Buying a health insurance policy is no longer easy. In 2002, with the privatization of the insurance industry, insurance companies came out of the woodwork to offer more products with a whole range of features.
To add to the chaos, post the non-tariff regime, the health insurance industry is no more cross-subsidized by motor and fire insurance and, therefore, health insurers are going through a tough transition. Potential subscribers have become more confused as they don’t know what their policy covers, what the best available rates are and what makes their policy unique.
Garima Jindal, 30, a New Delhi-based homemaker, bought a policy through an insurance broker. “I realized some policies give me cover for pre-existing illnesses after a certain number of claim-free years while some do not. I also realized that buying through a broker allowed me to compare all the policies at one go. Being experts in the business, brokers can guide me better,” she says.
In the health insurance business, there are huge disparities in premium rates, says S.K. Sethi, chief executive officer (CEO) of New Delhi-based Ria Insurance Brokers Pvt. Ltd.
“The net outcome of new players coming and strong stance by the Insurance Regulatory and Development Authority (IRDA), is that today, the Indian health insurance business is at par with the Western world’s,” says Manish Jaiswal, CEO and managing director (MD) of Bonsai International Group, a Mumbai-based insurance broking company. “But we still have miles to go in terms of claims management, pricing and online delivery of health insurance products either by insurance companies or brokers.”
Mint takes a look at the health insurance business.
After the tariff regime expired, the situation on the ground improved as competition is a win-win proposition for the consumer. Now, there is Reliance General Insurance Co. Ltd with a health insurance plan, which is aggressively priced. The Reliance HealthWise Policy provides coverage to a couple with two children up to Rs2 lakh for Rs5,000 premium annually.
In this new marketplace, however, prices are not uniform. New India Assurance Co. Ltd and Oriental Insurance Co. Ltd have a Rs1 lakh health insurance scheme for a 25-year-old male at an annual premium of Rs1,310. But premium rates differ widely among similar private players. Reliance General Insurance, for instance, offers a similar scheme for a Rs700 annual premium while ICICI Lombard General Insurance Co. Ltd offers its plan for Rs2,612 a year. The spread is almost Rs2,000.
“Any insurance company can offer lower premium rates on their health policies by enrolling a much younger and healthier population,” says Abhitabh Gupta, health insurance specialist, Reliance Health, a health-care solutions provider. “The same can also be ensured by limiting the maximum age for entry into the health scheme and by following proper underwriting guidelines.” Not everyone agrees with Gupta. Ajit Narain, MD and CEO of IFFCO-TOKIO General Insurance Co. Ltd, says: “Low pricing can also compromise on the quality of services offered.”
Health insurance buyers pay according to their age. Based on the risk profile, insurance companies have now classified rates into two categories—those below 26 years, who have to pay less, and those above 26.
“Ever since tariffs were done away with, premium rates have gone up by 25-30% on an average but, for some categories, it is much higher,” says C.S. Rao, chairman of IRDA, the insurance regulator.
If you are more than 65 years old, health insurance plans are a tough bet. Some premiums have shot up by as much as 100% since the start of the non-tariff regime. There are hardly any health schemes today for those above 65. Hospitals, too, seem to shy away from providing special rates for them.
An insurance industry official, who didn’t want to be named, says that in the next few months, product features are also likely to be released from tariff restrictions by IRDA. The new environment opens up the market for many health insurance products. Recently, based on the region-wise health insurance claims, New India Assurance divided the country into three zones with varying premium rates. Mumbai comes under zone I, New Delhi and Bangalore fall under zone II and the rest of India falls under zone III. Under New India Assurance’s health policy, people in metros will have to pay more than people living in semi-urban areas.
Stand-alone critical illness products also came as a blessing after privatization. None of the personal or group health insurance plans carries a critical illness cover rider, which is a major problem today for Indian customers. Health insurance customers have a wrong notion their health insurance covers all medical exigencies. The truth is somewhere in-between.
Of late, many insurance firms have started offering their own third-party administrator (TPA) services. With the introduction of TPAs, settling a claim is no longer mired in red tape. You need to produce your health card at an authorized hospital to get cashless treatment and then the TPA takes over the claim-settlement process. This enables a speedy management of claims.
A few months ago, with large corporate players taking financial stakes in the TPAs, at least four public sector insurance companies—National Insurance, United India Insurance, New India Assurance and Oriental Insurance—removed the administrators from their panel of service providers.
National Insurance, however, resumed the services last month.
Last year, the Anil Dhirubhai Ambani Group bought a stake in Medi Assist India Pvt. Ltd, a TPA. The Apollo Hospitals Enterprise Ltd owns a stake in Family Health Plan Ltd, and Germany-based Munich Re Group, the world’s largest reinsurance company, has acquired a stake in Mumbai-based Paramount Health Services Pvt. Ltd.
Buying a policy through a broker is another way of ensuring better claim management. In this case, you need to inform the broker of the problem on the customer-care phone number. “We have provided a 24-hour customer-care number to our policyholders so that they don’t have to run around even for cashless services,” says Rahul Aggarwal, CEO of Optima Risk Management Services, a New Delhi-based insurance broking company.
Competition in the insurance space has fuelled online buying and selling of policies. Insurance firms such as Bajaj Allianz General Insurance Co. Ltd and ICICI Lombard were the first to put health insurance online.
Among insurance brokers, Mumbai-based Bonsai Insurance Broking Pvt. Ltd has launched www.insurancemall.in, which offers free comparative information to potential customers and provides insurance-related services, such as online search of top insurance firms, purchase and claims assistance. The website also offers complete portfolio management and other services, such as renewal auto-reminders and counselling.
The insurance aggregator currently offers health, critical illness, personal accident, travel and home insurance. But the flip side is that only buyers above 45 years can buy policies online. “For people below 45 years, medical tests are mandatory and hence they cannot purchase the policy online,” says Niraj Jain, of Bonsai Insurance Broking. “But, we will soon add a feature in which prospective customers can send their scanned medical reports and buy a policy.”
Judging the potential of the online insurance market in boosting business, many brokers are also eager to explore the channel. “We plan to soon set up an online service considering its huge demand in future,” says Sethi of Ria Insurance Brokers. The more the merrier since, in the end, it is the customer who stands to benefit.
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