Don’t stop at top-rated plans; find one that caters to your needs
The ratings should not only help you choose a plan well but also help you develop an understanding about what to look for in health insurance
It’s important to buy health insurance, but with myriad policies available in the market, shopping for a good cover is not easy. It also doesn’t help that, in the market lexicon, a comprehensive health insurance is less about minimal exclusions—that make health covers comprehensive in the right sense of the word—but more about the many bells and whistles attached to the policy. Even conversations around claims settlement is missing in the sales pitch.
There is a huge gap between the details that the health insurance industry highlights when selling and the details—including essential features and claims record—that customers should keep in mind while buying. With the intention to bridge this gap, we partnered with SecureNow Insurance Broker Pvt. Ltd to devise the Mint SecureNow Mediclaim Ratings six years ago (see this year’s ratings). The idea of having the rating is to go beyond the price or the premium you pay for a policy and rate health insurance on parameters we think are important.
This year we rated 24 insurance companies and 112 policies across three broad categories of price, features and claims. The ratings should not only help you choose a plan well but also help you develop an understanding about what to look for in health insurance.
MSMR rates health insurance policies that pay for hospitalization bills; in insurance parlance, these are called indemnity covers. We made three cuts to the ratings based on the sum insured or the insurance cover, the age of the person and the type of cover—individual or floater that covers the entire family as one unit. The sum insured categories are ₹5 lakh, ₹10 lakh, ₹20 lakh and ₹50 lakh and the age groups are 30 years, 45 years, 60 years and 75 years. For the individual category, we rated health insurance plans for each age group and for all sums insured. For the floater category, we looked at a family of three for the 30 years age group and a family of four for the 45 years age group. For the 75 years category, there is a separate rating matrix on the basis of features we felt were more relevant to this age group.
Premiums: Premiums or pricing gets a weightage of 25% for the non-senior citizen category and 20% for plans rated for 75 years or senior citizens category.
We have reduced the weightage on pricing by 5 percentage points to factor in the fact that MSMR rates only the basic yet essential features of a health insurance plan, whereas, in order to grab your attention, health insurance plans come with diverse features like out-patient department (OPD), in-built critical illness plans and international cover, all of which affects pricing. So while insurers may get rated down on account of inflated pricing, they don’t get rated up because we are not rating these additional features.
To know how these policies were rated on individual parameters click here
Nevertheless, every year when we reach out to insurers to collect information, we also look at these features closely. However, these features are so diverse that it is difficult to rate them and, in some cases, these add-ons offer very little meaningful cover.
Also, the way we rate premiums is slightly different. For age categories of 30 and 45 years, we have averaged the premium by including higher age bands. It’s on this average premium that the policies are rated—policies that fall in the cheapest bucket get the maximum score. So if a plan is cheapest at 30 years, but expensive at 45 years or, say, 60 years, the average will end up not being the cheapest and our ratings will reflect that. For the 30 years category, we have averaged premiums across 30, 45 and 60 age bands; for 45 years, we have averaged premium across 45 and 60 age bands. For 60 years and 75 years categories, we stayed with individual premiums.
Features: We have looked at some exclusions that make health insurance less comprehensive and features that make health insurance more meaningful. In term of exclusions, the initial waiting period on a pre-existing ailment and sub-limits on room rents are two elements that can come as rude surprises—both get a score of 15% each and policies with these restrictions score down.
Also, unlike last year, where a waiting period of four years, the maximum period allowed, was given a rating of around 4% out of 15%, this year, plans with a waiting period of four years get zero score given that’s the maximum permissible period anyway. Policies with a waiting period less than four years score up.
In terms of value-add to the policy, features that enhance the level of sum insured have been considered. These are no-claim bonus (NCB), which gets a total score of 5%, and restore, which reinstates the level of insurance cover if used in a policy year and gets a score of 2.5%. It should be noted that a handful of insurers, including Manipal Cigna Health Insurance, now offer a bonus even when a claim is made. This is a positive step and should make its way to MSMR once more insurers line up with similar offerings.
We have also included preventive healthcare in our ratings, so policies that induce positive health activity and reward customers with cash-backs get a score of 2.5%. Overall, features get a score of 40%, like last year.
For the 75 years category, the overall score on features is higher at 45% because we have looked at more exclusions, namely co-payment, disease-wise capping and disease-wise waiting period. For this age group, the minimum restriction is more important than the enhancement of cover, so we removed NCB and restore benefits and reallocated scores.
Claims: Every year, we look at the number of claims settled with a total weightage of 25% and the number of complaints per claims with a total weightage of 5%, but this year we added another cut. We also included ageing of claims to see how many insurers are able to settle claims within a month. While cashless claim is popular, insurers still have a sizeable book of reimbursement claims—where the insured person pays the bill and then claims reimbursement from the insurer. This could be for various reasons like getting hospitalized in a non-network hospital and so this year “ageing of claims" makes it to MSMR with a weightage of 5%. Given the high emphasis on claims this year, we have only rated insurers which have settled at least 10,000 claims. This leaves Edelweiss General, Kotak General Insurance, Magma HDI General Insurance, Raheja QBE and Reliance Health outside the scope of our ratings.
Claims is the litmus test for any insurance product, but in the current scheme of things, poor disclosures don’t shed complete light on how insurers are faring. To begin with, insurers continue to report claims numbers on an aggregate basis in health insurance, which means they club group and retail policies together. This needs to change. Further, claims should be segregated for cashless and reimbursement.
How to use MSMR?
Policies with most of the essential features that we have pointed out in the rating scale have been rated A and their score lies between 65% and 100%. Subsequently, policies with a score of 45% but less than 65% shift to a rating of B, and the rest gets pushed to the C category. You can see the full ratings online at www.livemint.com/mintmediratings2019.
‘A’ rated products are policies that have done well broadly on all the three essential parameters of price, features and claims. We have considered 24 combinations—of age, sum insured, and individual and floater metrics. Six insurers were rated A for at least 15 of these combinations. They were ICICI Lombard General Insurance Co. Ltd, Bajaj Allianz General Insurance Co. Ltd, Manipal Cigna Health Insurance Co. Ltd, Apollo Munich Health Insurance Co. Ltd, Royal Sundaram General Insurance Co. Ltd and Religare Health Insurance Co. Ltd.
However, we recommend you don’t stop at looking at the top-rated products alone. Given that this year we have tweaked the weightage a bit (no points for four-year wait on pre-existing ailments and 5% extra for claims ageing), you may also find that ratings on some of the plans have changed, it’s important to look at the granular data to understand why (To find out how these policies were rated on individual parameters, go to www.livemint.com/mintmediratings2019). Again, in keeping with your particular needs, you may find comfort in a lower-rated plan, but make sure you don’t bring home a plan that’s restrictive by way of exclusions or is offered by insurers with poor claims record.