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?

Is Rs 92 Lakhs compensation for 2 lives high or low?

Is Rs 92 Lakhs compensation for 2 lives high or low?

On November 20, 2009, Prathap Kumar (28) who was working in Canada and had come to Chennai on a 10- day holiday. He met with an accident with truck when he and his family were going on the bike. The daughter was thrown off the bike on impact of the crash and was saved. Prathap and his wife died.

This case went to Motor Vehicle Tribunal in Chennai and after the trial Judgement has come in June 2012 .According to it;

·         Total compensation to be paid is Rs. 92 Lakhs.

·         Rs 50 Lakh will be kept in the name of the daughter in a nationalized bank until she’s 18.

·          Her grandparents will get Rs 20.9 Lakhs each so that they can use it for living /education of grand daughter.

Question before us is – Is it that Rs 92 Lakhs high or low?

We feel it is very less – A software engineer who was working in Canada and who is aged 28 years  could have worked /earned till  the age of 65 years – which means 37 years.

Insurance Industry who is coming? Who is going?

Insurance Industry who is coming? Who is going?

Every year we see developments in which:

·         New Insurance companies enter the Indian Market.

·         Some of the existing partners in an insurance company decide to exit as a result of which new investor or shareholder comes in and consequently there can be change in name of the company.

Let us look at the names of new entrants/ names:

Life

·         Edelweiss Tokio Life Insurance Co. Ltd. has entered.

         General

·         Magma HDI General Insurance Company Limited has entered

·         Liberty Videocon General Insurance Company Limited has entered

          Health

 ·         Religare Health Insurance Company Limited has entered

                                                

Change in partners have happened in the recent months 

Company	Who is gone/going	Who has come/ is coming
Max New York	New York Life USA	Mitsui Japan
Metlife	J & K Bank	Punjab National Bank
Reliance General	Entry of a foreign partner	Intact Insurance Co./ HDI-Gerling International Holding AG.
Future Generali	Kishore Biyani Group	Indian partner is planning to exit
Tata AIG General	AIG has gone	AIA has come
Tata AIG Life	AIG has gone	AIA has come

 Let us wait and watch.

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?

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.