Health & Medical Insurance

8/4/2019 Health & Medical Insurance

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IntroductionA person asked God, What surprises you most

about mankind ?

God - They lose their health to make money andthen money to restore their health.

That by thinking anxiously about the future, theyforget the present, such that they live neither for

the present nor for the future.That they live as if they will never die, and theydie as if they never lived.


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Contd. Life is less fleeting today with increase in life

spans and life expectancies across the globe

Even then , health, healthcare and healthcare costsan area of concern for govts across the world.

A fast-growing business globallybrings revenueof Rs 4 trillion globally

In India, mostly employer-sponsored healthinsurance- not much public awareness about theavailability and benefits of health insurance


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Introduction Health insurance an instrument for health of

economy health as a barometer of economicdevelopment

HI(13%) ranks next to motor (42%), fire(17%) innon-life business.Motor and health insurance isbought, not sold.

Health premiums would overtake fire insurance

premiums in few years Need for products ,designs, their sustainability &

structural facilities


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Environment Need for sufficient information / data for

development of good products, proper pricingand management

Lack of consumer awareness

Relevance due to break-up of joint family system

Tremendous scope in future


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Product Design Need for well-designed products to protect

family savings

Since claims outweigh premium, need forinvestment of premium by insurance co, so as tomeet expenses

Mediclaim - only hospitalisation cover, need for

outpatient costs cover since large numbers treatedwithout hospitalisation

Need for preventive measures by providing healtheducation and quality life.


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Contd. Incentives on health insurance by tax benefits

Tie-ups with hospitals to facilitate cashless benefits

Need for products of non-patient services Educating public on diseases, treatment.

Health insurance as employee benefits ?

Cost-effective health insurance - low premium soas to widen customer base.Popular in USA peopleready to pay more for better healthcare

Investment cum-service health service product -


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Contd.. People in India mainly interested in investment

want HI to be part of savings.Link-up of savingsschemes with HI.

HI products should cover causal (epidemics risk)and usual risks (overhead expenses,business risks).

Product design and pricing key factors forenhancing insurance high price reduces businessand less price increases loss of insurer


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Structural facilities SF provided by govt.-regulatory authority guide

insurers to design insurance for healthcare.

Insurer should be allowed to approach hospitals,doctors for getting adequate information

International Classification of Diseases good guidefor healthcare and developing SF of HI


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Sustainability of products HI products to be sustained for developing trust/

confidence of people.

Insurer to adopt proper management of funds,pricing, product-design and follow regulatoryfeatures

Insurers should maintain adequate risk capital to

meet contingency of unexpected losses Scope of HI to include inpatient & outpatient

facilities, physicians, OT, pharmacy and post discharge treatment charges


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Health Insurance in India Primarily dealt by medi-claim policies by PSU cos

in recent past.

HI still in nascent stage since public skepticalabout payment of services provided by companies

Lack of healthcare services and infrastructure,illiteracy and lack of trust in health schemes and

insurance cos have impeded HI in India Prospects of HI very bright due to escalating

health costs medical inflation index providesguidance for designing product and pricing .


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Contd Insurers to make study of claims so as to

classify healthy/unhealthy lives for properinsurance management.

Since health businesses one of fastest-growingsegments, insurers need to develop porfolio anddetect frauds.Claims -6-7% , but frauds occur.

Widely prevalent problem is adverse selection oflives rampant even in US/UK.This causes cos tolose money, makes it difficult for poor customers.

94% medically insured lives do not make claims


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.in India Total expenditure on health is 6% of GDP, govt

spending is 25% . In developed countries -40% ofGDP

Average growth in treatment costs increasing yearlyand majority of population below 35 entering anage vulnerable to health hazards.

Indias first stand alone health insurance company Star Health and Allied Insurance.DKV-Apollo andLIC have also entered.


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Risk management in Health

insurance Risk management is a process of loss prevention

and mitigation practiced by insured and insurer.

Insurer prices products based on his perception of

risk factors in the proposal form In HI, pricing done on age risk factor, excluding

other risk factors

Product sold is homogeneous, target group is

heterogeneous. Factors like gender, heredity,lifestyles, domiciles, excessive usage of medicalservices, occupation and income not givencredence while setting prices.


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Contd There are not many product varients like

hospitalization following accidents, hospitalizationfor named surgeries only, hospitalization for nameddiseases only.There is no product differentiationwith differentiated price.

Currently health business is conceived, priced, tran-acted with huge dissatisfaction on part of bothcontractual parties .

Pre-existing disease syndrome creation of insurers.

1.6 Cr policyholders, 10 lakh claimants latest data


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ContdAverage premium Rs 12oo and average claim Rs

18000 claims ratio 91%

Excludes distribution and management costs andinsurers lose money

Cos should try to analyse the claims in terms oftypes of treatments requiring hospitalization, age,

residences of claimants.Why should 1.5 Cr claim-free policyholders be

penalized by having their premium rates raisedwhen insurers are not plugging their loopholes ?


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Contd. Insurers should consider all risk factors including

heredity.Moral hazards and adverse selection arealso risks.

Access to and study of data absolutely essentialfor risk management

Since HI is bought, selling it as a commercial deal

and then treating claims as a matter of accomod-ation is unacceptable to insurer.


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Parameters for granting HIAge generally from 5 to 80 ( New India/Reliance)

Coverage covers hospitalization expenses due to

illness/accident which includes room, operation,medicines, consultation, diagnosis, nursing, blood,oxygen charges

Sum Insured should be chosen so that it fulfills

needs of hospitalization Pre-existing diseases these are excluded in the

first year of coverage, may be considered after 2-3renewals.


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Contd.Waiting period is the prescribed period of first

few days or months from the DOC wherein ifinsured is hospitalizes, nothing payable

Cashless facility Family discount in premium upto 10%

Free health check-up after 4 claim-free years - byPSU insurers only

Cumulative bonus -5% increase in SA every claim-free year by PSUs upto max 50% bonus

IT benefit under Sec 80D- Rs 15000(individuals)


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Contd. Long-term policy by Bajaj All & ICICI Lom.

Direct discount in premium if obtained from officeor through net.

Specialised products critical care cover for selecteddiseases by ICICI Lom, Bajaj All & IFFCO-Tokio

Products for specific class of people - students,families, middle-aged people, senior citizens and

poorer sections of society. HENCE HEALTH INSURANCE FOR ALL .AN

ABSOLUTE NECESSITY IN THESE DAYS !


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THANK

YOU !

Health & Medical Insurance

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