
an individual is not required to pay the hospitalization expenses at the time of
discharge from the concerned hospital. The settlement is done directly by the
insurance company (or insurer). However, prior approval is a must from the
68
TPA (Third Party Administration ) before availing the benefits under this option
cashless hospitalization can be of two types
• Planned hospitalization: This is a planned hospitalization wherein the
insured is aware of the hospitalization in advance. This duration period may
vary from case to case. Examples include: FTND (Full Term Normal Delivery),
Chemotherapy treatment for carcinoma (cancer), for cataract
surgery, tonsillectomy (removal of tonsils).
• Emergency hospitalization: It is a sudden hospitalization that may be either
an emergency or due to unforeseen circumstances. In short, hospitalization is
not anticipated in advance. Examples include RTA (Road Traffic Accident),
Myocardial infraction (heart attack) acute appendicitis.
B) MEDICAL REIMBURSEMENT
Re-imbursement means to repay or to compensate. Thus, Medical Re-
imbursement means to repay the products/services availed during
hospitalization and more importantly after the completion of the treatment
Under this procedure, the insured has to bear the entire expenses incurred
during hospitalization. After getting discharged from hospital, the insured/policy
holder can claim medical reimbursement. For availing benefits under this option,
the insured has to approach the concerned TPA under which he/she is covered,
fill the requisite form and satisfy all the requirements as mentioned. This
includes submission of TPA card, policy paper, discharge summary,
prescriptions, diagnostic laboratory reports, OPD treatment details etc. A sum
is granted as reimbursement for treatment expenses.
A recent survey conducted in 2008 showed that only 3% of the entire Indian
69
population has availed some sort of insurance policy and enjoys benefits
included under its coverage. This miniscule percentage constitutes both –
PSUs (Public Sector Undertakings) and Private insurance companies. Since, the
general public are by and large ignorant about the benefits of availing healthcare
insurance policies, there lies an urgent need to educate the masses regarding the
importance of Healthcare insurance and the benefits derived on account of itThere
are numerous reasons for not availing health insurance. There is a lack of knowledge
regarding the existing insurance products/services in the markets. On top of it, there
are numerous misconceptions about Insurance prevalent in the Indian Markets. Also
there are numerous fly-by-night agents out to fleece the gullible Indian public.
In India, public funded healthcare is available only to a miniscule section of BPL
(Below Poverty Line) groups, low-income groups and to government employees. The
Indian Government has formulated Employee State Insurance Scheme (ESIS) that
focuses on the public healthcare policy for low-income groups. The government
employees can avail Central Government Health Scheme (CGHS) that offers medical
treatment at a subsidized cost.
With the opening up of insurance sector for private participation, numerous players
have entered the healthcare segment, but inspite of the entry of private sector,
penetration of insurance coverage in India is abysmally low. Recently a legislature has
been passed in the Indian Parliament allowing 49% of FDI in insurance industry.
5.4 THE NEED TO SPREAD HEALTH INSURANCE AWARENESS
The condition of health insurance in India is not up to mark. 85% of Indian
population does not use health insurance to finance their medical expenditure.
These people pay for their medical expenditure from their pocket. As a result,
many of these uninsured individuals either end up with poor quality healthcare
70
or have to bear financial hardships. The financial stress that is engendered due
to rising medical expenses is believed to affect the lifestyle of all family
members for years. If the same continues, how will the people of India pay their
medical expenses in the future? How will the efforts of medical care providers
be fruitful, when there will be no one to avail medical treatment?
Thus, there is a need to increase the number of insured individuals in India.
Working in this direction, every individual, every medical care provider and
every health insurance company should play an active role. It is only then
possible that people would be able to avail quality healthcare in times of
medical emergency. Insurers have designed plans, but people should be
encouraged to buy them so that the overall condition of medical care
insurance in the country can be improved. The products and offerings brought
by different medical insurance providers vary from each other. The only point
that should be brought to light is that people should buy these products to
remove inconveniences from quality medical treatment. These products offer
much relief to them and their family members at the time of medical
emergency. There is no need for an insured individual to scramble for the
arrangement of funds at the last hour. Hence, the Government and all the
associated bodies should all offer their support in spreading health insurance
awareness so that Indian citizens are aware of the right to seek quality
healthcare without any financial thought.
Health of its citizen is one of the top priorities of a nation. A nation with Healthy
people would be able to pursue its agenda with dexterity and execute those
with fine see. Total Health care boost economic growth , reduces poverty and
71
lowers mortality rate. The success of many countries lies in their special effort
to cover the entire population with a scheme of health insurance that keep
them protected against unforeseen health hazards through insurance coupled
with wellness program . The Health insurance converge is well established
straightway . In India as also in many other countries with low per capita, the
burden of having to pay for unplanned and expenditure for medical treatment is
very acutely affecting large population. The total health expenditure in India is
around 5% of gross domestic products(GDP) in which bulk funding comes from
private household as mentioned above.
The Government should educate people about the rise of medical costs and
the importance of these products. Regulators should bring change in the
guidelines, allowing only the right players to enter the health insurance market.
Health insurance providers should design products, according to health needs
of target customers and encourage people to buy them. The combined efforts
of all these bodies will surely bring some improvement.
AWARENESS HELP TO BOOMING HEALTH INSURANCE IN INDIA
In the Indian non-life insurance industry, health insurance is the second largest
segment. It has picked up pace in previous fiscals, and is set to reach new
heights in the coming few years as public and private insurers are coming up
with various schemes to cover the untapped insurance market. As per our
latest findings, the Indian health insurance industry is one of the most prolific
ones in the world. As the healthcare costs and awareness are rising in the
country, we expect the segment to grow with gross premiums scaling up at a
CAGR of around 32.5% during 2010-11 to 2013-14. India‘s health insurance
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landscape has undergone tremendous changes in the last few years with the
launch of several health insurance schemes, largely initiated by central and
state governments. We observed that a significant share of coverage has been
achieved through central and state government-sponsored health insurance
schemes. Besides, private and public health insurers have introduced a large
number of plans and schemes to cover an individual and his family against
critical ailments like heart failure, stroke and kidney failure.
As a chunk of population in India is living with HIV/AIDS, the private health
insurance companies are cashing in on the big opportunity by designing special
policies for such people. India could soon see a national medical insurance
policy for people living with HIV (PLHIV). The National Aids Control
Organization is planning to make insurance 'inclusive and universal for PLHIV',
we observed while studying and analyzing trends in the Indian health insurance
industry.
During the health insurance market analysis, researcher found that there are
around 28 active third party administrators (TPAs) in India, and the TPA
infrastructure in the country has witnessed a strong growth with the rising
penetration of health insurance. The TPAs are recognized as valuable service
providers in the health insurance services delivery chain. Our comprehensive
report also identified that emergence and growth of health insurance have
given rise to a need for maintaining and optimizing claims processing and
management. It aims at enhancing services, offered by health insurance
companies, for the maximum benefit of the insured.
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According to the study, health insurance portability is also gaining popularity in
India as it allows health insurance policyholders to switch companies while
retaining their no-claims benefit. The report also provides an overview of the
rural health insurance segment, and expects that the number of uninsured rural
households will decrease with time. Various Insurance Regulatory and
Development Authority (IRDA) acts and amendments have also been studied
to understand the regulatory framework for the industry. The research also
looks into profiles of various players in public and private sectors to present the
competitive landscape and a balanced outlook of the Indian health insurance
industry to clients.
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CHAPTER 6
REGULATORY FRAMEWORK
6.1 IRDA
6.2 Rules for Health Insurance Claim Settlement by IRDA
6.3 Third Party Administrator
6.4 Role Of TPA
6.5 Standard Health Insurance Model
6.6 Structural and Operational Working Of Health Insurance
6.7 Claim management
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CHAPTER 6
REGULATORY FRAMEWORK
6.1 IRDA
HEALTH INSURANCE SETTLEMENT CLAIMS BY IRDA
Insurance regulator - Insurance Development and Regulatory Authority (IRDA)
is soon coming up with a separate health insurance claims settlement
regulation, which would address issues arising out of claims not honored by the
insurers in a time bound manner. Presently there is no separate provision for
the health insurance claim settlement. The IRDA is working on a draft
regulation and it is expected to be put up on the regulator‘s website
for comments and suggestions by April 30, 2012.
A public interest litigation was filed by a Mumbai-based insurance activist in
February 2011 against IRDA which said ―there are a great deal of
inconsistencies and violations in the health insurance industry, which are
directly detrimental to the interests, health and financial well being of crores of
Indian consumers.‖ The fight between the hospitals and insurers and their third
party administrators (TPAs) should not impact consumers, it said.
After hearing the petition last month, a division bench of Chief Justice Mohit
Shah and Justice Roshan Dalvi said in its order, ―We expect that the IRDA will
display the draft regulation for health care on its website as possible.
There are currently more than 7 crore health insurance customers with a total
premium of Rs. 11,000 crore. Out of the 4 public sector general insurers, New
India Insurance incurred a loss of Rs 422 crore in FY ‗11 and the rest were
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making profits. Out of the 15 private non-life insurance companies only 2 made
profits. The net loss of the general insurance industry was Rs 1,019 crore
for the last financial year.
There have been number of cases where insurers were accused by the
customers for denying, delaying or reducing claim amounts deliberately.
In2010, the 4 public health insurance companies, having a 60% share of the
total market, struck off a large number of hospitals from their Preferred Partner
Network (PPN) in almost all metros. PPN hospitals provide cashless medical
facility under the health insurance policy. Insurers alleged that there were some
hospitals who along with the patients were inflating the medical bills and
some TPAs were also involved in this.
There is documentary evidence of some insurance companies providing
incentives to their TPAs to lower the amount claimed by a customer. Experts,
however, feel that when there are mechanisms the IRDA has developed to deal
with claims, there is no need for a new set of regulations.
IRDA is planning to change Health Insurance in India:-
On 30th May 2012, IRDA published an exposure draft of IRDA (Health
Insurance) Regulations 2012. The exhaustive 44 page new draft regulations for
Health Insurance released, reflect IRDA's continued efforts and intentions to
"clean up" the grey areas in Health Insurance in India.
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6.2 RULES BY IRDA
All Health Insurance products henceforth would be renewable for
lifetime, without any renewal ceasing age.
Grace period for renewal of Health Insurance would be 30 days, before
which delay of renewal could be condoned by the Insurance Company.
Health Insurance policies from Life Companies would have a minimum
term of 4 years, whereas Non-Life companies could have a maximum
term of 3 years.
Clear procedures specified for smooth migration of children from
Floater plans proposed by their Parents, into their own independent
plans.
Insurers would be required to have policy wordings of all their products
mandatorily put up on their website. (Yes, there are some good
companies which don‘t have Policy Wordings on their portal)
Communication of Denial of Coverage, and Loading on fresh Health
Insurance proposals should be in writing.
Separate Claims and Grievance Cell for Senior Citizens.
Loading on Claims only when individual claims for 3 consecutive years
exceed 500% of the renewal premium.
Health Insurance Customers with multiple insurance policies, would
have a choice to choose which product he wants to use. Contribution
would be effected between Insurance companies, without involving the
customer.
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Standard Definitions, Exclusions, and Forms (like Claim Forms) are
expected to be released by IRDA.
Renewal Procedure (regarding maximum age, changes in coverage at
later ages, upgrading cover, loading charges) would have to be
clearly detailed in the policy wordings
Any change in Terms of the policy at the time of renewal need to be
communicated with the policy holder 3 months before the renewal date.
Insurers are required to mandatorily settle claims within 30 days of
submission of complete documents.
Insurance Companies cannot reject claims on technical grounds of
delayed submission, if the customer can provide valid reasons for the
delay caused.
Cashless Cards should be issued within 15 days of issue of the
Health Insurance Policy. No Fresh cards would be issued every year on
renewal. The same cashless card would be continued every year.
Hospital Network would be the responsibility of the Insurance
Company, and not the TPA (which is the case currently) Insurance
Companies would be required to make direct agreements with Hospitals.
These agreements could be tripartite with the TPA. In short, Insurance
Companies would administer the network and would be held responsible
for issues that arise in the network. (Since TPAs were originally brought
in to primarily administer the network of hospitals, their role after these
regulations take effect, would be diluted significantly.)
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Any Change of TPA in a policy should be informed to customer with
30days of such change. All data should be seamlessly transferred to the
new TPA, ensuring there is no hassle caused to the customers.
6.3 THIRED PARTY ADMINISTRATION
A Third Party Administrator (TPA) is an organization which processes claims
or provides cashless facilities as a separate entity. Seen as an outsourcing of
claim processing, TPA processes claims for both retail and corporate policies.
The risk of loss incurred remains with the insurance company. The insurance
company usually contracts a reinsurance company to share its risk. An
insurance company hires TPA to manage its claims processing, provider
network and utilization review. While some TPA operates as units of insurance
companies, most are often independent.
TPA is also involved in handling employee benefit plans such as processing
retirement plans. Handling healthcare or employee benefit claims requires
using a specialized set of manpower and technology, therefore hiring a TPA for
the same is a more cost effective method. The Insurance Regulatory and
Development Authority of India (IRDA) defines TPA as a Third Party
Administrator who, for the time being, is licensed by the Authority, and is
engaged, for a fee or remuneration, in the agreement with an insurance
company, for the provision of health services. TPA was introduced
by the IRDA in 2001.
Being one of the prominent players in the managed care industry, it has the
expertise and capability to administer all or a portion of the claims process. The
services include claims processing, premium collection, enrollment and
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cashless processing. Insurance companies setting up its own health plan often
outsource certain responsibilities to a TPA.
The TPA acts like a claims adjuster for the insurance company. In some cases
the insurance company sets up an entire department within their own company
to act as TPA as opposed to hiring a commercial TPA company.
6.4 ROLE OF TPA IN HEALTH INSURANCE
Large number of the health insurance companies in India suffer losses and
have been doing so for years together. The group health insurance profile is
what may cause optimum leakage to the health insurance companies in India.
TPA was introduced through the notification on TAP Health Insurance
regulation 2001 by the IRDA-their basic role is to function as intermediary
between the insurer and the insured and facilitate the cashless services of
insurance .For this service they are paid a fixed percent of insurance premium
as commission . The commission is currently fixed at 5.6 percent of premium.
The introduction of TPAs is of great help and relief to the insurance
companies, which have been searching for ways and means to get their
management expenses in line with the specifications laid down by the IRDA.
TPA is maintaining a database of policy holders and issue identity cards with
unique identification numbers to them. They also handle all the policy- related
issues, including claim settlements for the policy holders Insurance companies
(insurers) can now outsource their administrative activities, including settlement
of claims, to third party administrators, who offer such services for a cost. The
insurers remunerate the TPAs; hence, policyholders receive enhanced facilities
at no extra cost. Once the policy has been issued, all the records will be
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passed on to the TPAs and all further correspondence of the insured will be
with the TPAs and not with the insurance companies
The TPA's are expected to provide value-added services to the consumers, like
arranging ambulance services, medicines and supplies, guiding policy holders
for specialized consultation, and providing information about 24- hour help
lines, health facilities, bed availability, organization of lifestyle management and
well- being programs.
In the middle of 2010, the public sector health insurance companies, namely
United India, New India, Oriental Insurance and moreover National Insurance
took a tough stand and penalized major hospitals where such procedure were
taking place. They eliminated these hospitals from the list from which cashless
medical services can be availed by the customers. This caused a lot of pain to
the insured, however the industry woke up to the fact that insurance companies
were being taken for a ride. The 4 public sector health insurance companies
then decided to float a TPA of their own and even do away with the middlemen
who were not falling in line. This action is likely to cut down the frequency of
false claims creeping their business. The move has acquired big support even
from the private health insurance companies. The issuer was not of the public
sector health insurance companies alone as well as certain private sector
companies have done away with the practice of TPAs as well as used to
process claims through in-house representatives. The TPA undoubtedly aims
to give the health insurance industry the required boost in India.
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THE SERVICES PROVIDED BY TPA ARE AS FOLLOWS:
ID card: TPA provides ID cards to all their policyholders in order to validate
their identity at the time of admission.
The TPA's undertakes "Pre-authorization" before a surgical procedure to
ease claim processing
24 hours customer support services: The TPA provide assistance through
their 24 hrs call center that provides information regarding policyholder's data,
provider network, claim status, benefits available with existing cardholder, etc
All these details are furnished on request.
Cashless Hospitalization: Each policyholder is provided with a list of
empanelled hospitals where in he/she can avail cashless hospitalization.
Claim Management: On behalf of the insurance companies TPA administers
and settles claims for hospitals and policyholders .Policyholders have the privilege
of expressing their grievances to the concerned insurance company or at the
consumer's court if they are not satisfied with the services of a TPA.
THE SPECIALIZED FUNCTIONS OF THE TPA INCLUDE:
The TPA keeps and maintains all the records of medical insurance policies of
an insurer.
The TPA issues identity cards to all the policyholders. The policyholders will
have to show the identity cards to the hospital authorities before availing any
services from the hospital.
In case of a claim, policyholders will have to inform the TPA on a 24 hr toll-
free line provided by them
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After informing the TPA, the policyholder will be directed to a hospital where the
TPA has a tied up arrangement. However, policyholders have the option to be
admitted at another hospital of their choice in which case, payment will be on
reimbursement basis.
TPA pays for the treatment; they issue an authorization letter to the hospital for
the admission of the policyholder in the hospital.
At the point of discharge, all the bills will be sent to the TPA while they are
tracking the case of the insured at the hospital.
TPA makes the payment to the hospital.
TPA sends all the documents necessary for consideration of claims, along with
the bills to the insurance company.
The insurance company then reimburses the TPA
CONDITIONS DEFINED BY IRDA FOR TPA
Before IRDA allowed the TPA‘s to formally enter in to the insurance market
there were intermediaries who were acting on behalf of the corporate and
playing very similar role of present days TPA‘s. Corporate were utilizing these
agencies to help them make process of claim reimbursement easier and
smoother for their employees, Also these agencies were helping to market the
insurance product available –mainly the mediclaim –to corporate. As regulation
,2001er IRDA , the following are the conditions , specified for the TPA‘s. Figure
5 shows the detail condition specified by IRDA by TPA‘s.
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source :www.irda.gov.in
Figure no.6.4.1 Conditions Defined by IRDA for TPA
Only a company with share capital 1crore of registered under the companies Act.
1956 can function as TPA
An organization is desires to function as TPA shall license from the authority by
make in a application in writing in form TPA and accompanied with fees of RS
20000
The Authority, on examination of the application and detailed furnished by the
applicant, may issue a license , if it satisfied that the applicant TPA is eligible to
function as TPA
Every TPA approved by the Authority shall pay a further Rs.30000(Rupees thirty
thousand only )to the authority as license fees before the license granted to it.
A copy of agreement entered in to between the TPA and insurance company or an
modification thereof , shall be filed , within 15 days of its execution and
modification.
Every TPA shall appoint , with due intimation to the authority ,from among its
directors or senior employees, a chief Administrator officer (CAO) Chief executive
officer(CEO) who shall be responsible for the proper day to day administration
activities of the TPA
Where the authority decides to issue a license to the applicant to act as TPA, it shall
issue the same in the form TPA-2
Every License granted by the Authority to a TPA, shall remain in force for three years
, unless the authority decides , either to revoke or Cancel it earlier , as provided in
these regulations. A license granted to a TPA may be renewed for a further period of
three years
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6.5 STANDARD HEALTH INSURANCE MODEL
PREMIUM FEE FOR SERVICE
REIMBURSMENT
HEALTH SERVICES
Source: International research of multidisciplinary research Figure no. 6.5.2 Standard Health insurance Module
In graphical representation of working environment of insurance industry and
role of TPA in the system .The core product or service of a TPA is ensuring
cashless hospitalization to policyholder. Intermediation by a TPA is ensuring
that policy holder hassle- free services. Insurance companies pay for efficient
INSURER
GOVERNMENT OR PRIVATE
( for PROFIT OR NON PROFIT)
CUSTOMER
INDIVIDIUAL and/ OR
EMPLOYER
Making regular payments
to a fund
HEALTH CARE
PROVIDER
GOVERNMENT
OR PRIVATE
( for PROFIT OR
NON PROFIT)
T
P
A
REGULATOR
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And cost efficient services and health care providers get their reimbursement
on time. By doing this it is expected that TPA‘s would develop appropriate
system and management structures aiming of controlling costs ,developing
protocols to minimize unnecessary treatments, Investigations, Improvement
quality of services and ultimately lead to lower insurance premium.
However the system is currently going through teething troubles. Cashless
policies where the insurer directly pays the hospital bill to the health care
providers have not yet fully materialized.
Other than the above diagram we can see that there are main three
stakeholders in the health insurance system. These are insurance companies,
Health care providers and customers. Other than these, two more parties which
are important and involved in the process are of Third party Administrator and
regulator. Important difference between health insurance and any other kind of
insurance there are more stakeholders than in the other type of insurance and
this makes the whole process more complex and difficult to control.
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6.6 STRUCTURAL AND OPERATIONAL WORKING OF HEALTH
INSURANCE
Operational Health Insurance procedure
Source:www.assocham.org
Figure no 6.6.3 Operational Health Insurance Procedure
Operational and Surgical related
Expenses
Critical Illness Related
Expenses
Network
Hospital
Non
network
Hospital
Step1- Claims needs to be
confirmed by a registered
practitioner including a
Relevant specialist
acceptable to the company (
The cost of which shall be
borne by the policy Holder)
Step 2- Life Insured
should have survived
for at least 28 days after
happening of the Event
Step 1- Filling all the
required claim
documents within 60
days of the date of
happening of the
event with relevant
document
Step 2-Receive benefits
as applicable (Payout
may be reduced by 20
to 30% in case of
hospitalization or
undergoing surgery in a
network Hospital
Step1- Complete Pre
authorization form
and send to TPA
Step 2-Cashless
Hospitalization Step 3- Filling all the
required claim
documents within 60
days of the date of
happening of the event
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6.7 CLAIM MANAGEMENT
Health insurance claims management has evolved significantly in India over the
past 10 years. Since the introduction of Mediclaim in the mid 1980s till the
advent of TPAs in 2002, claims management focused primarily on
reimbursement claims. With the advent of cashless hospitalization, the entire
claim process changed. New processes, such as prior authorization became
vital for providers and payers. Time, which was not a crucial element in
processing reimbursement claims earlier, all of a sudden became a vital
parameter. Frequently the patient was already admitted when an authorization
request reached a TPA, this meant that a response had to be given within 4-6
hours so the full treatment could commence. Authorization limit enhancements
were also sought as the treatment progressed or as the patient was ready for
discharge, they also required an urgent response.
The early claim systems were ad-hoc applications, frequently improvised upon
to incorporate the ever changing multitude of payers / providers requirements,
customer expectations and health insurance products. They were mostly
reactive systems, supporting existing products and practices and not designed
to support future requirements. Thus a peculiar chicken and egg scenario
existed- how could an insurer introduce a new product when systems to service
it did not exist? A good claims management system must service existing
products well while having the in-built flexibility to support products with new
and unique features, such as outpatient coverage or products with a savings
component. Increased flexibility to incorporate on-the-fly modifications in
benefits and processes, in-built intelligence to standardize routine processes
and rules based prompts and alerts are now available in newer claims system.
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Not only do they reduce manual intervention and improve process efficiencies,
they can auto adjudicate and process claims which meet all compliance
parameters thus enabling claims staff to provide more time for claims that
require detailed analysis.
FEATURES OF EFFICIENT CLAIMS MANAGEMENT SYSTEMS
Over the next decade, the insurance industry will witness continuous evolution
in health insurance products and processes. The trend to move the claims
function in-house may also be adopted by more insurers. This will create a
unique opportunity for claims system vendors who can offer systems and
applications with a high level of flexibility and automation. The starting point is a
well defined and intelligent work flow management module to ensure optimum
work routing and distribution, in-built escalation and strong external
communication features (like auto letter generation for various scenario‘s or
SMS gateway). The ability to easily configure new products at a granular level
is a vital requirement this enables the automation of various validation checks
on policy, claimant, benefits and provider. A product configure at or interacts
with a rules engine to define product benefits and exclusions to facilitate
automated adjudication of claims. Appropriate pre-processing edits before the
adjudication can substantially increase efficiency and process claims faster. . In
fact in the U.S. auto adjudication rates of 65% to 85% are not uncommon,
albeit a very high percentage of these are simple primary care claims. Since
new products will attempt to differentiate themselves with new service models,
the claims systems will require business process builder to build operational
workflow compatible with the product. In summary, the product configuration
module, business process builder and rule engine is already becoming the core
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of the new generation claims systems. Such integrated solutions enable the
claims teams to achieve significant automation of validation checks at the
policy and the product level including verification of benefit and coverage limits
to streamline prior authorization for cashless claims.
Access to data in the policy administration system and provider module is vital
at this stage. Once the claim data is in the system, pre-defined rules and
product specific processes can be applied. After ensuring that all mandatory
information is provided and is valid, the first step would be to match the claim
against the prior authorization. The second step would be to conduct checks for
medical appropriateness, compliance with provider contracts and variation from
usual and customary practices. Much of this can be automated through the use
of standard treatment guidelines embedded in the system to identify excessive
or unwarranted billing item, therefore generating cost savings for the insurer.
An ideal claims management system should also include a fraud management
module that identifies possible fraudulent patterns based on policy holder
profile, underwriting information and provider profile. Since fraud or abuse
patterns frequently reoccur, such a tool can be very useful.
Once a claim has been processed the claim payment process starts.
Integration with payment gateways is a common feature now and significantly
simplifies this process when paying network hospitals. In case of non-network
hospitals or reimbursement claims, it helps to have a good cheque printing
module. Finally, an effective claims management system can provide excellent
insight to management. Not only can past trends be identified and leveraged,
the vast amount of claims data can be combined with enrollment data to be
efficiently used in actuarial pricing and underwriting.
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In summary, underwriting and claims handling are two core functions of an
insurer and technology offers a lot to streamline both these functions. The
recent advances in claims system ensures that in a few years a significant
portion of claims in India will be processed without any significant manual
intervention.
Know How: Health Cashless Insurance Claims Settlement
Cashless Hospitalization
Cashless hospitalization is service provided by an insurer wherein you are not
required to settle the hospitalization expenses at the time of discharge from
hospital. The settlement is done directly by the insurance company. However,
prior approval is required from the TPA before the patient is admitted into the
hospital.
Types of Cashless Hospitalization
Cashless claims can be of two types:-
Planned: Where the insured is aware of the hospitalization 2-3 days in
advance.
Emergency: Where the insured or any covered family member meets with
sudden accident or suffers from bout of illness that requires immediate
hospitalization.
The procedure of planned / emergency hospitalization.
In case of planned hospitalization
Contact the toll free help-line number.
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Fax / submit the required documents. E.g. Doctor‘s certificate, etc.
Obtain approval from the TPA .
Obtain authorization for network / non-network hospitals.
Avail health treatment.
In case of emergency Hospitalization
Rush the patient to the hospital
Patient avails treatment
Family contacts toll free number provided by the insurer
Family submits required documents. E.g. Doctor‘s certificate, etc
Family obtains approval from the TPA
Family obtains authorization for network / non-network hospitals
Hospital bills are directly settled by the TPA
Non-cashless claim or claim reimbursement : filing claim
A non-cashless claim is when you avail treatment in hospitals that do not form
part of insurer‘s network. In such cases, you have to pay the hospital bills and
subsequently claim reimbursement from the insurer.
The procedure to be followed in case of claim reimbursement :-
Call toll free number and provide hospitalization details.
Settle the hospital bills directly.
Submit the relevant bills / documents to the TPA.
Documents required for filing a non-cashless claim
The following documents are required:-
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Duly completed claim form
Xerox copy of the policy
Bills, receipts and discharge certificate/card from the hospital in originals
Bills from chemists supported by proper prescription
Receipt and pathological test reports from a pathologist
Medical practitioner / surgeon prescribing the test.
Nature of operation performed and surgeon‘s bill and receipt.
The claims are serviced at both network as well as non-network hospitals.
Not covered under cashless and non-cashless hospitalization: How to
prevent rejection claim.
There are following rules to prevent rejection of claim:-
Read the list of coverage and exclusions in policy wordings (which comes to
you with the policy).
Ensure that you declare all the pre-existing diseases at the time of enrolment.
Do not claim for any hospitalization and diagnostic studies / investigation
charges, which do not confirm existence of an illness or injury that requires
hospitalization.
After filing the claim, make sure that maintain minutes of interaction with the
insurer in black and white.
Understand the policy in detail. Be informed about the ‗Fine print‘ , exclusions
and details pertaining to depreciation and deductions.
Do not hesitate to ask details of deductions or rejection.
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CHAPTER 7
INDUSTRY TREND AND DRIVERS
7.1 Value Chain
7.2 Distribution Channel
7.3 Insurance Portability
7.4 Portability in Health Insurance Help to increases
buying pattern of customer
7.5 Portability Form
7.6 Gaps and Improvement area in Health Insurance
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CHAPTER -7
Value Chain
Insurer
Payer Intermediaries Providers
Source-http://www.slideshare.net
Figure no. 7.1.1 Value Chain
Private companies
Public companies
Employer,
Government,
Mediclaim
policy Holder
NGO/ SHG
TPAs
Distribution
Channel Partners
HMO
PPO
Hospitals,
diagnostic centers
, Nursing Homes ,
Doctors
Customers (Individual Patents )
IDRA-Regulator
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7.1 VALUE CHAIN
Value Chain Insurers Private Companies IRDA - regulator Public Companies
Payers Intermediaries Providers TPAs Employers Hospitals Distribution
Channel Government Diagnostic Centers Partners Mediclaim Policy Holders
Doctors HMO NGO/SHG/MFI Nursing Homes PPO Customers (Individuals,
Patients) Private: Private Companies, TPAs, Distribution Channel, TPA‘s, PPO,
HMO, Healthcare Providers, Private Employers Public : Public Companies,
Healthcare Providers, Government Employer.
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DISTRIBUTION CHANNEL IN INDIA
AGENCY MATURE
DIRECT MARKETING MATURE
BANKASSURANCE GROWING
BROKER GROWING
TELEMARKETING GROWING
MICROINSURANCE GROWING
VIRTUAL MARKETING EMERGING
Figure no 7.2.2 Distribution Channel in India
7.2 DISTRIBUTION CHANNEL
In India distribution channel has increase day by day there has been many
channel partners like Agency, Direct marketing , bank assurance, Brokers,
Telemarketing, Micro insurance, virtual marketing but some channel partners
are emerging slowly in the market. The Agency , Direct marketing ,Banc
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assurance, brokers plays an very important role to fulfill the need of the
customers as per their requirement.
Agency and direct marketing channels stable in the market, now many of the
banks has started there own insurance product or they are tie up with the
insurance company so the banc assurance channel now growing in the market
, many of the customers maintain their loyalty towards the company hence they
bye only that companies product.
Brokers and the telemarketing is the easiest way to get the product, by setting
at home customer get there product in hand so this is also one of the growing
channel in the market.
Leveraging the Distribution Network:
Enhancing customer awareness product innovation to suit different segment of
society rather than one size fits all.
Agency model to be restricted to tap the rural market
Finding New business opportunities
Banc assurance channel not capitalizing on the available data base.
Brokers distribution to about 18% of health insurance market focus only on
ubran and group polices & brokers can tap the worksite.
Marketing opportunities available in virtual marketing activities such as
Electronic kiosk stands, mobile advertising, Internet tap.
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7.3 HEATH INSURANCE PORTABILITY
Portability allows customers to carry forward continuity benefits accrued on
their previous policy. These benefits are gained by being under continuous
coverage for a certain period. This is essential for getting coverage for pre-
existing diseases. Earlier, policyholders had to stick to a policy only to retain
the waiting period benefit .
Those covered under employer group health insurance policies or family floater
policies can also port to an individual health cover .However, they will first have
to switch to a plan offered by their existing insurer and will be allowed to switch
to the insurer of their choice only after a year.
IRDA Has issued two circulars on the subject of portability of Health
Insurance
1. Circular dated 10th February , 2011:
Insurance companies have been advised by IRDA to permit the
policyholder to carry forward the credit gained for pre-existing
conditions in terms of waiting period when he or she switches from
one insurer to another , or one plan to another , provided the
previous policy has maintain without break.
The entire data base of the companies , including the claim details ,
in respect of polices where the policyholder have opted for
portability will have to be shared with there counterparts, if
requested by the counterpart within seven working days of such
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request. A time period of three days has been granted by the
regulator to acknowledge portability applications.
This reform is expected to bring about a positive change in the
insurance industry as a whole. The industry players have
welcomed this development. Health insurance portability will bring
about a higher level of competition within seven working insurers in
order to retain existing customers. This will insure that there is
constant innovation and improvement in the efficiency , standard
and services.
2. Circular dated 9th September, 2011:
It was felt necessary to put in place a system to enable
collection of data on the history of Health Insurance and
monitoring the transfer of record of the porting policyholder. In
that context, it was decided that the implementation of
portability of health insurance polices would be mandate to
commence no later than 1st October 2011
Detailed procedures of Health insurance portability have been
set out.
Definition of portability and break in policy.
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PORTABILITY IN HEALTH INSURANCE: HELP TO INCREASE
BUYING PATTERN OF CUSTOMERS
The IRDA, vide circular dated February 10, 2011, had issued guidelines
on portability of health insurance policies which was to be introduced from
1st July 2011. Subsequently, on 24th June 2011, it was felt necessary to
put in place a system to enable collection of data on the history of health
insurance and monitoring the transfer of records of the porting policy
holder. In that context, it was decided that the implementation of
portability of health insurance policies would be mandated to commence
no later than 1st October 2011. In continuation of the above guidelines, the
detailed procedure on health insurance portability shall be as set out in
these guidelines.
1. In these guidelines, the following terms shall carry the meanings as assigned
to them.
1.1 Portability: Portability means the right accorded to an individual health
insurance policyholder (including family cover) to transfer the credit gained by
the insured for pre-existing conditions and time bound exclusions if the
policyholder chooses to switch from one insurer to another insurer or from one
plan to another plan of the same insurer, provided the previous policy has been
maintained without any break.
1.2 Break in policy: A break in policy occurs when the premium due on a given
policy is not paid on or before the premium renewal date or within 30 days
thereof.
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2. All policyholders are hereby vested with the right of portability, i.e.,
policyholders have the right to purchase a Health Insurance Policy from
another insurer from amongst the products such insurer is marketing and the
right will be limited to transfer of the period gained in the existing policy (ies)
which would account towards PEDs and the time-bound exclusions of the new
policy.
3. A policyholder desirous of porting his policy to another insurance company
shall apply to such insurance company at least 45 days before the premium
renewal date of his/her existing policy.
3.1.The Insurer may not be liable to offer portability if policyholder fails to
approach the new insurer at least 45 days before the premium renewal date.
3.2.The insurer may consider a proposal for portability even if the policyholder
fails to approach the insurer at least 45 days before the renewal date, it may be
free to do so.
3.3. Where the outcome of acceptance of portability is still waiting from the new
insurer on the date of renewal:
3.3.1 the existing policy shall be allowed to extend, if requested by the
policyholder, for the short period by accepting a pro- rate premium for such
short period, which shall be of at least one month and
3.3.2 shall not cancel existing policy until such time a confirmed policy from
new insurer is received or at the specific written request of the insured
3.3.3 the new insurer, in all such cases, shall reckon the date of the
commencement of risk to match with date of expiry of the short period,
wherever relevant.
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3.3.4 if for any reason the insured intends to continue the policy further with
the existing insurer, it shall be allowed to continue by charging a regular
premium and without imposing any new condition.
4. On receipt of an application for porting, the insurance company shall furnish
the applicant, the Portability Form as set out in Annexure ‗A‘ to these guidelines
together with a proposal form and relevant product literature on the various
health insurance products which could be offered.
5. The policyholder shall fill in the portability form along with proposal form and
submit the same to the insurance company.
6. On receipt of the Portability Form, the insurance company shall address the
existing insurance company seeking necessary details of medical history and
claim history of the concerned policyholder. This shall be done through the web
portal of the IRDA within 7 working days of the receipt of the Portability form.
7. The insurance company receiving from another insurance company a
request for relevant data shall furnish the requisite data in the data format for
porting insurance policies prescribed in the web portal of IRDA within 7 working
days of the receipt of the request.
8. On receipt of the data from the existing insurance company, the new
insurance company may underwrite the proposal in accordance with its
underwriting policy as filed by the company with the Authority in accordance
with clause 6 of IRDA Form R2 of IRDA (Registration of Indian Insurance
Companies) Regulations, 2000 and clause 14-15 of F&U Guidelines (circular
no. 021/IRDA/F&U/Sep. 06 dated 28th September 2006), and convey its
104
decision to the policyholder in accordance with the Regulation 4 (6) of the IRDA
(Protection of Policyholders‘ interest) Regulations, 2002.
9. If on receipt of complete information and data within the above time frame,
the insurance company does not communicate its decision to the requesting
policyholder within 15 days then the insurance company shall not retain the
right to reject such proposal and shall have to accept the proposal.
10. Portability shall be allowed in the following cases:
10.1 All individual health insurance policies issued by non-life insurance
companies including family floater policies
10.2 Individual members, including the family members covered under any
group health insurance policy of a non-life insurance company shall have the
right to migrate from such a group policy to an individual health insurance
policy or a family floater policy with the same insurer. One year thereafter,
he/she shall be accorded the right mentioned in 10.1 above.
THE PROCEDURE OF PROTABILITY
The application to port your health insurance policy should reach the new
insurer 45 days prior to the last date of renewal of your existing policy.
On receiving your request, the new insurance company will provide you a
proposal form and a portability form along with details of various products
offered by it.
Choose the product which suits your requirement, fill up the proposal and
portability forms and submit them to the new insurer.
105
Once the insurance company receives both these forms, it will approach
your existing insurer seeking details such as medical records and claim
history .
The data will be received through a common data sharing portal
developed by Irda for all insurers. The existing insurer will have to furnish
all the details within seven working days.
After the new insurer has the requisite information, it has to take a
decision on underwriting your policy within 15 days. If it fails to take a view
within this time frame, it will be bound to accept your application.
MERITS AND DEMERITS OF HEALTH INSURANCE PORTABILITY
Merits
To make the process smooth and efficient Insurance Regulatory and
Development Authority (IRDA) has made a clause; according to which if insurer
does not respond into specified time then proposal would be considered to be
accepted.
Portability also allows policyholder to switch from group health insurance policy
to individual or family floater health insurance policy without loosing out on
waiting period credit. This will help those employees who solely depend on
group health insurance policies provided by their employer as now they can
shift to individual health insurance policy without waiting for four years to pre-
existing diseases to be covered.
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Demerits
Policyholder would think to shift to another insurer only if he is not happy with
the claim settlement of the existing insurer that means he had made a claim;
Portability depends on health insurer as he has right to reject or accept the
proposal hence no insurer would like to have a policyholder who had earlier
made a claim.
Another drawback of portability is that there is high probability that insurer will
reject the proposal of senior citizen who are considered high risk category.
If you have accumulated no-claim-bonus and willing to port your health
insurance policy then you will have to pay higher premium for same cover
under new policy because as per IRDA regulations no-claim-bonus can be
transferred to new insurer but premium will be charged on enhanced amount.
Another point is that if policyholder is shifting from group policy to individual
policy then he will get credit for period he has been insured with current insurer
only this is a compromise for the insured especially if he has not made claim
with previous insurer.
Another thing that you need to remember is that you can shift to individual
health insurance policy of the same company which has provided you group
health insurance policy; however, you can shift to another insurer after one
year.
There is confusion on the definition of pre-existing diseases take for instance if
a policyholder has gone for treatment for a disease and his earlier insurer had
settled a claim then in such condition will the new company can deny a cover
for that disease. If new insurer does not provide cover without waiting period for
the ailments suffered during the tenure of the old policy then health insurance
107
portability does not serve its purpose for senior citizen and persons having
chronic diseases. Hence new insurer should cover such diseases. If disease is
listed as pre-existing disease in the current policy then new insurer should also
treat it as pre-existing disease.
108
SAMPLE PORABILITY FORM
Portability Form
Name of the Policyholder / insured (s)
2) Date of Birth/Age
3) Address of the policyholder/insured
4) Details of existing insurer
i. Name of the product
ii. Sum Insured
iii. Cumulative Bonus
iv. Add-ons/riders taken
v. Policy number
5) Details of the proposed insurance
i. Name of the product proposed/intend to
take
ii. Sum Insured Proposed
iii. Whether Cumulative Bonus to be converted
to an enhanced sum insured
6) Reason(s) for Portability
7) No. of family members to be included in the policy
to be ported:
Enclosure: Photocopy of the existing policy documents
Date: Signature of the
policyholder
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7.4 THE GAPS AND IMPROVEMENT AREA IN HEALTH INSURANCE
Health insurance is an expense, to be sure, but the importance of health
insurance really helps defray that expense. To save money, it is better to work
with a health insurance agent who can help you compare plans and costs to find
the best one for you and your family's needs.
Remember, medical expenses are higher than ever, so if you have to be
hospitalized for any reason, your costs are going to be a lot higher than you
might have anticipated. They could be so high that you simply can't pay them,
and bankruptcy is your only recourse. It doesn't make sense to go bankrupt, and
ruin your financial future, just because you didn't buy affordable health
insurance.
Think about another importance of health insurance. Your family. Your children
need health care throughout their young lives, and it seems like kids are always
getting into scrapes that require a trip to the emergency room. If you take care
of a family, you owe it to them to get health insurance. Without it, your entire
family is vulnerable, and if anything happened, would you want to live with the
guilt that having no health insurance could create?
The importance of health insurance cannot be overrated. Certainly, it can be
difficult to come u with the money for individual health insurance. But can you
afford to be without it, really?
This private sector bridges most of the gaps between what government
offers and what people need. However, with proliferation of various
health care technologies and general price rise, the cost of care has
also become very expensive and unaffordable to large segment of
population. The government and people have started exploring various
110
health financing options to manage problems arising out of growing
set of complexities of private sector growth, increasing cost of care
and changing epidemiological pattern of diseases.
The proportion of insurance in health care financing in India is extremely low.
Public spending in health care is very low at 17% and the National Health Policy
has recognized this More than 86% of healthcare financing is through
unplanned or, non-contributory spending 86% from out-of-pocket expenses 83%
from private sector spending Health care financing in India.
111
CHAPTER-8
HEALTH INSURANCE MARKET ANALYSIS
8.1 Indian Health insurance Market
8.2 Growth Drivers
8.3 Market drivers
8.4 Market Restraints
8.5 Company wise Gross direct premium
8.6 Non life insurance claim settlement facts-Figure
8.8 Budget 2012
112
CHAPTER-8
8.1 INDIAN HEALTH INSURANCE MARKET ANALYSIS
Indian Health Insurance Market (2004-2011)
Health Insurance is one of the India Largest sector, in terms of revenue &
employment & sector is expanding rapidly.
Health Insurance spend in India is currently poised to touch 8% of GDP
in 2012 (5.5 in 2009)
Private Sector accounts of total healthcare spending in India.
Fastest Growing segment in the Insurance Industry – Presently Growing
at 32%
Health Insurance sector poised for immense growth
The Growth Chart
Figure 8.1.1 Indian Health insurance Market
0
2000
4000
6000
8000
10000
12000
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-2011
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8.2 GROWTH DRIVERS:
Research has shown that Indians across all segments and age groups are
presently more prone to lifestyle-related ailments and diseases than previous
generations. This fact, undoubtedly negative, stands out as the root cause for
the potential growth of the health insurance sector. Jacob informs, ―The
growing percentage of middle class citizens in the country and the
increasing .healthcare cost is also adding to the growth of the health insurance
segment. Changing demographics, affluence and work-life balance has brought
about a paradigm shift in the attitude of people, who demand for a better
quality of healthcare. Health insurance as a mechanism to finance this need, is
therefore, finding greater acceptability. Thus, the market has great prospects,
but the need of the hour is to identify products that will suit customers‘
insurance needs and win their confidence.‖ Biggest target for the insurance
companies in the next five years would be to cover 20 per cent of the Indian
population. This is expected to be driven by factors like entry of new
competitors, increasing consumer awareness, relaxation in income ceiling, low
growth in public sector employment and increased efforts of Non-government
Organisation (NGO)/self-help groups. He further adds, ―Over the past few years,
many companies have entered into the market, and the industry is seeing a lot
more innovation with product offerings for different segments including senior
citizens, corporate, low poverty line and affluent class. Information Technology
(IT) has also been one of the significant enablers of growth in the sector. Given
the current health insurance penetration levels in the country, at about three to
four per cent, there is a significant potential and a long way to go.
114
There will be the number of factors, which will lead to growth for the Health
Industry , Including Health Insurance . The Drivers of Growth under mentioned:
India is now the second fastest growing major economy in the
world.
Third Largest Economy in the World.
Indian Healthcare has emerged as one of the largest services
sector in India.
Healthcare spending in India is expected to raise by 15%per
annum.
Healthcare spending could contribute 6.1%of GDP in 2012 and
employ around 9 million people
Along with these other reasons, as why the Health insurance will see a major
boom in the coming days in an account of many factors As under mentioned:
Shift from socialized to private providers
Booming Economy and High literacy rate
Shift life style- related diseases
Easier Financing
Increasing life expectancy
Recognition by government priority section
The majority of health care services in India are provided by the private sector
& the private sector in India is one of the largest in the world, having:-
80 percent of all qualified Doctors
75 percent dispensaries
115
60 percent of hospitals in India belonging to the private sector
With the booming economy and High literacy rates, the capacity to spend along
with the capacity of the people to pay has increased. As people earning &
education level increase with it will lead to more spending in health care. The
increase in purchasing power & education will lead to a number of positive
trends for the Health care industry as under-mentioned:-
When families move from middle income to rich, the highest
The top 33 per cent income earners in India accounted for 75
percent of total private expenditure on healthcare.
The proportion of households in the low –income group has
declined significantly and the ―Great Indian Middle-class‖ has
come
With Literacy the Per-capita expenditures on healthcare rise
with higher education level
Households that have higher education levels tend to spend
more per illness.
116
A Great Future of Health Insurance Industry of India
Source: S.K Sethi founder (www.healthinsuranceindia.org)
Table no.8.2.1 Great future of Health Insurance Industry
As People are conscious of health care and hence need for Health Insurance is
increasing year by year. Healthcare costs are increasing at 20% per year.
People have started giving more importance to health insurance with a life
insurance. large number of people are now on the verge of becoming buyer/
customer of health insurance.
Health Insurance industry achieve figure of 30% then the portfolio will be Rs
64414 Cr. in 2017-2018.
Health Insurance industry achieve figure of 60% then the portfolio will be Rs
223892 Cr. in 2017-2018
This is very much possible because of following facts:
a) People are conscious of health care and hence need for Health Insurance is
increasing year by year.
117
b) Healthcare costs are increasing at 20% per year. People have started giving
more importance to health insurance with a life insurance. We feel large
number of people are now on the verge of becoming buyer/ customer of health
insurance.
c) There is talk of health insurance being made compulsory and we understand
PHD Chamber of Commerce is considering organizing a full fledged workshop
on this topic in near future. May be in the beginning health insurance will be
made compulsory either for senior citizens or some specific weaker segment of
our society- but sooner or later our society/ government will go for it on full
fledged basis as a part of its social security programme and implement this
proposal. This aspect will become more and more important as the population
of senior citizens will increase substantially during 2012-2025 period.
In the light of these facts , Health Insurance has a great future in our
country and achieving figures of Rs. 223892 crores is going to be a reality.
118
8.3 MARKET DRIVERS
Current Impact Future Impact
(2008-2011) (2012-2015)
Increasing awareness of
Health Insurance
Raising Health care cost
Have increased the need
for the health Insurance
supportive demographic
profile(proposing middle
class, increasing dieses state
population)
Detariffing of the general
insurance company(which
has increased the efforts
towards health insurance
& other personal lines of
The business)
Rationalization of the
premium rates (e.g. trends
of the upward revision of the
group health policies)
10 5 10 0 5 10
Figure no. 8.3.2 Market Drivers
119
Market Drivers Current Impact (2008-2011) Future Impact (2011-2014)
Increasing awareness of Health Insurance Rising healthcare costs have
increased need for health insurance Supporting Demographic Profiles
(Prospering Middle Class, increasing disease state, population) Detariffing of
the general insurance industry (which has increased emphasis and efforts by
insurance companies towards health insurance and other personal lines of
business) Rationalization of premium rates (e.g. trend of upward revision in
respect of Group Health policies) 0 5 10 0 5 10 In order to encourage foreign
health insurers to enter the Indian market the government has recently
proposed to raise the foreign direct investment (FDI) limit in insurance from
26% to 49% , Government initiatives are always supportive to Healthcare
Insurance Environment. The spending on Healthcare is increasing YOY from
2005 to 2025. The prospering middle class in India supports this spending
environment. The average annual household consumption in healthcare
(discretionary spending ) is expected to double between 2005 and 2025.
Source: Mckinsey There is a clear indication that seekers ( annual income
between INR 2,00,000 and 04,99,999) and strivers ( annual income between
INR 5,00,000 and 10,00,000) population is significantly increasing in the next
future. There will be a direct proportionality of this increase to healthcare
spending parity. Market Restraints Current Impact (2008-2011) Future Impact
(2011-2014) Inadequate healthcare infrastructure Limited reach Significant
underwriting losses for Health Insurance business in India Lack of
standardization and Accreditation norms in healthcare industry in India
Insufficient data on Indian consumers & disease patterns resulting in difficulty in
product development and pricing 0 5 10 0 5 10.
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8.4 Market Restraints
Inadequate Health care
Infrastructure
Limited Reach
Significant underwriting losses
for Health Insurance business
in India
Lack of Standardization norms in
Healthcare insurance industries
in India
Insufficient data on Indian
consumer & diseases pattern
resulting in difficulty In product
development and pricing
0 5 10 0 5 10
Figure no. 8.4.3 Market Restraints
121
Market Restraints Current Impact (2008-2011) Future Impact (2011-2014)
Inadequate healthcare infrastructure Limited reach Significant underwriting
losses for Health Insurance business in India Lack of standardization and
Accreditation norms in healthcare industry in India Insufficient data on Indian
consumers & disease patterns resulting in difficulty in product development and
pricing 0 5 10 0 5 10
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8.5 COMPANY WISE GROSS DIRECT PREMIUM INCOME IN INDIA:NON
LIFE INSURERS
INSURER TOTAL PREMIUM MARKET SHARE
( CRORE) (IN PERCENT)
2009-10 2010-11 2009-10 2010-11
National 4625.18 6220.70 13.36 14.61
New India 6042.51 7097.14 17.45 16.67
Oriental 4736.71 5457.33 13.68 12.82
United 5239.05 6376.66 15.13 14.98
Public Total 20643.45 25151.83 59.63 59.07
Royal Sundaram 913.11 1144.00 2.64 2.69
Reliance 1979.65 1655.43 5.72 3.89
IFFCO Tokio 1457.84 1783.18 4.21 4.19
TATA AIG 853.80 1173.09 2.47 2.76
ICICIC Lombard 3295.06 4251.87 9.52 9.99
Bajaj Allianze 2482.33 2869.96 7.17 6.74
Cholamandalam 784.85 968.00 2.27 2.27
HDFC Ergo 915.40 1279.91 2.64 3.01
Future General 376.61 600.16 1.09 1.41
Universal Sompo 189.28 299.10 0.55 0.70
Shriram 416.93 780.89 1.20 1.83
Bharti AXA 310.82 553.90 0.90 1.30
Raheja QBE 1.32 4.90 0.00 0.01
SBI General 43.02 - 0.10
L & T General - 17.24 - 0.40
Private –Total 13977.00 17424.63 40.37 40.93
Grand Total 34620.45 42576.45 100.00 100.00
Table no 8.5.2 Gross Direct Premium
123
The premium underwritten by 15 private sector insurers (other than the insurers
carrying on exclusively business) in 2010-11 was 17,425 crore as against
13,977 crore in 2009-10. ICICI Lombard continued to be the largest private
sector non- life insurance Company, with market share of 9.99 per cent. It
reported a marginal increase in market share up from 9.52 per cent in 2009-10,
Bajaj Allianz , the second largest private sector non-life insurance company ,
which underwrote a total premium of 2,870crore, saw decline in market share
from 7.17 per cent in 2009-10 to 6.74per cent during the year under review. Of
the 15 private insurers , 12 reported increase in premium underwritten and one
insurer namely, Reliance general witnessed a significant decline in premium
underwritten (reported a negative growth of 16.38 per cent). The other two
insurers had commenced their operations in 2010-11.
In case of public sector non life insurers, all four companies expanded their
business with an increase in respective premium collections. The market share
of these companies, other than for national, however, declined from their
previous year respective levels, which helped to improve its market share to
14.61 percent in 2010-11(13.36 per cent in the previous year). It reported
growth of 34.50 per cent , which is higher than the industry average for 2010-
11, New India , with insurance premium of 7,097 crore , remains the largest
general insurance company in India with market share of 16.67 percent.
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8.6 Non- Life Insurance claims settlement facts –figure
Year Outstand
ing as on
1st April
2010
No.of
claims
reported
during
2010-11
Total
claims
settlement
during
2010-11
No. of
claims
settlement
during
2010-11
%of
claims
settled/
total
claims
processe
d
No. of
claims
repudia
ted
% of
repudiat
ion –
repudiat
ed /total
claim
process
ed
2010
-
2011
3331724 26598505 29930229 25535978 85.3 779645 2.6
Source- Irda
Table no. 8.6.3 Claim settlement Facts and Figures
From the total no claim processed during the year by the non-life insurers, the
percentage of claims repudiated at the industry level is only 2.6 percent.
As against this, the industry settled 85.3 per cent claims of the total claims
lodged and the balance 12.1 percent outstanding at the end of the year.
Overall the number of repudiated claims has been increasing. The rise is due to
the fact that the sector is expanding rapidly and business volumes are
increasing. The number of polices issued by non-life insurance companies is
increasing year on year, the same stood at 7.93 crores in the year 2010-11.
The number of claims intimations would also be more and there for an increase in
claim repudiation numerical terms.
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8.7 Budget 2012: Hike Sec 80D limits to boost health insurance
The market builds up a lot of expectations before the presentation of the
Budget, and both, the common man and industry have always been anxious to
understand its implications. Insurance is a vital service in a growing economy,
and helps regulated risk-taking by individuals and enterprises. Still, penetration
of general insurance in India is abysmally low. The adoption of general
insurance products such as health among retail consumers will get only better
with promising measures by the government. Here are some proposed
changes that can help the insurance industry move to the next level of growth
and consolidation. The measures will also help the industry to render better
service to their customers.
Considering extremely low penetration of GI products in our country, there is a
pressing need for concerted effort to make insurance all the more affordable
and an attractive proposition for the common man. Clearly, abolition of the
service tax will enable this process. Currently the service tax stands at 10.3%
including education cess and the Government should consider waiving off the
service tax on premiums paid. Alternatively, they should at least exempt health
insurance products from the purview of service tax. This move will help to
develop health insurance in the country by aiding greater penetration
Currently, the qualifying amounts under Section 80D for self, spouse and
dependent children is up to Rs. 15,000/- and additional deduction up to Rs.
15,000 for the parents. Given the high cost of medical care and to encourage
more people to purchase health insurance, Section 80D limits should be
increased substantially from the current levels.
126
CHAPTER 9
HEALTH INSURANCE ISSUES
9.1 Reasons for poor penetration of Health Insurance
9.2 Major Issues In Health insurance
9.3 Major issues in handling of Health Insurance
9.4 Fraud in Health Insurance
127
CHAPTER 9
9.1 Reasons for Poor Penetration of Health Insurance in India.
Penetration of health insurance has been slow and halting, despite the huge
market estimated to range between Rs 7.5–20 crores. Some reasons that
explain for the slow expansion of health insurance in the country are as
follows:
1. Lack of regulations and control on provider behavior
The unregulated environment and a near total absence of any form of control
over providers regarding quality, cost or 282 Financing and Delivery of
Health Care Services in India ata-sharing, makes it difficult for proper
underwriting and actuarial premium setting. This puts the entire risk on the
insurer as there could be the problems of moral hazard and induced demand.
Most insurance companies are therefore wary about selling health insurance as
they do not have the data, the expertise and the power to regulate the
providers. Weak monitoring systems for checking fraud or manipulation by
clients and providers, add to the problem.
2. Unaffordable premiums and high claim ratios
Increased use of services and high claim ratios only result in higher premiums.
The insurance agencies in the face of poor information also tend to
overestimate the risk and fix high premiums. Besides, the administrative costs
are also high—over 30%, i.e. 15% commission to agent; 5.5% administrative fee
to TPA; own administrative cost 20%, etc. Patients also experience
problems in getting their reimbursements. Including long delays to partial
128
reimbursements
3.Reluctance of the health insurance companies to promote their
products and lack of innovation
Apart from high claim ratios, the non-exclusivity of health insurance as a
product is another reason. In India, an insurance company cannot sell non-life
as well as life insurance products. Since insurance against fire or natural
disaster or theft is far more profitable, insurance companies tend to compete by
adding low incentive such as premium health insurance products to
important clients, cross-subsidizing the resultant losses. With a view to get the
non-life accounts, insurance companies tend to provide health insurance cover
at unviable premiums. Thus, there is total lack of any effort to promote health
insurance through campaigns regarding the benefits of health insurance and
lack of innovation to make the policies suitable to the needs of the people.
4. Too many exclusions and administrative procedures
Apart from delays in settlement of claims, non-transparent procedures make it
difficult for the insured to know about their entitlements, because of which the
insurer is able to, on one stratagem or the other; reduce the claim amount, thus
demotivating the insured and deepening mistrust. The benefit package also
needs to be modified to suit the needs of the insured. Exclusions go against the
logic of covering health risks, though, there can be a system where the
existing conditions can be excluded for a time period—one or two years but not
forever. Besides, the system entails equity implications.
129
5. Inadequate supply of services
There is an acute shortage of supply of services in rural areas. Not only is there
non-availability of hospitals for simple surgeries, but several parts of the country
have barely one or two hospitals with specialist services. Many centres have no
cardiologists for several non communicable diseases that are expensive to treat
and can be catastrophic. If we take the number of beds as a proxy for
availability of institutional care, the variance is high with Kerala having 26 beds
per 1000 population compared with 2.5 in Madhya Pradesh.
6. Co-variety risks
High prevalence levels of risks that could affect a majority of the people at the
same time could make the enterprise unviable as there would be no gains in
forming large pools. The result could be higher premiums. In India this is an
important factor due to the large load of communicable diseases. A study of
claims (Bhat 2002) found that 22% of total claims were for communicable
diseases.
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9.2 MAJOR ISSUES IN HEALTH INSURANCE
Figure no. 9.2.1 ISSUES IN HEALTH INSURANCE
In India there has been many issues in handling the Health Insurance
because Lack of underwriting Discipline, Lack of product innovation, Lack of
product awareness , increased competition, increased claim cost and many
more, because of this major problem customers did not get there product in
proper manner.
According to this graph it shows that the percentage of underwriting discipline if
very high so to reduce such type of problem government has to take strict
action against this issues , because it affect the loyalty of the customer and
20%
8%
4%
4%
11%
53%
Health Insurance
Lack of underwriting Diciplin
Lack of product innovation
Lack of Product awareness amoung Distributores
Lack of customer awarness
Increased Compitation
Increased in Hospital tariff (claim cost)
131
brand image of the company also. Insurance company is leading in product
innovation; a product is bundle of satisfaction that a customer buys. A growth
oriented firm always looks beyond the existing products or services and there
firm should respond to dynamic environment & offer new services. So because
of lack of product innovation customer are not ready to purchase that product.
Lack of product awareness among distributors, if they are not in position to
introduce the product to customer it will not be in a position to understand the
importance and uses of health insurance. it is rightly said that awareness
develop brand equity , due to awareness a customer recognized the product
and purchase the same , a customer is in position to identify the product
because of such awareness. The firm has to fight competition, promotion will
be focused on attracting new users and retained repeat customers . The firm
may improve service quality and new features and offer low premium prices to
attract money conscious customers.
132
9.3 MAJOR ISSUES IN HANDLING HEALTH INSURANCE
Figure no.9.3.2 Major Issues in Handling Health Insurance There are many Indian citizens who are dissatisfied with the services of health
insurance providers. The main reason for their dissatisfaction is the rejection of
health insurance claims. Majority of these people do not want to know the
cause behind the rejection, but instead show frustration for not being offered
the required coverage or reimbursement. Research shows that many of these
claims get rejected because of a wrong choice made by an individual at the
time of choosing a health insurance plan.
People should understand their health insurance plans before buying to avoid
these confusions. One important point that everybody should keep in mind is
13%
13%
14%
22%
24%
63%
76%
0% 20% 40% 60% 80%
changes in regulation
policy cancellation notice
Changes in regulation (service tax being imposed)
After sales service
Services from broker not up to mark
Services from TPA not up to mark
Employed dissatisfied due to delayed claim sattlement
Series 1
133
the associated waiting period. This is the time period before which there is no
coverage offered for the particular ailment. If a person claims for the same
illness before the waiting period elapses, he/she would not be offered the
coverage. The other important point that a person should ponder over is to go
through the exclusions section. It will help in informing him/her about the
uncovered perils.
The single grievance that any dissatisfied health insurance consumer would
have is that of slow settlement of claims, or that of disputed claims. In order to
overcome the concept of Third Party Administrators was introduced which was
essentially for outsourcing claim settlement. The cashless model of
hospitalization also depends on the TPAs, where policy holders are allowed to
avail medical treatment at any of the networked hospitals without having to pay
cash upfront. However, TPAs are also a source of discontentment among
consumers. The survey shows that their quality of service and infrastructure
needed to improve, and that the service form hospitals was really not up to the
mark.
Most of the brokers are not provided the services up to mark, after selling the
policy they are not taking care about the after sale service procedure The study
revealed that the satisfaction levels in health insurance plans was the least.
Indicating that the health insurance segment needs to consolidate its services
and bring down the dissatisfaction levels of consumers who use the service.
because of the half knowledge of the customer ,the policy can get not approve
and customer get the cancellation notice from company,
There is much confusion with regard to cashless hospitalization facility. People
should remember that this facility can be availed only in network hospitals and
134
thus, going to non-network hospitals to seek treatment on cashless basis does
not make any sense. The common cause behind all these problems is that
people do not read the terms and conditions of their health insurance policy
carefully and thus, face problems at the time of claim settlement. Many of these
people do not look into their healthcare needs while buying insurance, which is
the other important point to be pondered over.
135
9.4 FRAUD IN HEALTH INSURANCE
As India‘s insurance industry matures, fraud risk management is going to be a
major concern for insurers and business leaders. Insurers will need to
continuously reassess their processes and policies to manage and mitigate the
risk of fraud. Fraud risk in the insurance value chain can emanate from internal
and external factors External fraud risk can arise at various stages, e.g.,
registration of clients, underwriting, reinsurance and the claims process The
severity of fraud can range from a slight exaggeration to deliberately causing
loss of insured assets.
In the insurance industry, fraud has always been considered a sensitive issue.
The million dollar question continues how to reduce fraud , these companies to
prove that fraudulent activities exist, for instance, knowing a claim is fraudulent
is one thing, but proving this to be fraudulent is a different matter. Fraudulent
claims and surrenders received by insurers, which also adds up our survey
According to Researcher survey report, there are various types of insurance
frauds, which occur in all the areas of insurance e.g., as claims and surrenders,
fake documentation, mis-selling, collusion between parties, etc. All insurance
fraud can be classified under the categories of soft and hard fraud, as describe
below:
136
Source: Fraud Investigation & Dispute Services
Figure no.9.4.4 Frauds affecting Health Insurance companies
Hard fraud : This occurs when people unlawfully obtain money from insurance
companies by a reporting a false injury or accident
Soft fraud: This happens when people either lie to their insurance companies or
hide certain information for their financial gain.
Today when India‘s insurance industry is working toward reducing cost, one of
its main focus areas to control or reduce costs is by proactively arresting fraud,
which can be achieved through an effective Fraud risk assessment (FRA)
program.
Some essential characteristics of a FRA programs includes:
Effective policy holder and vendor due diligence process
0% 10% 20% 30% 40%
Commission Rebetting
Fake Document
Collusion between Parties
Misselling
Different types of frauds affecting Insurance Companies
Different types of frauds affecting Insurance Companies
137
Effective claims validation
Mystery shopping, i.e. gathering market intelligence relating to tied and
corporate agents, brokers etc.
Channel reviews pertaining to tied agency ,bancassuarce and tele calling
Contract compliances review including review of adverting expenses,
intellectual property (IP) compliance etc.
Effective fraud analytics and electronic dashboard.
In its quest to restrict unfair practices, IRDA has formulated the insurance
regulatory and development authority (Protection of policyholder‘s Interests)
regulations 2002, To counter the increase in the number and complexity of
frauds, IRDA has announced draft regulations for open market consultation, to
reduce ―Unfair practices‖ and the ―Information gap‖ in domestic insurance.
The Insurance Regulatory and development authority (IRDA) has put in place
a significant regulation to bring about transparency in the selling process by
stipulating that‖ All Insurance companies (Life and General)have to resolve
complaints from policy holders within 14 days and any failure to do so will
attract penalty . Any failure on the part of insurers to follow this procedure and
time frame will attract penalties by IRDA.‖
Some of the proposed Regulation:
An amendment of IRDA‘s regulations to protect policyholder‘s interests and
issuances of key feature documents for insurance products
Guidelines on distance marketing and sale process verifications of insurance
products
Standardization of terms and conditions on unit-linked insurance products
IRDA‘s acquisition for the distribution of insurance products
138
In its bid to check financial fraud , IRDA has made it mandatory for all insurers
to obtain recent photograph of new customer
139
CHAPTER 10
INSURANCE GUIDELINES
10.1 Guidelines to meet the need of customer
10.2 SWOT analysis
10.3 How to choose best health insurance Plan
140
CHAPTER 10
10.1 IMPORTANT GUIDELINES TO MEET THE NEED OF THE
CUSTOMERS
Contact the Insurance division to see if the insurance seller is legitimate ,
licensed broker
Read before Sign
If something is unclear get an Explanation in writing from the agent or company
before signing the Insurance form.
Get contract in writing. The only guarantee of coverage is in contract
Ask the agent to Explain thoroughly the policy , the policy ,the coverage and its
limits and conditions
Check the reports rating, the responsiveness of insurance companies to
customer claims
Get copy of every document you sign as apply for and buy the Insurance
policy.
Keep your receipt and cancelled check.
Read your policy as soon as you received it .Be sure that what you received is
what you paid for.
141
10.2 SWOT ANALYSIS OF HEALTH INSURANCE
STRENGTHS (FUTURE GROWTH FACTORS)
India is now the second fastest growing economy in the world
Third largest economy in the world
Indian health care has emerged as one of the largest services
sector in India
Healthcare spreading in India is expected to raise by 15% per
annum
Healthcare Spending could contribute 6.1% of GDP in 2012 and
employ around 9 million peopIe
WEAKNESS (GAPS IN THE INDUSTRY AND SYSTEM)
Inadequate healthcare infrastructure
limited Reach
Significant underwriting losses for business in India
Lack of standardization and Accreditation norms in health
industry in India
Insufficient data on Indian consumers & disease patterns
resulting in difficulty in product development and Pricing.
OPPORTUNITIES (UNTAPPED POTENTIAL)
Increasing awareness of health Insurance as raising
Healthcare costs have increased need for Health care cost
Supporting Demographic profiles (Prospecting middleclass,
Increasing disease state population)
142
There is clear indications that seekers(annual income
between INR2,00,000 and 4,99,999) and strivers (annual
income INR5,00,000 and 10,00,000) population is
significantly increasing the next future. There will be a direct
proportionality of this increase to healthcare spending parity.
The disease rates in India are increasing . India has one of
the highest heart disease and diabetes rates in the world
Shift to lifestyle related diseases .
THREAT(ARES NEEDING IMMEDIATE CONCERN)
New modern private insurance companies are indulging in
money –making business with little interest in insurance
Insurance policies contain too many exclusive clauses
Most Insurance companies now use ‗call centres and staff
attempt to answer questions by reading from a script, It is
difficult to speak to anybody with export knowledge.
143
10.3 HOW TO CHOOSE BEST HEALTH INSURANCE PLAN?
Ever since the new ideas and new techniques have been witnessed in the
market, health insurance has gained real importance. It is very important to
choose the right kind of plan not only for your benefit but for family‘s as well.
The basic idea of the insurance companies is to bring more and more plans
which would suit your needs the best way. And hence, there are innumerable
unique plans made available in the market by the insurance companies. The
only thing you need to know is the right kind of criteria while choosing any plan.
There are certain tips which would surely help you choose the right kind of
plans;
While choosing a plan, the first priority for is to acknowledge your needs
and then act accordingly while choosing the kind of plan you need.
Check out the prices of the various policies available in the market.
Compare them and buy the plan as per your paying capacity.
Search for the individual or family policies available, as are much more
economical and provides higher coverage for all the members of your
family.
Normally a broker is the best option when buying a policy cover as he
can review all the terms of the policy properly and doesn‘t push an
individual towards buying any policy.
Preferably, avoid insurance policies which have tie-ups with any
particular hospitals or have specific conditions for buying the plans.
144
The most important thing is to be truthful with the broker or the insurance
company and give them all the proper details required for their
procedures.
Rest will depend upon the insurance policy taken by you and the way it would
be helpful in the near future. The better way is to maintain utmost care in your
well being and your eating habits. This would keep you away from the germs as
well as harmful diseases.
145
CHAPTER 11
Key Players
11.1 ICICI LOMBARD
11.2 BAJAJ ALLIANZE
11.3 STAR ALLIED HEALTH INSURANCE
11.4 NEW INDIA ASSURANCE
11.5 OTHERS
11.6 Comparison of Health Insurance Companies
146
CHAPTER 11
TOP 5 HEALTH INSURANCE COMPANIES
11.1. ICICI LOMBARD
ICICI Lombard GIC Ltd. is a joint venture between ICICI Bank
Limited, India's second largest bank with consolidated total assets of over USD
91 billion at March 31, 2012 and Fairfax Financial Holdings Limited, a Canada
based USD 30 billion diversified financial services company engaged in general
insurance, reinsurance, insurance claims management and investment
management.
ICICI Lombard GIC Ltd. is the largest private sector general insurance
company in India with a Gross Written Premium (GWP) of Rs. 5,358 crore for
the year ended March 31, 2012. The company issued over 76 lakh policies and
settled over 44 lakh claims and has a claim disposal ratio of 99% (percentage
of claims settled against claims reported) as on March 31, 2012.
The company has been conferred the "Golden Peacock Award 2012" for
Corporate Social Responsibility, "Golden Peacock Innovation Award-2010" for
Rashtriya Swasthya Bima Yojana. It also received the "Skoch Financial
Inclusion Award-2011" in the micro finance category. The company has been
conferred with 'NASSCOM - CNBC TV18 IT User Award 2010' for Best
Technology Implementation in the Insurance Sector. It has been awarded
CNBC Awaaz Consumer Award 2010 for being the 'most preferred brand' in the
147
General Insurance category. ICICI Lombard Auto Insurance has been rated
highest in customer satisfaction by J.D. Power Asia Pacific in India among 11
auto insurance providers. It was awarded Customer and Brand Loyalty award
in the 'Insurance Sector - Non-Life' at the 3rd Loyalty awards, 2010 and the
'General Insurance Company of the Year' at the 11th Asia Insurance Industry
Awards. The company also won the NDTV Profit Business Leadership Award
2007 and was adjudged as the most Customer Responsive Company in the
Insurance category at the Economic Times Avaya Global Connect Customer
Responsiveness Award 2006. It has the Gold Shield for 'Excellence in Financial
Reporting' by the ICAI (Institute of Chartered Accountants of India) for the year
ended March 31, 2006.
PRODUCT OFFERED
Family Protect Premier
Health Advantage Plus
Critical Care
Personal protect
Health Care Plus
Popular Product
Health Advantage Plus-
Health Advantage which covers not only hospitalization expenses
but also outpatient expenses like dental, up to a limit. Maternity cover is also
available under this product. The company has also added Health insurance
Guide, an interactive tool to help the customer Selecta plan to suit his
requirements.
148
Health Advantage Plan has two fixed Premium brackets of Rs.
15,000 and Rs. 20,000 for senior citizens. This ensures that you get the entire
Tax benefit.
IMPORTANT HEALTH FEATURES:
1. A Choice of cover of Rs. 2 lakh and Rs.3 lakh at the same premium rate
2. You can avail Outpatient treatments under this policy
3. You can cover 2 individuals in the same policy at the same rate.
4. Pre existing illness covered after 2 years
5. No pre-screening or medical test till age limit 55
6. The premium does not change as per age.
149
11.2 BAJAJ ALLIANZ
Bajaj Allianz General Insurance Company Limited is a joint venture between
Bajaj Finserv Limited (recently demerged from Bajaj Auto Limited) and Allianz
SE. Both enjoy a reputation of expertise, stability and strength.
Bajaj Allianz General Insurance received the Insurance Regulatory and
Development Authority (IRDA) certificate of Registration on 2nd May, 2001 to
conduct General Insurance business (including Health Insurance business) in
India. The Company has an authorized and paid up capital of Rs 110 crores.
Bajaj Finserv Limited holds 74% and the remaining 26% is held by Allianz,
SE.As on 31st March 2010, Bajaj Allianz General Insurance maintained its
premier position in the industry by achieving growth as well as profitability.
Bajaj Allianz has made a profit before tax of Rs. 180 crores and has become
the only private insurer to cross the Rs.100 crore mark in profit before tax in the
last four years. The profit after tax was Rs. 121 crores, 27% higher than the
previous year.
Bajaj Allianz General Insurance has received the prestigious "Business Leader
in Bajaj Allianz today has a countrywide network connected through the latest
technology for quick communication and response in over 200 towns spread
across the length and breadth of the country. From Surat to Siliguri and Jammu
to Thiruvananthapuram, all the offices are interconnected with the Head Office
at Pune.
150
Bajaj Allianz has received iAAA rating, from ICRA Limited, an associate of
Moody's Investors Service, for Claims Paying ability. This rating indicates
highest claims paying ability and a fundamentally strong position.
Bajaj Allianz General Insurance has received the prestigious "Business Leader
in General Insurance", award by NDTV Profit Business Leadership Awards
2008. The company was one of the top three finalists for the year 2007 and
2008 in the General Insurance Company of the Year award by Asia Insurance
Review.
PRODUCT OFFERED
1. Individual Health Guard
2. Family floater Health Guard
3. Extra Care
4. Health Ensure
5. Critical illness care
Popular Product:-
Health Guard
Health Guard (Mediclaim), Silver health (Senior Citizen) and Star package
(Family Floater), there are also other plans like Hospital Cash which gives an
amount on every day of hospitalization and Critical Illness which gives a lump
sum in the event that the insured contracts one of the critical illnesses listed like
cancer during the policy period. Bajaj was the first company to come up with a
captive TPA with ensuing efficiencies.
151
MAIN IMPORTANT FEATURES OF HEALTH GUARD:-
The member has cashless facility at over 2900 hospitals across India
With Health Guard, the member has access to cashless facility at various
empanelled hospitals across India.
Pre and post - hospitalization expenses covers relevant medical expenses
incurred 60 days prior to and 90 days after hospitalization
Covers ambulance charges in an emergency subject to limit of Rs. 1000 /-
No tests required up to 45 years up to SI 10 lacs*
10% co- payment applicable if treatment taken in non-network hospitals
20% co-payment applicable for members of age group 56 -65 years, opting this
policy for first time
Waiver on 10% co-payment is available on payment of additional premium
Pre-existing diseases covered after 4 years continuous renewal with Bajaj
Allianz
152
11.3 STAR HEATH AND ALLIDE INSURANCE
Star Health and Allied Insurance:
Star Health and Allied Insurance Company Limited (Star Health) is a joint
venture between Oman health Insurance Company, ETA Ascon Group and a
number of insurance veterans in the country. It is also the first dedicated health
insurance company in India. Known for its innovation, Star has some very
unique products like Diabetes Safe which is for diabetic patients and Star Net
plus which is designed for HIV+ patients. Star Health insurance has an in-
house TPA which increases its efficiency in dealing with cashless cases. They
also have a unique feature where in customers calling a toll free number can
get free consultations with a general physician.
Star Health and Allied Insurance Company Limited (Star Health) has a capital
base of Rs.438 crores, more than sufficient to form a General Insurance
Company. However, Star Health has chosen to be in the field of Health. It is
India's first stand-alone Health Insurance Company in India and deals in
Personal Accident, Mediclaim and Overseas Travel Insurance.
PRODUCT OFFERED
Medi Classic
Diabetes safe
Family Health optima
153
Star Health
Senior citizen Red carpet
Star critical plus
Popular Product
Family Health optima:
Star Health brings you this Unique insurance policy with unique benefits for -
coverage for both future ailments / diseases and for pre existing diseases /
conditions
STAR ADVANTAGES
No Third Party Administrator; direct in-house claims settlement
Faster & hassle-free claim settlement
Cashless hospitalization
Network of more than 4900 hospitals across India
24x7 Toll- free Helpline
Free General Physician Consultation over phone. Doctors on duty 24x7. By
quoting the policy number, any person can contact our Doctor on the toll free
number 1800 425 2255 for medical advices.
Free Health magazines are issued to policy holders at regular intervals
154
11.4 NEW INDIA ASSURANCE
New India is a leading global insurance group, with offices and branches
throughout India and various countries abroad. The company services the
Indian. It is one of the first Indian owned companies when it was formed in
1919. It offers different health insurance products like Mediclaim policy, senior
citizen and universal health insurance policy. New India is a leading global
insurance group, with offices and branches throughout India and various
countries abroad. The company services the Indian subcontinent with a
network of 1068 offices, comprising 28 Regional offices, 393 Divisional offices
and 648 branches. With approximately 21000 employees, New India has the
largest number of specialist and technically qualified personnel at all levels of
management, who are empowered to underwrite and settle claims of high
magnitude. New India has been rated "A-" (Excellent) by A.M.Best Co., making
it the only Indian insurance company to have been rated by an international
rating agency. Rating based on following factors:
Superior Capital Position
Strong Operating Performance
Only Company to develop significant International operations, long
record of successful trading outside India
155
PRODUCT OFFERED
Mediclaim Policy
Senior citizen policy
Universal health Insurance
Popular Product:
Mediclaim Policy
We have designed a new Policy called as Family Floater Mediclaim Policy for
covering the family members with one sum insured. All the terms and
conditions of Individual Mediclaim Policy 2007 will be applicable for Family
Floater Mediclaim Policy
This insurance is available to persons between the age of 18 years to 60
years. The persons beyond 60 years can continue their insurance provided
they are insured under Mediclaim policy with our Company without any break.
MAIN FEATURES MEDICLAIM POLICY:
Existing policy holders can continue to renew their mediclaim policy till
lifelong
The policy offers an attractive discount in premium for family cover
Loyalty Discount is offered on continuous policy renewal
Good Health Discount is provided for claim free years
Cost of Health Check up is also provided after a certain period of time
156
11.5 OTHER HEALTH INSURANCE COMPANIES
HDFC ERGO
MAX BUPA
UNITED HEALTHCARE
APOLLO MUNICH HEALTH INSURANCE
CHOLAMANDALAM GENERAL INSURANCE
RELIANCE GENERAL INSURANCE
157
11.6 COMPARISON OF HEALTH INSURANCE COMPANIES
April to December 2011
According to the latest statistics released by the IRDA, gross premium
underwritten by non-life insurers in the health segment during the period April
to December FY2011-12, grew 17.5 per cent to Rs96.4 billion as compared to
Rs82.1 billion in the same period in the previous financial year.
Source:IRDA
Figure no.11.6.1 Comparison of Health Gross Premium
158
Notes: The total health premium figure includes domestic and overseas
medical insurance
Among the Public Sector Undertakings (PSUs), United India Insurance and
National Insurance each registered a strong growth of 29.1 per cent and 24.8
per cent respectively.
Among private players, ICICI Lombard occupied the top position with a market
share of 12.7 per cent and growth of 13.2 per cent. With the exception of
Reliance General, Star Health & Allied Insurance, Bajaj Allianz all the other
companies recorded a growth in health insurance premiums during the period
April to December FY2011-12, as compared to the same period of FY2010-11.
Health insurance industry in India, covering developments in the period
December 2011 to February 2012.The health insurance sector continues to
record good growth and as per the statistics released by the Insurance
Regulatory and Development Authority (IRDA), the industry recorded 17.5 per
cent growth in gross premiums written during the period between April to
December FY2011-12, as compared to the same period in the previous
financial year.
With the health insurance portability in place, the sector has seen a range of
innovative products. Companies have started offering better features while
keeping the prices consistent. The products include critical illness, travel
insurance and products that reinstate the sum insured. IRDA is working to roll
out both Life and Non-Life insurance cover to people with HIV/AIDS and those
vulnerable to such diseases. The authority proposes to implement the orders
effective 1 October 2012.
159
As per the recent insurance fraud survey, rising incidences of fraud have
impacted claim costs for insurance companies and premiums for policy holders.
FY2011-12 has seen insurers working on remedies to reduce fraudulent claims,
and setting up an in-house claim settlement process.
160
DATA ANALYSIS
AND
FINDINGS
161
CHAPTER 12
DATA ANALYSIS AND FINDINGS
Survey has been done to know the Awareness, Preference and consumption
pattern of health insurance. By using Questionnaire method.
SAMPLE SIZE-300
Q.1 Do you have any Insurance Policy?
(a) Yes (b) No
Figure no.12.1
Parameters Percentage
Yes 54%
No 46%
Table no.12.1
Analysis:-The analysis shows that green symbolize of Insurance 68%
Respondents having Insurance Policy 32% Respondents don‘t have any kind of
Insurance Policy.
0%
10%
20%
30%
40%
50%
60%
70%
Yes No
162
Q.2 Are you aware about Health Insurance?
(a)Yes (b) No
Figure no. 12.2
Parameters Percentage
Yes 68%
No 32%
Table no.12.2
Analysis:-
The condition of health insurance in India is not up to mark. Most of the
respondent does not use health insurance to finance their medical expenditure.
These people pay for their medical expenditure from their pocket. As a result,
many of these uninsured individuals either end up with poor quality healthcare
or have to bear financial hardships. The awareness about Health insurance is
very low due to many reasons.
0%
10%
20%
30%
40%
50%
60%
70%
Yes No
163
Q.3 If yes, do you know benefits of health insurance?
Figure no.12.3
Parameters Percentage
Yes 64%
No 36%
Table no.12.3
Analysis:-
Because of lack of product benefit customer are not ready to purchase that
product. Lack of product awareness among distributors ,if they are not in
position to introduce the product to customer it will not be in a position to
understand the importance and uses of health insurance. it is rightly said that
awareness develop brand equity , due to awareness a customer recognized the
product and purchase the same , a customer is in position to identify the
product because of such awareness.
0%
10%
20%
30%
40%
50%
60%
70%
Yes No
164
Q.4 Do you have any Health Insurance Policy?
(a) Yes (b) No
Figure no 12.4
Parameters Percentage
Yes 54%
No 46%
Table no 12.4
Analysis:-
54% Respondents having Health Insurance policy. 46% Respondents don‘t
have Health Insurance policy. Because lack of awareness about Health
Insurance and major issues in handling of Health Insurance 50%people not
having Health Insurance.
42%
44%
46%
48%
50%
52%
54%
Yes No
165
Q.5 If yes, which companies plan do you avail?
(a) ICICI Lombard
(b) Bajaj Alliance
(c ) Star Allied
(d) New India Assurance
(e)Others
Figure no.12.5
Parameters Percentage
ICICI LOMBARD 36%
STAR ALLIED HEALTH INSURANCE 26%
BAJAJ ALLIANZE 15%
NEW INDIA ASSURANCE 15%
OTHER COMPANIES 8%
Table no.12.6
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
ICICI Lombard
Bajaj Alliance
Star Allied New India Assurance
Others
Companies
Companies
166
Analysis:-
India‗s largest Pvt. Sectors Bank, which is also in Health insurance, ―ICICI
Lombard‖ is one of the best health insurance company and ―Star Allied Health
Insurance‖ company approximately equally preferred by the consumers , It has
been successfully able to sustain in this competitive market. The company offer
attractive products as per expectations of the customers .Although the premium
amount is high but customers still opt this companies Insurance product. It
has created as his own brand image. only because of quality services. In case
of New India Assurance company and Bajaj Allianz the most target audience
are middleclass and lower middle class , as the companies premium amount is
less than other insurance company.
167
Q.6 How did you get this health Policy?
(a)Employer Provides (b) Own purchase (c) Family Provides
Figure no. 12.6
Parameters Percentage
Employer Provider 15%
Own Purchase 57%
Family Provider 28%
Table no.12.6
Analysis
The Analysis shows that 57% respondents purchased own Health Insurance
.Single premium provide lots of extra lifetime facility, as compare to family
floater plan customer will get maximum sum assured. very few companies are
provide health insurance for their employee and in case of family floater
company charge more premium as per the age of the family member.
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
Own Purchase Employer provider
Family Provides
Health Policy
Health Policy
168
Q.7 How much premium do you pay annually?
(a) 1000- 5000 (b) 5001- 10000 (c) 10001 – 15000 (e) Above 15000
Figure no.12.7
Parameter Percentage
1000-5000 33%
5001-10000 35%
1001-15000 25%
Above 15000 10%
Table no.12.7
Analysis:
Most of the respondents having insurance policy between the range of 1000-
15000 ,Insurance companies offered insurance policy as per the age of the
customer but one most important thing researcher found that as the premium
amount is increase automatically customer will get better coverage and benefit
but some middleclass and lower-class customers not able to pay more amount
for premium.
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
1000- 5000 5001- 10000 10001 – 15000 Above 15000
Premium
Premium
169
Q.8 Why did you purchase this health insurance plan?
(a) Health Expenses recover
(b) Tax benefits
(c) Recover Future uncertainty
Figure no.12.8 Parameters Percentage
Health expenses Recover 44%
Tax Benefit 21%
Recover future Uncertainty 33%
. Table no. 12.8
Analysis:-
The main concern of any insurer by purchasing any Health Insurance is to
cover their Health expenses ,the number of diseases increases day by day and
peoples are paying high amount for that so to recover that expense people
preferred Health Insurance. and most of the customers purchase health plan
for the tax benefit and recover the future uncertainty.
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
Health Expenses recover
Tax benefits Recover Future uncertainty
Health insurance plan
Health insurance plan
170
Q.9. Kindly Rate The Following Factors Important To You In Opting Health Insurance (More than one)
b) Service of Insurer ( ) ( ) ( ) ( ) ( )
d) Network Coverage of Hospital ( ) ( ) ( ) ( ) ( )
e) Premium Amount ( ) ( ) ( ) ( ) ( )
f) Coverage Amount ( ) ( ) ( ) ( ) ( )
g) Coverage of Diseases ( ) ( ) ( ) ( ) ( )
h) Number of claims allowed per year ( ) ( ) ( ) ( ) ( )
figure no.12.9
Parameters Percentage
Service of Insurer 30%
Network Coverage Hospitals 20%
Premium Amount 30%
Coverage of Diseases 10%
Number of claim allowed per year 10%
Table no.12.9
0%
5%
10%
15%
20%
25%
30%
Important Factors
Important Factors
171
Analysis:-
For the continued development of the health insurance market, and also to
protect the long-term interests of the insured persons, the prices of health
insurance products should continue to be affordable to ensure wider
acceptance and increased reach, while on the other, the insurance industry
requires that this line of business remains commercially viable and better after
sale service.
Q.10 How Well Do You Think, You Are Covered By Your Current Health Insurance Policy?
a) Definitely well-covered
b) Probably well-covered
c) Not well-covered
d) Probably not well-covered
figure no.12.10
0%
5%
10%
15%
20%
25%
30%
35%
Coverage by current insurance policy
Coverage by current insurance policy
172
Table no.12.10
Analysis:-
43% respondents says that their health insurance plan not well covered and
probably not well covered the percentage is quite high. people should
understand their health insurance plans before buying to avoid these
confusions. One important point that everybody should keep in mind is the
associated waiting period. This is the time period before which there is no
coverage offered for the particular ailment. If a person claims for the same
illness before the waiting period elapses, he/she would not be offered the
coverage.
Q.11 Which according to you is the most important aspect that every
health insurance plan should cover?
a) Hospital care
b) Preventive care
c) Maternity
d) Health specialists
e) Choice of doctors
Parameters Percentage
Definitely Well-Covered 32%
Probably Well-Covered 25%
Not Well- Covered 28%
Probably not well-covered 15%
173
Figure no.12.11
Parameters Percentage
Hospital care 34%
Preventive care 8%
Maternity 13%
Health specialist 27%
Choice of Doctors 18%
Table no.12.11
Analysis:-
Most of the respondents says that they want better coverage of hospitals and
coverage of maternity also because many of the reasons doctors are taking
decision for suzerain so its not affordable for common men and they want their
own family doctors for treatment so this are the main things that researcher
found.
0%
5%
10%
15%
20%
25%
30%
35%
Plan Cover
Plan Cover
174
Q .12. What Are The Reasons, You Do Not Have Any Health Insurance
a) It's Too Expensive
b) Insurance Is Not Important, No Reason To Get It
c) It Is Too Hard To Understand/Confusing
d) I Do Not Have Trust On Insurance Companies
e) Employer Sponsored Cover Is Sufficient For Me
f) All of Them
Figure no 12.12
Parameters Percentage
Too expensive 28%
Insurance Is Not Important 5%
Not having trust on insurance company 16%
Employer sponsored 23%
All of them 20%
Table no.12.12
0%
5%
10%
15%
20%
25%
30%
Reasons
Reasons
175
Analysis:-
Respondents think health insurance is too expensive high premium and other
problems have resulted in a very complicated and perhaps unsustainable
health insurance system. Respondents says that the concept of insurance is
very hard and confusing to understand because of that insurance agents
mislead people and not provide them actual hidden charges information and
because of other customers experience other peoples are also not having trust
on Insurance company.
176
ON THE BASIS OF VARIABLES THE RESPONDENTS HAS GIVEN
REPONSES AS PER THEIR EXPERIENCES WITH ICICI LOMBARD, BAJAJ
ALLIANZ, STAR ALLIED HEALTH INSURANCE, NEW INDIA ASSURANCE.
Figure no.12.13
Figure no. 12.14
0
0.5
1
1.5
2
2.5
3
3.5
4
ICICI LOMBARD
Rank
0
1
2
3
4
Star Allied Health Insurance
Rank
177
Figure no. 12.15
Figure no 12.16
0
0.5
1
1.5
2
2.5
3
3.5
4
BAJAJ ALLIANZE
Rank
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
NEW INDIA ASSURANCE
Rank
178
Figure no.12.17
Based on the responses collected from the respondents and after tabulating
and using ranking technique it was found that :-
ICICI LOMBARD consistently stand on 1st and 2nd rank , The policy covers
reimbursement of hospitalization expenses incurred for diseases contracted
or injuries sustained in India. Exclusion clauses apply. Moreover, favorable
claims experience is recognized by discount and conversely, unfavorable claims
experience attracts loading on renewal premium. On payment of additional
premium, the policy can be extended to cover maternity benefits, pre-
existing diseases, and reimbursement of cost of health check-up after four
consecutive claims-free years. In case of Star Allied Health Insurance got
approximately equally preferred by the customers they given similarly 2nd rank to
both of them. But in case of Bajaj Allianz and New India Health Insurance, both
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
OTHER COMPANIES
Rank
179
the companies premium is low as compare to other company most of the middle
class people preferred this companies plan but they are not providing the
services up to the mark the coverage of health hazard , Converge of risk and
list of Associated Hospitals as compare to ICICI LOMBARD and Star Allied is
not up to level.
As per rank given by the Respondents to ―Bajaj Allianz” Standard Health
Insurance policies, it has become the 3rd most preferred Health insurance
company. Many of other companies like HDFC standard life Insurance, Apollo
Munich, Cholamandalam, United Health Insurance companies Health Plans are
less impressive, and are Ranked fourth by Respondents.
180
FINDINGS
A systematic approach was followed to identify the requirements of a Target
customers to provide them with benefit and reasonable degree of security.
Today everyone believes investment in Health Insurance –it is vital for the
future.
Health insurance has emerged as one of the fastest growing segments in the
non-life insurance industry with 30 per cent growth in 2010-11. For the purpose
of regulation, health insurance companies are classified as non-life companies.
Health insurance‘s annual premium collections are over Rs 6,000 crores.
Despite the high growth, the business is a huge challenge for insurers because
of the high losses over soaring medical expenses.
Awareness and Perception of policy holder: Out of total 300 respondents only
75percent people have proper knowledge about Health insurance plan. It
shows that there has been 30:70 split between cashless and Reimbursement
Health insurance policy. Even from researcher field experience it was quite
evident that policy holder has not wider information about their insurance
policy.
Knowledge about coverage and exclusion of policy: Most of the time Policy
Holders have inadequate knowledge on illness covered in their polices,
exclusion of illness in the policy, cashless Reimbursement and list of
empanelled hospitals. Similarly only 8.2% of policyholders are aware about the
fact that insurance companies charged extra fees for TPA. Claim settlement
and after sales Services:- Majority of the customers complaining that there has
been always delay in claim settlement and other after sale service. Most of the
181
time the agreed time for claim settlement is one month but actual time for claim
settlement is two to three month.
Generally Policy holders avoid dealing directly dealing with their Insurance
Company due to various procedure hassles. Insurance agents seems to have
major influence on policy holder s decision and policy holders more trust and
faith of them On one hand, because the prices of health insurance products
most of the customers avoid best Health Insurance Plan.
182
CONCLUSION
AND
RECOMMENDATION
183
CHAPTER 13
CONCLUSION :
This paper makes an attempt to understand the awareness, preference and
consumption pattern of Health insurance plan.
The result of this study shows that the annual premium is the most important
factor that influences the decision or choice of health Insurance plan. This
means that households having higher income have higher probability of buying
healthcare plan. Thus, less income groups may not opt for health insurance
plan. Thus there is a need to develop more products that cater to need of larger
and all levels of income groups. Apart from annual premium, hospital network
and disease coverage or coverage of services hold importance in making
choice of healthcare plan. Thus, insurance company should provide larger
network of hospitals and services in their plans in order to satisfy their customer
fully. Accessibility of service provider and company reputation also moderately
influence the decisions. The decision made for choosing the plan is mainly
influenced by self perceptions. Family and relatives and past experience hold
second position for assisting in the choice of plan. Most people would prefer to
buy healthcare plan from private insurance companies for they provide better
services and innovative products. Thus, there is large scope for private
insurance companies to grow.
The legal and regulatory framework of private health insurance, particularly
because it operates in the voluntary market, should continually balance
competing goals of access, affordability and quality of healthcare and provide
health coverage to a larger fraction of the population with varying risk
184
characteristics and ability to pay. Regulations, aside from their aim of providing
protection of health insurance policyholders and beneficiaries, can be potent
tools to promote access to healthcare, control pricing of health coverage vis-à-
vis healthcare providers and enhance quality of healthcare. Allowing the
participation of other entities that provide health coverage, such as Hospital
and/or Professional entities, and self-insured health insurance schemes of
Mutual Benefit Associations and Cooperatives would further increase the reach
and depth of private health insurance. Licensing standards for compliance
which are enforced on health care provider facilities as well as self-regulation in
the medical profession and within provider groups are necessary for continuing
improvement of healthcare quality. Private health insurance cannot grow if
reasonable consumer expectations relating to access, cost and quality of
healthcare remain promises rather than realities.
The analysis clearly shows that there is demand for cash less health insurance
scheme but the customers want reduction in number of exclusions and
inclusion of pre-existing diseases. They want the TPAs to be efficient and
perform up to the expectation of the policyholders and insurers. Even though
the insurers are providing need based plans but more should be done to meet
the needs arising out of changing lifestyles of people. The population of elderly
people, in India, is rising and they would require institutional care, which is
totally missing. The plans need to include pregnancy related expenses,
inclusion of chronic and debilitating diseases, HIV and AIDS, TPAs need to be
more efficient in claims processing and providing better networking for the
policyholders. These challenges can be overcome by setting up and stand-
alone health insurance companies that are run on-profit objective. In most of
185
the countries life insurance companies underwrite health insurance. In India,
life insurers should be allowed to underwrite health insurance. The tax benefits
available at present should be hiked and continued with. The health plans
should be wide based in order to include outpatient care along with in-patient.
To create the awareness of health insurance is very important, the Government
and all the associated bodies should all offer their support in spreading health
insurance awareness so that Indian citizens are aware of the right to seek
quality healthcare without any financial thought. and it will help to increase the
awareness of health Insurance among the people.
186
RECOMMENDATION
The Health Insurance recommendations, some of the keys ones are as follows:
♦ Lowering The Limit Of Capital Requirement:
The capital requirement for health insurance companies be reduced to Rs 25
crore from the current Rs 100 crore. Present Rs 100-crore requirement is a
deterrent since a larger capital requirement will bring in additional cost
associated with such capital.
♦ Raising The FDI Limit:
The foreign direct investment (FDI) limit be raised to 51 % from the existing %.
This could attract global health insurance players and encourage them to take
a long-term perspective of their investments in the country.
♦ Grading And Accreditation Of Health Providers:
The grading and accreditation of hospitals and health providers in a post-tariff
regime. The parameters used to evaluate the hospitals would include medical
specialties (evaluated on the availability of equipment, qualification and
adequacy of medical personnel). The provision of a database is something that
could be taken up by the Tariff Advisory Council in active collaboration with the
IRDA.
♦ Advertisement Of Health Insurance:
Large efforts should be laid towards developing health insurance as an
alternative and acceptable method of personal finance risk management tool.
The whole aim should be to divert towards popularizing health insurance as a
187
concept in rural areas under the guidance of the ministry of finance and the
IRDA.
The Research also recommends that
(1)Life insurance companies to develop underwriting guidelines and sell health
insurance policies because of their wide distribution network.
(2) Multiple health insurance products should be offered at various price points
to customers.
(3) IRDA should engage the services of the Ministry of Health and Family
Welfare, Indian Medical Council, Indian Medical Association, healthcare
associations and other bodies.
Other Recommendations
♦ Abolition of the service tax on health insurance products. It has also been
suggested that income tax holidays be accorded to the health insurance
companies for 10 years from the date of incorporation.
♦ Introduction of a common pool for terminally ill people/people who do not
have access to any kind of health insurance.
♦ Fraudulent claims, when discovered and proved, should be treated as
criminal offence and subject to strict legal action including imprisonment.
♦ Systems of co-payment, co-insurance and voluntary deductibles to be used to
(1) Make health insurance more viable,
(2) Control frauds
(3) Refrain customers wanting to avail luxury facilities.
188
ANNEXURE – 1
BIBLIOGRAPHY
189
ANNEXURE – 1 REFERENCE
Ellis RP, Alam M, Gupta 1.1996 Health Insurance in India: Prognosis and
prospectus Bostan University: Bostan and Institute of Economic growth :Delhi
December 18.
IIMA 1999. Indian Institute of Management, Ahmedabad. Report of Health
Inurance in India.
insurance Regulatory and development Authority(IRDA)
Bhat, K & D, Malavankar(2001, Health Insurance in India : opportunities ,
Challenges , and concern in Indian health insurance industry : transition and
prospect by Srivastava D C new century publication , New Delhi.
Gumber A, Kulkarni V.2000, Health Insurance for informal sector: case study of
Gujrat Economic and political Weekly, sep 30
Directorate General of Health Services
Dholkia R. Economic reforms: Implications for Health Insurance.
Presentation at one day workshop on ―Health Insurance in India.‘ Indian
Institute of Management, Ahemdabad Oct 30. 1999.
Ramesh Bhat and Nishant Jain (2006), Factor affecting the demand for
insurance in macro health insurance scheme, IIM Ahemdabad.
Berman and M. E.Khan (1993): paying for Indias Health care, New Delhi, sage
publication.
H.Sadhak (2009), Health Insurance Care In India ,sage publication, delhi
190
Jyitsna sethi and nishwan Bhatia(Dec.2008):To study the Type of Health
Insurance and Health Insurance scheme in India, PHI Learning pvt.ltd
publication
Anand Ganguly(2012): To studies how manage the health care effect of
dreaded dieses,New age pvt .
M.N. Mishra and S.B .Mishra, To study the environment product design And
structured Facilities, S chand and company pvt ltd publication.
Hima Gupta, (2007) "The role of insurance in health care management in
India", International Journal of Health Care Quality Assurance, Vol. 20 Iss: 5,
pp.379 – 391.
Nyman. J.A.(1999). ―The value o Health Insurance: The access Motive‖.
Hopkins S. & M.Kidd(1966). The determinants or the demand for private Health
Insurance under medicare.
191
BIBLIOGRAPHY
www.google.com
www.mediindia.net
www.healthinsuranceindia.org
www.bimabazar.com
www.timesofindia.com
www.irda.govt.in
www.policymantra.com
192
ANNEXURE- 2
QUESTIONNAIRE
193
ANNEXURE – 2 QUESTIONNAIRE
Name of Respondent: -
Date: -
Gender
(a) Male (b) Female
Age (in Years)
(a) 18 - 25 (b) 26 – 35 (c) 36 - 45 (d) above 45
Qualification
(a) 12th (c) Graduate (d) Postgraduate (e) Professional
Monthly Income (in Rs.)
(a) Below 10,000 (b) 10,001-20,000 (c) 20,001-30,000 (d) above 30,000
Occupation
(a) Student (b) Private Employee (c) Govt. Employee
(d) Business Man
Q.1 Do you have any Information regarding Insurance?
(a) Yes (b) No
Q.2 Are you aware about Health Insurance?
(a)Yes (b) No
Q.3 If yes, do you know benefits of health insurance?
(a) Yes ( b ) No
194
Q.4 Do you have any Health Insurance Policy?
(a) Yes (b) No
Q.5 If yes, which companies plan do you avail?
(a) ICICI Lombard
(b) Bajaj Alliance
(c ) Star Allied
(d) New India Assurance
(e) Others
Q.6 How did you get this health Policy?
(a)Employer Provides (b) Own purchase (c) Family Provides
Q.7 How much premium do you pay annually?
(a) 1000- 5000 (b) 5001- 10000 (c) 10001 – 15000 (e) Above 15000
Q.8 Why did you purchase this health insurance plan?
(a) Health Expenses recover
(b) Tax benefits
(c) Recover Future uncertainty
Q.9 Kindly Rate The Following Factors Important To You In Opting Health Insurance (More than one)
(a) Service of Insurer ( ) ( ) ( ) ( ) ( )
(b) Network Coverage of Hospital ( ) ( ) ( ) ( ) ( )
(c) Premium Amount ( ) ( ) ( ) ( ) ( )
(d) Coverage Amount ( ) ( ) ( ) ( ) ( )
195
(e) Coverage of Diseases ( ) ( ) ( ) ( ) ( )
(f) Number of claims allowed per year ( ) ( ) ( ) ( ) ( )
Q.10 How Well Do You Think, You Are Covered By Your Current Health Insurance Policy?
(a) Definitely well-covered
(b) Probably well-covered
(c) Not well-covered
(d) Probably not well-covered
Q 11. Which according to you is the most important aspect that every
health insurance plan should cover Hospital care?
(a)Preventive care
(b)Maternity
(C). Health specialists
(d.)Choice of doctors
Q.12 Your Experience With Your Current Health Insurance Company:
(a) Name of the Insurance Company…………………………
(b) Customer Service (Excellent………Good………Bad………..Poor……..)
(c) Claim Refund….
Very Satisfied…Satisfied……..Not Much satisfied……Dissatisfied
(d) Complain Addressable System…
Very Satisfied…Satisfied……. Not much Satisfied…….Dissatisfied
(e) Role of TPA
(Very Satisfied…Satisfied…...Not Much Satisfied...........Dissatisfied
196
If Not……..
Q 13. What Are The Reasons, You Do Not Have Any Health Insurance
(a) It's Too Expensive
(b) Insurance Is Not Important, No Reason To Get It
(c) It Is Too Hard To Understand/Confusing
(d) I Do Not Have Trust On Insurance Companies
(e) Employer Sponsored Cover Is Sufficient For Me
(f) All of Them
197
Article
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