The advent of standalone health insurance companies in India dates back to the year 2006. It’s been more than a decade since standalone health insurance companies began to set shop. Antony Jacob, chief executive officer, Apollo Munich Health Insurance Co. Ltd, a standalone health insurance company explains how the markets and products have changed in the last decade and the role of standalone health insurance companies in setting the agenda. Apollo Munich is the second health insurance company that was launched in 2007. Edited excerpts:
There are now at least six standalone health insurers in India. How has the advent of health insurance companies changed the market in terms of product offering?
If you go back to the early days, the products were one-size-fits-all. For instance, people with conditions like diabetes or hypertension were not offered health cover earlier but now there are special disease management covers. Now you have super top-up plans that offer customers a choice to take a deductible plan when they have an employer provided cover, which significantly expands their coverage at a lower cost and can also be converted to a full blown policy later on.
Standalone health insurers brought significant changes that were later turned into regulation. For instance, lifelong renewability. In the early days, there was claim-based loading on renewal. I believe that was wrong philosophy as we are in the business of paying claims; so why penalize someone for claiming. We officially took a stand against claim-based loading. Now regulations don’t allow insurers to load the policy of an individual on the basis of her claims record. We also allowed portability even before it was introduced.
The next big recent change has been preventive healthcare. Policyholders need to be rewarded to stay healthy so against the norm of a 10% increase (maximum 50%) in the sum assured for every claim-free year, we offer a 50% increase (maximum 100%) in our product Optima Restore. So if you can demonstrate two healthy years, we will double the sum insured.
Then came the restore (benefit), which makes floater policy a worthwhile purchase. Policyholders like the concept of a floater plan but the problem was that if one family member exhausted the cover, there would be no cover for the rest of the family that year. So we put a restore benefit, where we reinstate the sum insured one more time.
We have developed an app, through which we can count the number of steps a person takes in a day and then reward them at the time of renewal by giving a discount on premium.
But policy features are still laced with caveats such as co-pay and sub-limits, making them difficult to understand.
It’s true that health insurance products were complex, and they still are. That’s why our tagline is ‘Let’s Uncomplicate’. We started towards selling simple and easy to understand products. But have we finished the journey? No. Health insurance is not an easy subject anywhere in the world, so it will always remain an ongoing process. But when we started 10 years back, we made sure our policy didn’t have any co-pay or sub-limits except in the case of senior citizens.
We continuously engage with our customers and based on their feedback, we identify topics to train our sales force. We also maintain a report card of our agents by tracking post-sales feedback. Price increase on renewal is a big issue and policyholders want to know why do they have to pay more on renewal. But in this country I can’t see a scenario where there is no price increase either with age or with external factors such as medical inflation. So we tell our distributors to make sure they communicate to the customers upfront that premiums are bound to change.
But in the past, premiums have increased rather exorbitantly. In health insurance, the most popular reader feedback for us also is about this sudden hike in premiums on renewal.
Insurance products are file-and-use. Which means you need to file a product and get an approval from the regulator. Even when you revise the price, you need approval. No insurer gets an automatic approval without the regulator challenging the rationale. In theory we can go to the regulator after every 12 months for a price revision, but the process of approval can take 3-6 months as there is a lot of back and forth. The regulator is doing a good job by minutely reviewing every price revision but the time taken for approval doesn’t make sense for an annual hike. So when insurers hike the premium some years down the line, it looks steep.
A better way of doing this is to peg the annual hike to an inflation index created by an independent authority. Up to that index, insurers should be allowed to increase their premiums every year so that they don’t have to go to the regulator after a gap of 2-3 years and ask for a hike in double digits. But the issue is that there isn't any official healthcare index.
You have disease specific plans like for diabetes and dengue. Isn’t buying a basic health insurance policy with adequate cover enough?
'Energy' is meant for people who are diabetic. It’s an indemnity cover, but the USP is that it works closely with you to manage your diabetes. That’s the big difference. Dengue cover comes for just Rs524 for a sum insured of Rs50,000. Why would a person use health insurance and let go of her no-claim bonus? The second set of people who will want to buy this cover are the very young. They may not be interested in a full-fledged health insurance policy, but may want a cover specifically for dengue. This (policy) comes at the same price for all age groups, but with a waiting period of 15 days. There is definitely a market for disease specific product. But we see that most products are defined benefit products. Critical illnesses like cancer need long-term care so there is a need to build in OPD in health insurance plans.
The most important aspect of health cover is claim settlement, which is still not smooth. Why is that so? From a service perspective, where do you rate health insurance market in India on a scale of one to 10?
I agree that on discharge there is huge scope for improvement. The issue here is that there are other stakeholders involved. There are providers and policyholders, but we are attempting to make a difference. For example, we have tied up with hospitals where we have our own people, either physically or online, to help with discharge. We are seeing some early signs of faster settlement of claims. We are also looking at packaged deals with hospitals.
An ideal situation is a smooth in and out, whether it’s in-patient or out-patient. In that sense, we are at mid-point, at 5.5 or 6. This is largely because of multiple stakeholders and the challenge with connecting all of these stakeholders.
Can insurers add exclusions to policy contracts in the name of product revision? Of late we have seen policies with added exclusions after a product revision. So when a customer renews the policy, she gets a different contract than what she bought first.
Health insurance is a renewable contract between the insurer and the customer governed by the regulator. With long-term learning of claim trends, insurers enhance, modify or limit the benefits. This is done largely as a safeguard against fraud and abuse that the insurer witnesses over a period of time and to offer an enhanced cover to the customers. We apply revised exclusions only to new customers, however, the enhanced benefits are offered to both old and new customers.