The rising cost of medical treatment and lack of adequate insurance cover are the biggest worries for India. Health insurance provides much-needed relief, particularly in cases of medical emergency, where the cost of hospital room and services, the doctor’s fees, and medicines can add up to a stiff bill.

Health insurance has offered general insurance companies a good potential to grow. Premium collection in the health insurance segment was Rs 11,777 crore in 2011-12 from Rs 9,944 crore of 2010-11 — up 18 per cent in a year.

According to a survey by Marsh India Insurance Brokers, conducted among 301 Indian organisations across sectors with a group total size of 1.5 million people, the rise in medical insurance costs for employers has outpaced the growth in salaries over the last five years.

While salary costs for employers have risen around 7-12 per cent annually, medical insurance costs continue to rise at an average rate of 18 per cent.

The rising cost of medical insurance has been a serious cause of concern for policyholders.

Universal healthcare

To provide universal access to affordable health-care, in 2008 the Union Government launched Rashtriya Swasthya Bima Yojana (RSBY) to provide cover for below poverty line families. Beneficiaries pay Rs 30 as registration fee while the Central and State Governments pay the premium to the insurer selected by the State Government based on competitive bidding.

Those covered under RSBY are entitled to hospitalisation coverage up to Rs 30,000 for most illnesses/diseases that require hospitalisation. The Government has even fixed the package rates for the hospitals for a large number of interventions.

Pre-existing conditions are covered from day one and there is no age limit in this scheme, estimated to cover three crore lives. Health cover in India typically consists of a personal scheme or a group scheme sponsored by an employer. Some schemes currently available are individual, family, group insurance, senior citizens insurance, long-term health care and insurance cover for specific diseases. 

Increasing awareness about the benefits of health insurance has resulted in an increase in both the number of complaints and queries under the Right to Information Act.

In fact, following a growing number of complaints about the claims settlement process, which insurers outsourced to different third party administrators (TPAs), insurers were forced to revisit existing arrangements.

Delay in cashless issuance, delay in payment of claims, delay in dispatch of health cards were some of the common complaints that policyholders faced while settling claims through third-party administrators (TPAs).

So, to have more control over the claim settlement processes, many private sector insurers including ICICI Lombard, Bajaj Allianz, Future Generali, HDFC Ergo and some standalone insurers have set up in-house claim settlement teams for faster and more efficient disbursal of claims.

The four public sector insurers — New India Assurance, Oriental Insurance, United India Insurance and National Insurance — that control 70 per cent of the health insurance market are in the process of promoting their own TPAs, which they believe will help improve claim settlement experience.

The in-house TPA of the public sector insurers is expected to be operational by October this year.

Portability

To address this issue of rising complaints, the Insurance Regulatory and Development Authority (IRDA) has announced the introduction of health insurance portability, so that a policyholder dissatisfied with the service and offerings of a particular insurance company can move to another insurance company and not lose out on any of the benefits.

Under portability, an insured individual health insurance policyholder (including family cover) can transfer the credit gained for time-bound exclusions if the policyholder chooses to switch from one insurer to another or from one plan to another of the same insurer, provided the previous policy has been maintained without any break.

According to insurers, however, the number of requests for porting is currently low as insurance companies have not promoted portability aggressively. 

Another factor, experts feel, is the lack of standardisation in the available health insurance products in the market which made comparison among products difficult for policyholders.

Standardisation

To bring about clarity in health insurance products, IRDA has released comprehensive guidelines, the the Health Insurance Regulations, 2013.

The regulations list standardised definitions of 46 terms commonly used in health insurance policies and 11 critical illness terms to bring uniformity in sales, claims and settlement processes of insurers. The guidelines allow the patient to opt for non-allopathic treatment, provided that treatment has been taken in a government or government-authorised institution.

Moreover, the latest regulations make it mandatory for insurers to renew health insurance for lifetime and give health insurance policies to first time buyers at least till the age of 65 years.

Also, insurers cannot increase the premium (loading) if one has claimed benefits under the policy but can only increase the premium on the overall portfolio of customers. And in case an insurer is likely to increase the premium rates, the firm will have to inform customers three months in advance so that a customer can shift to another insurer.

Insurers expect that with the implementation of these regulations, there will be a standardisation of health insurance products offered by all insurers and that it will go a long way in reducing ambiguity and conflicts in health insurance policies.

deepa.nair@thehindu.co.in

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