Friday, July 31, 2009

Magma Fincorp JV with HDI-Gerling Germany to enter general insurance including Health

An application will be submitted to IRDA for approval to Magma HDI General Insurance Co Ltd for setting up a general insurance company which will handle health insurance also.Magma Fincorp, a Kolkata-based non-banking financial company, is the Indian partner while Germany’s HDI-Gerling International Holding AG.will be the foreign partner.

We welcome this.This company will be the second insurance company from Eastern India. The new company, Magma HDI General Insurance Co Ltd, will apply to the Insurance Regulatory and Development Authority for obtaining licences soon.

After it comes up with a bouquet of non-life insurance products, it plans to enter into medical insurance.

The new company, where the German partner has a 26% stake, will have a total initial capital of Rs 110 crore.

Sunday, July 19, 2009

Proposal to set up Health Insurance Council

One of the proposal of IRDA panel, which evaluated the performance of third party administrators, is for setting up of Health Insurance Council. They feel that this is one of the most critical requirements in the industry

It is understood that Insurance Regulatory and Development Authority (Irda) is considering to accept this proposal and “Health Insurance Council" will be set up.

The proposed council will also look to standardize procedures in the industry, and update and maintain standard documents and "standard masters". It could also help solve differences between insurers and TPA’s, and also between insurers.

Any step which is taken for bringing in improvements in service level,bringing down costs,improvement in productivity as well as customer satisfaction is welcomed by all of us.The earlier it is done,better it will be.

Proposal to set up Health Insurance Council

One of the proposal of IRDA panel, which evaluated the performance of third party administrators, is for setting up of Health Insurance Council. They feel that this is one of the most critical requirements in the industry

It is understood that Insurance Regulatory and Development Authority (Irda) is considering to accept this proposal and “Health Insurance Council" will be set up.

The proposed council will also look to standardize procedures in the industry, and update and maintain standard documents and "standard masters". It could also help solve differences between insurers and TPA’s, and also between insurers.

Thursday, July 16, 2009

Be careful Insurance companies have started canceling loss making group health policies

Some buyers have been thinking they are smart and by creating excessive competition among Insurance co’s, and Insurance intermediaries they can bring down the insurance premium for Group health policy. As insurance companies have started looking at their portfolio carefully, we can say most of them have started canceling heavy loss making policies. We welcome this as we want healthy insurance companies as large assets of this country are also insured with them.

According to one newspaper report cancellation of group Mediclaim policy midway has gone up by 30 percent during last 6 months.

The question before us is why this has happened? Customers will always like to buy any product, service or insurance at lowest cost. Are we penalizing the underwriters or the sales team which picked up the premium at lower rate to achieve their targets and incentive plans?

We understand practically all private insurers are canceling group health policies with a 30-day notice. Incidentally insured or insurer both have the right to cancel the contract by giving 1 month notice.

According to a source ICICI Lombard has asked L&T to pay additional premium for the group health policy in the middle of the year. When contacted, L&T said that ICICI Lombard has requested for extra premium but has not sent any notice.

An ICICI Lombard spokesperson said that they have a vigilant investigating team, which ensured that genuine claims were paid.

We feel “Cancellation of health policy midway is not a good practice and this shakes the confidence of the public. If the insurer has not priced the risk appropriately or the sales staff has shown aggressiveness in booking the business then they should be penalized first and not the customer. Policy should only be cancelled in case the data given by the customer at the time of quote was given wrongly or the information was concealed.”

Wednesday, July 15, 2009

Is vertical integration a good thing in Indian Insurance Industry

In management schools vertical integration is taught and there are positive and negative points in having the same.The greatest point is economies.At the same time
under corporate governance, privacy and ethics aspects we are supposed to behave differently.

TPA's are facing rough weather as covered in my various blogs in the past.As predicted by me the third-party administrator business in insurance is going through a churn, with conflict-of-interest issues hastening stake sales.

Bangalore-based TTK Healthcare Services, a third party administrator (TPA) is up for sale. Zurich based Swiss Reinsurance Company, the world’s second largest reinsurance company, owns 26 percent in TTK Healthcare, while the remaining 74 percent is owned by TTK Group and India Value Funds Advisors, a private equity fund.

Sources close to the development said this followed Swiss Re’s decision to go for a joint venture with Religare Enterprises to set up a health insurance company.

We will like to raise the question -Will the insurance companies stop dealing with insurance brokerge firm of Religare? Any health insurance quote given by the insurance company can be used/misused by Religare Swiss re Health co.We will welcome response from any insurance company in this regard

Should we expect the same thing to happen with some other TPA's?

Sunday, July 12, 2009

Should lodging of fraudulent insurance claims be made punishable ?

Very intersting and thought provoking question has come before us and it is ;
Should lodging of fraudulent insurance claims be made punishable ?

I came across an interesting news item which has originated from U.K. and it may be an eye opener for many. This judgement also raises the question whether Insurance Company should take the case to such level where the client (even if he has lodged fraudulent insurance claim) is jailed.

You will find the answer in the last 2 lines of the news item in which the statement of the insurance company is as follows;
Andrew McBride, claims director for QBE, said: "QBE works closely with all its policyholders to protect their interests and at the same time offer them outstanding service in claims handling. Fraudulent activities such as this have the potential to raise costs and risks for our other clients."

Yes it is true that those who get bogus claims are contributing towards increase in premium being paid by the honest customers. In this case the figure quoted by the insurance company is UK pounds 40 or say Rs 3100.I wonder how much is being paid by many of us, who are honest customers of Indian Insurance companies.

Let us go to the news item to have the details;

In this case three people have been jailed for 12 months after making fraudulent insurance claims following a coach crash at a wedding.

The bridegroom Andrew Singh and his parents Graham and Niramella Singh were each sentenced at Manchester Crown Court to 12 months for perjury and nine months for conspiracy to defraud. The sentences will run concurrently.

The court heard that the wedding in Preston in July 2004 resulted in 73 personal injury claims resulting from two minor accidents in coaches taking guests to the reception.

One coach collided with a car while another struck a wall at Chipping Village Hall where the reception was taking place.

Of the 27 claims that finally reached court, 25 - including those of Andrew Singh and his parents - were thrown out after a wedding video brought in by the claimants themselves showed many of them dancing enthusiastically at the reception. Both Andrew Singh and his father Graham were seen being carried aloft by guests.

The Singhs denied that a wedding video had existed prior to the trial but when other witnesses gave evidence to suggest that large numbers of the claimants were not present on the coach, the Singhs produced the video in an attempt to establish that they were on the accident coach.

Commenting on the case, Ian Birkinshaw of DWF, who acted on behalf of QBE Insurance in the case, said: "Fraudulent claims are a burden on honest drivers, adding £40 on to the cost of every insurance premium. In this case the claimants' actions also resulted in a two-week civil trial, which cost an estimated £250,000."

He added: "Graham, Niramella and Andrew Singh perjured themselves in court and had children in the witness box claiming to be injured when they were not even on the coach. The judgement sends out a very strong message that the courts will not tolerate this type of behaviour."

Andrew McBride, claims director for QBE, said: "QBE works closely with all its policyholders to protect their interests and at the same time offer them outstanding service in claims handling. Fraudulent activities such as this have the potential to raise costs and risks for our other clients."

Friday, July 10, 2009

HEALTH INSURANCE premium to touch Rs 12000 crores during this year

Yes it is going to be true that HEALTH INSURANCE premium will touch Rs 12000 crores during this year.

Mr. Harish Rawat, Minister of state for labour and employment, informed Rajya Sabha that Rashtriya Swasthya Bima Yojana (RSBY) is being extended to all 600 lakhs BPL families in the country during the current financial year.

Taking average family size of 5 members this means that by the end of March 2010 we will have 30 crores persons covered under this Yojna.

Assuming premium size is Rs 750 per family this means premium collected by the insurance companies will be Rs 4500 crores. Against the backdrop that health insurance premium for the year ending march 2009 was Rs 6000 crores we in estimate that health insurance premium during this year is going to be in the range of Rs.12000 crores to Rs 14000 crores .

This means that health insurance is becoming one of the prominent segments of Indian Insurance Industry.

Monday, July 6, 2009

Rashtriya Swasthya Bima Yojana (RSBY) to grow(Budget)

While presenting the budget in Lok Sabha ( Indian Parliament ) on July 6,2009 Mr. Pranab Mukherjee ,Finance Minister made the following statement

"Rashtriya Swasthya Bima Yojana (RSBY) was operationalised last year. The initial response has been very good. More than 46 lakh BPL families in eighteen States and UTs have been issued biometric smart cards. This scheme empowers poor families by giving them freedom of choice for using health care services from an extensive list of hospitals including private hospitals. Government proposes to bring all BPL families under this scheme. An amount of Rs 350 crore, marking 40% increase over the previous allocation, is being provided in 2009-10 Budget Estimates."

This means during this year the number of those covered will increase to 65 lakh BPL families.Taking an average of 5 family members this means number of persons covered will be 230 lakhs(2.30 million)'

The recent study of Earnst & Young shows that Indian Health Insurance Industry will touch the figure of Rs 30,000 crores by 2015 seems to be very realistic as RSBY in itself is acting as advertising for health insurance in India.Every person who gets claim settled under RSBY makes 5 other persons aware of the concept of health insurance.


Friday, July 3, 2009

Third Party Administrator (TPA) Committee submits report to IRDA

The committee headed by S. B. Mathur, Secretary-General of the Life Insurance Council, has recommended the formation of a common body comprising members from the TPA’s, life and non-life insurance companies and hospitals and representatives from consumer groups.

This is a good suggestion as consumer representatives may get a say in claims settlement for Mediclaim policies .We are hopeful that IRDA will accept this recommendation made by the Third Party Administrator Committee.

The proposed body is expected to simplify and speed up cashless claims settlement of insurance policies. The body, it is proposed, would address claims-related complaints by hospitals and take the views of the nominated consumer representatives and other stakeholders in settling disputes. Its operation is expected to be independent of the insurance ombudsmen services. The Ministry of Health, through its Directorate-General, might also facilitate in the functioning of the new body, Mathur said. “We have suggested to the Insurance Regulatory and Development Authority to nominate one or two representatives to look after customer interest,” he said. The nominees, he pointed out, would not necessarily have to be members of consumer associations.

Currently, the policyholders have to rely solely on the TPA’s, which are intermediaries between insurance companies and hospitals for settlements of claims. There are 27 IRDA-approved TPA’s across the country. “The lack of coordination and the consequent blame game among the different stakeholders had thrown up a lot of problems,” Mathur said, adding that the objective of the proposed body would be to help standardize the settlement procedures and bring transparency to the system. Hospitals now are not under the IRDA and their representation in the proposed body therefore could at least make them more accountable, he added.

The panel has also recommended doubling the minimum capital requirement for TPA’s to Rs 2 crore. It has proposed extending licence to a TPA only if it is present in at least six locations. These regulations, however, are not particularly aimed at ranking of TPA’s, he added.

With 4 PSU’s having appointed KPMG to suggest format for their own TPA and ICICI/Star/Bajaj Allianz handling their own claims-we feel increase of equity requirement is unjustified. We foresee some TPA’s are going to return the licence to IRDA in future as the business prospects will be reduced with 4 PSU’s withdrawing the business from existing TPA’s.

With growth of Telecom sector through out the country and availablity of 1 800 free calling service is there a need to have 6 branches. We feel ther is no need provided 24x7 call centre is working efficiently .

Wednesday, July 1, 2009



It is intersting to read in The Economic Times about Insurers Data Base to be set up
According to this nes item health claim data of individuals/families will be compiled for being used by the Health Insurance companies.

My viewpoint is that Health Insurance has been a bleeding portfolio for not because of individuals but because of group policies, which are being picked up by the Insurance Companies at low premiums for achieving the targets .These targets are set up for managers and branches at unrealistic levels.We recently came across a case study where the premium quoted for a group by 3 different co's was Rs 6.50 lakh to Rs. 8.00 lakh.

Then suddenly someone from 4 th Insurance company appears and picks up the policy for Rs 4.00 lakhs.One does not realise how the underwriter of this company calculated that Rs. 4 lakhs is the reasonable and acceptable premium.

Let us come to the news item which appeared as follows;

Faced with mounting losses as claims exceed premium income, health insurers are looking at setting up a shared database of fraudulent claimants and those with pre-existing health conditions. Insurance companies feel that plugging leakages caused by unethical claims would help reduce losses.

Although data on fraudulent claims are absent, insurers say their experience points to several instances of inflated claims. They say such frauds are possible because of poor regulation of health-care service providers. "Industry- level discussions on the subject are already under way," said Anuj Gulati, director, services and business development, ICICI Lombard General Insurance.

Besides inflated claims, non-disclosure of pre-existing illnesses is a major concern for the industry, whose claims payout is estimated to be 130 percent of the premiums collected.

Once a database is in place, insurers can identify frauds if they move from one company to another. "The centralised database would help insurers plug the leakages and also offer inputs for taking more informed decisions while underwriting risks. The discussions are still on at the industry-level and there is a long way to go before it (database) takes definite shape," said Gulati.

Adds Antony Jacob, CEO, Apollo-DKV Insurance Company, "Formation of such a repository — whenever it takes shape — will certainly be welcome. Access to claims and exposure data pertaining to the Indian health market as a whole will be available to health insurers, helping them analyse the data in a meaningful way by using analytical tools while pricing new products and re-pricing existing ones."

In the long run, a central database will also be useful for policyholders, as it will facilitate portability of health insurance. "Some companies may be extremely cautious while acquiring other insurers' customers due to difficulty in underwriting without adequate data to compute the risks. Therefore, a repository giving health insurance companies selective access to proposers' claims history will help in appropriate pricing of the policy, benefiting the customers as well as health insurers," said Gulati

My comment on this news item is
"Let us compile the data of group policies first ,control the claims of group policies first and then move to the creation of the database of the individuals"


The Times of India has carried an intersting news regarding RTI( Right To Information Act )being used by Anant M Nandu.

The news item covered is :

The Right To Information Act has come to the help of thousands of Mediclaim policy holders who have been struggling to get refunds for the excess premium they have paid.

The Central Information Commission (CIC), in a landmark order, has directed New India Assurance Company Ltd to make public the details of the total number of policy holders who are still to get a refund for the excess premium charged. The CIC has asked the firm to provide the information on the company’s website and send a copy of the information to the Insurance Regulatory & Development Authority.

The CIC’s order came after RTI applicant Anant M Nandu filed a query seeking details on the number of Mediclaim policyholders charged excess premium even after the quantum of premium was reduced.

Grant Road resident Nandu had filed an RTI query last year after he learnt that the company was charging an extra premium during the renewal of his policy. “I had earlier sent them a letter asking for a refund, but they never responded. That is when I filed the RTI query,’’ Nandu said

The question comes to my mind is CIC could take action because New India Assurance is a PSU.What options we as consumers are having with respect to Privately owned companies?

Can we expect from the Government that RTI Act is also made applicable to Private Banks & Insurance Companies.Consumers will be relieved from the difficulties ,they are facing

Comments are invited.