Let us welcome Religare Health Insurance

Let us welcome Religare Health Insurance                                                                          

It is always good to have entry of a new Insurance company. There is a challenge for the new company to come out with new/innovative /attractive product.

Religare Health Insurance has become operational and has started doing business in July, 2012

Salient points of their policy are:

• Maximum sum Assured – Rs 60 Lakhs (highest in India)
• Yearly check up on free of cost basis.
• Overseas treatment permitted for those who have sum assured of Rs 50 Lakhs/ Rs 60 Lakhs.
• No age limit for entry
• Life long renewals
• In house claim settlement
• Restoration of sum assured after lodging/settlement  of claim

You will be interested to know the premium to be paid by someone for sum assured of Rs 50 Lakhs:

Family Floater for 2 adults of age group 61-65 years it is Rs 2, 58,360.

The good point is that insured is permitted to undergo treatment in foreign countries for critical/serious ailments/surgeries. This is to make clear that till now all health insurance policies were having the condition that insured can have treatment within India only.
 

Religare has taken a welcome step by permitting overseas treatment (for sum assured Rs 50 lakhs & Rs.60 lakhs).

You being a well informed person are aware of that Overseas Travel Policy does not permit you to travel abroad and get hospitalized for treatment of existing diseases.

For the same family -Family Floater for 2 adults of age group 61-65 years for sum assured of Rs 25 Lakhs the premium is Rs 47,958. But it permits treatment within India only.

The premium for Rs 50 Lakhs is not 2 times of the premium for Rs 25 Lakhs but it is 5.39 times or 439% higher.

Any Comment?

Health Insurance Portfolio – An Analysis

Few years back we were very enthusiastic about the growth of Health Insurance portfolio. This was especially true during 2007-08, when this portfolio grew from Rs 3210 Cr to Rs 5110 Cr. i.e by 59.20%. Let us look at the growth figures from 2006 to 2012:

% Growth of Health Insurance over the Years

We have drawn graph showing the % growth YOY and, it shows that figure is fluctuating and is becoming less and less attractive as years have passed by.

Graph Showing % Growth Year  Over Year

Let us try to make projections for next 6 years.
We have done this with growth rate of 12%, 20%, 30% & 60%.

Projections for Health Insurance Portfolio

If we achieve figure of 30% then the portfolio will be Rs 64414 Cr. in 2017-2018.

If some one asks me- What should be the growth with which you will be happy?- I will say it should not be 30% gross but it should be 30% net (as we have to discount for inflation of 10% per annum in normal costs and 20% per annum in health care costs). Let us not be satisfied with meager growth of 16%- let us aim for 60%.
It means we should have growth of 60% year over year and then the figure will reach Rs 223892 crores.

Is compulsory Co Payment of 20% in Group Health Insurance Policy a solution?

We understand that for controlling the losses of Health Insurance portfolio a circular has been issued by Ministry Of Finance to 4 PSU’s namely

• New
• National
• Oriental
• United

This circular has many guidelines out of which few guidelines are such, which are to be strictly followed:-

(i)     Co-payment (20%) shall be made compulsory in every Group Health Policy.

Let us see the implication

Employer- Should it pay this Co payment as and when any member of Group Health Insurance Policy undergoes hospitalization and lodges claims to the insurance company.

Employee- Should it be borne by him/her.

Employer is ready to pay higher premium (but without Co Payment clause) in the beginning so that it does not have uncertainly with respect to

• Payment under Co Payment clause.
• Funds planning.
• Avoid unnecessary paper work in accounts/ administration department of the company in dealing with copies of bills etc. In case employer pays this- taxation aspect also is to be taken care of as payment beyond Rs 15000 may have implication of TDS.

Is it that with this move an effort is being made to?

-          decelerate the growth of health insurance portfolio

-          Move business to Private sector companies?

What will be the repercussions of this?

Only Time will tell- let us wait.

Our suggestion is that insurance companies should be asked /instructed to give 2 quotations:-

Option 1- Premium with Co-payment 0% (as at present). We know it will be higher.

Option 2- Premium with Co-payment 20%. Let customers choose this option if budget is the constraint at their end.

Let the Market and the customer decide whether they need Option 1 or Option 2?

Your comments are invited by IRDA on draft Health Insurance Regulations 2012

Health Insurance emerged as an important segment of Indian Insurance Industry as a result of that various initiatives were taken by the following:

IRDA Regulations Health Companies with a view to consolidate various guidelines circulars/ instructions the reputation has released.

IRDA’s exposure draft on Insurance Regulatory and Development Authority (Health Insurance) Regulations 2012

This is a serious attempt to put various points in one document. Selected Points are:

• The IRDA (Policyholder Protection of Interest) Regulations, 2002 (hereinafter referred as “2002 Regulations” shall be applicable mutatis mutandis to all health insurance policies, wherever relevant.

• Entry and Exit Age:

 All health insurance policies shall provide for entry age at least up to 65 years, except for those referred in regulation. In health insurance policies, where the covers offered are specific to a particular age groups like maternity covers, children covered under a family floater policies, cover offered to students etc, insurers shall offer an option to migrate to a suitable health insurance policy, at the renewal of the policy or at the end of the specified exit age, by providing suitable credits for all the previous policy years, provided the policy has been maintained without break.

 All health insurance policies shall not have an exit age for renewal of the policies, once the proposal is accepted, provided policy is continuously renewed without break.

• Settlement of Claim: On receipt of complete documents, an insurer shall within a period of 30 days offer a settlement of the claim to the insured. If the insurer, for any reasons to be recording in writing and communicated to the insured, decides to reject a claim under the policy, it shall do so within a period of 30 days from the receipt of complete documents.

• Timeline for Submission of claims documents:

I. Insurer may stipulate a time limit latest by which the claims documents should be furnished by the policyholder/ insured to make a claim.

II. In case of non submission of timely submission of claims documents, insurers shall not repudiate such claims unless and until the reasons of delay are categorically enquired about, reasons recorded and the insurers sufficiently satisfy that the delayed claims could have otherwise been rejected if reported in time.

III. All insurers shall develop a sound mechanism of their own to handle such claims with utmost care and caution. The insurers shall incorporate additional wordings in the policy documents, suitably providing insurer’s decision to condone delay on merit for claims which are not submitted in time, but if substantiated by the insured that the delay is beyond his/her control and due to exceptional/ unavoidable circumstances.

You as a customer are the most important link- It is suggested that you should go into details of this 44 pages document and make suggestions to IRDA by June 30, 2012. Feel free to send comments to us.

Health care costs can definitely be reduced by using Generic Medicines Vs Branded Medicines

Various People have been discussing about inflation as well as increase in Health care costs in the country and how it is resulting in more and more families getting into debt trap. The statement of our Health Minister Mr. Ghulam Nabi Azad that every year more than 3.50 crores families get into below the poverty line is an eye opener.

Aamir Khan also realized this as a major social and economic problem of Indian society and has covered this in his TV show ‘Satyamev Jayate’ on May 27, 2012. I was also highly impressed and pleased to read his informative article in HT- May 28, 2012.
An interesting point raised by Aamir is by giving facts & figures of some diseases, medicines, price and difference in the price of branded vs. generic medicines.

Question before us is: - Can hospitalization costs be reduced by using generic medicines?

Yes, we feel definitely the cost can be reduced. The general impression in the market is that quality of branded medicines and that too of reputed companies is much better. Is it correct or is it the impression of common man. Test labs of Government/ Non Government/ even NGO’s can play a significant role in the country by bringing out results- publicize them through print/ electronic/ internet/ Social Media.

There seems to be potential of reducing health insurance claims (paid by insurance companies) by 10% and this can be 10% of Rs 19000 crores- straight Rs 1900 crores. It is a significant figure. Let us try to achieve it for betterment of our society.

Premium Rates For Group Health Cover To Go Up

The government has been watching the financial health of 4 PSU’s (General Insurance Companies ) and has told them they should not offer heavy or aggressive discount on group health policy which is a loss making portfolio . This is an attempt to stem losses of close to Rs 1,500 crore, which these companies have incurred during year ending March 2012.

The move could lead to a higher premium on such policies.

The finance ministry has told generalinsurance companies to revise the premium upwards or stop renewing group health insurance policies to prune their losses, said a finance ministry official. The combined ratio--- claims paid plus other expenses as a percentage of premium earned--- is close to 150% now. The combined loss of state-run firms, mainly on account of such discounts on policies, is estimated to be close to Rs 1,500 crore for FY12. This has prompted the government, the owner of these companies, to issue the directive to cut losses.

It has been noticed that Public sector companies are giving huge discounts to grab market share. So our efforts will be to bring discipline to the group health insurance segment. There should be an audit of individual portfolios so as to ensure that segment-wise there is no loss,” said the official.

What we can expect in near future is:

a) Control on Costs will be brought –use of generic medicines vs branded medicines ,sub limits within the policy ,use of PPN hospitals
b) Non coverage of parents
c) Concept of Co payment may be @ 20%. We foresee this will become a common feature in 2012- 2013

Rupee Depreciation Vs US $ to result is increase in Overseas Travel Insurance Premium

We did not realise when the Rupee was depreciating Vs US $ that it will result in increase in Overseas TravelInsurance Premium. It has really put pressure on the travel insurance portfolio of leading general insurance players and they are having no option but to go to the regulator--- Insurance Regulatory Development Authority (IRDA) --- to refile and restructure the premium charges of their products soon.

According to spoke person of HDFC Ergo, there is definitely a possibility to revise premiums. “Since almost all claims in travel insurance are denominated in foreign currency, the claim amounts are going up as the rupee depreciates. If the depreciating trend continues, premiums will   be revised upwards.”

If you are traveling frequently –it will be worthwhile for you to buy Annual Multi Trip Policy.