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HEALTH INSURANCE "IDENTIFYING AWARENESS PREFERANCES AND BUYING PATTERN IN MUMBAI Swati Kedare PDF
HEALTH INSURANCE "IDENTIFYING AWARENESS PREFERANCES AND BUYING PATTERN IN MUMBAI Swati Kedare PDF
Submitted by:
Research Guide:
DR. R. GOPAL
November 2012
HEALTH INSURANCE: “IDENTIFYING AWARENESS
PREFERANCES AND BUYING PATTERN IN MUMBAI.”
DECLARATION
and the dissertation has not formed the basis for the award of any degree,
MUMBAI. is the bonafide research work carried out by Ms. Swati D. Kedare,
in partial fulfilment of the requirements for the award of the Degree of Master in
formed the basis for the award previously of any degree, diploma, associate
Written words have an unfortunate tendency to convert genuine gratitude into stilted
formality. However, I feel this is the best way to express my appreciation for
everyone concerned.
Working on this project on has been an incredible experience for me. For this very
wonderful experience I would like to thank a lot of people without whose co-operation
and support working on this project would not have been so pleasurable and
interesting.
Firstly, I would like to thanks the University Padmashree Dr. D Y Patil Department of
Business Management which has accepted me for M.Phil program and I feel great
pride and pleasure in putting on record a deep sense of gratitude Dr.R.GOPAL,
Director, Department Of Business Management, During my research If it was not his
encouragement and support, this project would never have been possible. I would
have been deprived of a vast treasure of knowledge.
These acknowledgements are one way where I can say actually thanks to my family
and friends who have supported me in the making of this project. Without their help
and guidance it would be a very difficult task for me to try and plan this project and
actually prepare it.
I would sincerely like to thank customers and employees of various Health Insurance
Companies for giving me some of their valuable time from their busy schedule to
answer my queries regarding the project.
1 INTRODUCTION 7
2 Review Of Literature 17
4 HEALTH INSURANCE 30
4.5 Importance 45
6 REGULATORY FRAMEWORK 74
6.1 IRDA 75
6.2 Rules For Health Insurance Claim settlement by 77
IRDA
6.3 TPA 79
6.4 Role Of TPA 80
NO NO
facts –figure
Viii
LIST OF FIGURES
No. no.
Insurance
ix
LIST OF ABBREVIATIONs
x
EXECUTIVE SUMMARY
1
EXECUTIVE SUMMARY
As today many Health Insurance Companies are coming in the city, For
selecting sample sampling technique was used. Sample consists of all those
variables which are mostly responsible for taking health insurance policy by the
people of city of Mumbai, also the main aim of research work is to find out
buying behavior of the people before purchase insurance policy and to find
used more broadly to include Insurance covering disability or long term nursing
2
government. By estimating the overall risk of Healthcare expenses, a
profit entity. The most important thing which is learned from this project is how
methodology techniques.
The health insurance market covers very smaller part of the total population
India.
The Health Insurance market in India is unique and has developed a strong
growth potential in the recent years with the entry of many foreign players in the
market. The health Insurance market in India was worth INR 5,125 crores with
While the penetration of the Health Insurance market is still quite small, it is one
This Research analyzes this growing industry in its research report Health
Insurance Industry in India. The report analyzes the whole industry in terms of
growth rate, market segments, and the major players in the industry.
The growth will be supported by stand alone Health Insurance companies and
3
across the country motivating a larger section of population for better
State owned health insurance companies constitute about 70% of the market
and the rest is occupied by private companies. However private companies are
growing fast and aims to occupy a larger hare in the Health Insurance market in
near future.
This report has attempted to discuss the vital scenario in healthcare and Health
discussed. Growth drivers and issues of the industry are also covered. Major
public and private players are covered in terms of their performance, products
and out look. Future outlook of the industry is also discussed. The report will be
useful for insurance companies (both Indian and global), other intermediaries
Since the liberalization in 2000, the Insurance industry in India has been
factors. The Indian health insurance market grew at a CAGR of 34.00% during
the review period and is expected to grow at a CAGR of 23.51% over the
forecast period to register the fastest growth among all the Insurance sectors.
as the rise in ‗double income no kids‘ families, increased FDI limits and the
only 26% comes from the local, state and central government authorities, while
4
nearly 71% is paid by the patient‘s family. Insurance accounts for just 3% of
public-sector companies, while the private sector has made gradual progress
in the sector.
SCOPE
market in India:
• It provides historical values for India‘s Health Insurance industry for the
report‘s 2007–2011 review period and forecast figures for the 2012–2016
forecast period
along with the product innovation and customer targeting strategies followed
in India
• It profiles the top health insurance companies in India along with snapshots of
Today many of the Insurance Companies not only provides Products but also
provides very good Services. There is mixture of Product and Services. The
Services. For example, Health Hazard ,Risk cover and many more services.
5
Most of the peoples aware about ICICI Lombard company. It has been
amount is high but customers still opt this companies Insurance product. It has
created as his own brand image. Only because of quality services. In case of
New India Assurance Company the most target audience are middleclass and
lower middle class, as the companies premium amount is less than other
as they are not much aware about Health Insurance, the middle class people
always consider less premium amount which suits there budget & they are able
to pay regular premium amount. Star Health Insurance company is newly enter
in the market but in very less period this company capture most of the market
associated with this company, gives very good medical services, risk cover. As
it shows that many of the customers wants something new in the market and
many of the always welcome for the new changes. So it gives very good idea
company came with new service, Insurance Portability This new service helps
6
INTRODUCTION
7
CHAPTER 1
INTRODUCTION
HEALTH INSURANCE
How many accident you need to realise that you need Health Cover? It takes
just one visit to a hospital to make us realize how vulnerable we are, every
passing second. For the rich as well as poor, male as well as female and young
as well as old, being diagnosed with an illness and having the need to be
failure, cancer – the list of lifestyle diseases just seem to get longer and more
common these days. Thankfully there are more speciality hospitals and
specialist doctors – but all that comes at a cost. The super rich can afford such
costs, but what about an average middle class person. For an illness that
requires hospitalization/ surgery, costs can easily run into five digit bills. A
Health insurance policy can cover such expenses to a large extent. Read why
Health Insurance is more important these days compared to Old days Health is
a human right, which has also been accepted in the constitution. Its
the population both in rural & urban areas have acceptability and affordability
towards medical care, at the same time cannot be said about the people who
belong to poor segment of the society. It is well known that more than 75% of
the population utilizes private sectors for medical care unfortunately medical
care becoming costlier day by day and it has become almost out of reach of the
poor people. Today there is need for injection of substantial resources in the
8
an important option, which needs to be considered by the policy makers and
sum assured , age, current health condition and your previous medical history.
Higher the sum assured, higher the premium. So what is the ideal health
this. If we agree that health insurance is important, one has to look at his/ her
own lifestyle, health condition, age/ life stage, family history of illnesses and
affordability. Keep in mind that most insurance companies limit the sum
charges, etc. for hospitalization. Not only are such ―benefits‖ superfluous, they
tend to drive the premiums higher. So it is best to avoid such plans and stick to
premium, or annual tax) that will ensure that money is available to pay for the
The concept of health insurance was proposed in 1694 by Hugh the Elder
Chamberlen from the Peter Chamberlen family. In the late 19th century,
9
disability insurance. This payment model continued until the start of the 20th
century in some jurisdictions (like California), where all laws regulating health
pay all other health care costs out of their own pockets, under what is known as
the fee-for-service business model. During the middle to late 20th century,
Today, most comprehensive private health insurance programs cover the cost
of routine, preventive, and emergency health care procedures, and also most
prescription drugs, but this was not always the case. Insurance may be
healthcare costs and is called Health Insurance. Since the past two decades,
availing healthcare insurance coverage not only for themselves but also for
closely concerned with security. Insurance acts as a shield against risks and
Company, New India Assurance, United India Insurance, ICICI Lombard, Tata
10
AIG, Royal Sundaram, Star Allied Health Insurance, HDFC standard life,
India‘s fast growing demand for affordable health cover is attracting greater
business attention, with both life and non-life insurance companies now
entering the market with innovative new protection and savings medical
has only intensified in recent months, with the introduction of new savings-
2001. Over the past ten years coverage rates across the populous South Asian
country have doubled and the domestic insurance industry has overtaken
several more developed financial markets in the process. The overall number
of insurance policies sold has increased several times over, and combined
fastest growing insurance lines, accounting for almost a third of new written
premiums last year. Sales of medical insurance products have been driven by
three key factors: a low penetration rate of about 5 percent at present, surging
treatment costs, and a lack of other social safety options across most of India.
and private sector activity, expected to exceed US$200 billion by 2015, even
more significant opportunities for the country‘s health insurance sector will likely
emerge. Over the next three years, health insurance has the potential to
11
become an INR300 billion market (US$6 billion), according to industry
observers.
health insurance sector has worked to both develop innovative new coverage
products and increase service standards for clients in the domestic market. Of
particular note has been how the entrance of several major life insurance
brands, including Life Insurance Corporation of India, Aviva Life Insurance and
Max Life Insurance, has affected the market recently. These life insurers offer
specific policy. These long-term products have tenures that can last up to 20
years. When the policy expires, customers are entitled to receive the fund value.
submission of medical bills. Most of these health insurance plans sold by life
While life insurer health plans are tied to equity returns, medical insurance
These plans, with premiums reviewed and renewed annually, also offer
12
hospital networks. These products have so far proven to be the most popular in
India. Health insurance policies sold through non-life and dedicated medical
healthcare needs.
Despite the positive growth indicators, India‘s health insurance market still has
many problems to contend with in order to match its true potential going
forward. The most important challenge for insurers remains the low level of
savings and investment tool across much of the country. This problem is slowly
platforms to reach previously untapped regions and client bases with more
local bank.
Indian consumers already aware and enrolled in health insurance schemes, the
satisfaction levels for health insurance in India have consistently ranked below
comparable levels elsewhere, with critics frequently citing the low coverage of
plans in terms of both the diseases and number of hospitals covered. Unlike
other homogenous general insurance products, premiums for medical plans are
based on the health of an individual policyholder and this had lead to confusion
13
and fraud in the Indian market and increased policy cancellations from
customers who do not find any value in their health insurance policies.
The Insurance Regulatory Authority of India (IRDA) has come to the forefront in
tackling these service standard issues recently. Speaking at the first meeting of
the India Health Insurance Forum in Hyderabad last Thursday, IRDA chairman
J Harinarayan said the industry must now work to improve communication with
as a third of all consumer complaints this year have been directed towards
health insurers. According to IRDA data, of the 92,898 complaints levied at the
non-life sector so far in 2012, 38,891, or 37.5 percent have been focused on
health insurance issues. ―If one-third of complaints are from the health side, I
will conclude that the nature of communication on health insurance policies and
With a reach of just about 2% of the country‘s 1.2 billion population, India offers
insurance products in the category offered by both life and non-life insurers.
While ICICI Lombard, Bajaj Allianz and Reliance General are some of the
prominent general insurers in the health insurance space, Apollo DKV, Star
Health & Allied Insurance are the standalone players. Health insurance‘s
annual premium collections are over Rs 6,000 crores. Despite the high growth,
14
the business is a huge challenge for insurers because of the high losses over
The interesting find about health insurance in India was how people perceived
macro level, very few households in India have contingency plans to meet their
health expenses. Health risks in India are perceived differently than the western
The industry is also becoming tech-savvy with facilities to buy certain types of
insurance penetration level in India is very low when compared with the global
companies and the insured, and their role assumes importance when a claim
Health insurance policy does not always cover every possible health problem
someone might encounter in the future. There are certain terms and conditions
15
agreed to by the insured (person who is taking the plan), and the insurer (entity
that is providing the plan) and the entire procedure happens according to what
The best time to avail a health insurance plan is when the insured is still in a
good physical condition. The normal logic among young people is that since
they are rarely afflicted by physical ailments they do not need such a plan.
In reality people can fall prey to a disease or other physical problem at any time
- nobody can be absolutely sure of a life fully free of such issues. Normally as
someone gets older the problems increase and the possibilities of some major
disease are always there. A problem with trying to get a medical insurance
during old age is that since there are more chances of a medical condition the
premium is often high or the insurer is not ready to cover the individual in
question.
16
LITERATURE REVIEW
17
CHAPTER 2
LITERATURE REVIEW
typically rise and their contribution to household income and home production
(e.g. cooking or childcare) declines (e.g. Wagstaff and Doorslaer, 2003; Gertler,
Levine & Moretti, 2003; Gertler and Gruber, 2002). According to the WHO,
meaning they are obliged to spend on health care more than 40% of the
income available to them after meeting their basic needs.‖ (WHO Factsheet
N°320, 2007)Low income and high medical expenses can also lead to debt,
sale of assets, and removal of children from school, especially in poor nations.
A short-term health shock can thus contribute to long-term poverty (e.g. Van
Damme et al, 2004; Annear et al, 2006). At the same time, because
households often cannot borrow easily, they may instead forego high-value
care. When they do access care it will often be of low quality (Das, Hammer
Theory suggests that health insurance can address some of these problems.
By covering the cost of care after a health shock, insurance can help to smooth
consumption, reduce asset sales and new debt, increase the quantity and
countries. One reason for the lack of evidence is that it is difficult to find a valid
control group for the insured. We cannot simply compare the outcomes of
18
insured and uninsured households, since health insurance status is typically
strongly correlated with other household characteristics. For example, rich and
well educated households typically have both better health (Asfaw, 2003) and
better health insurance coverage (Jütting, 2004; Cameron and Trivedi, 1991),
but the positive correlation between health and insurance status tells us nothing
about the impact of insurance. On the other hand, those in poor health may be
more likely to pay for health insurance (Cutler and Reber, 1998; Ellis, 1989),
but finding that the insured tend to be sicker would not imply that insurance
causes illness.
rigorous studies are based on United States data. We follow Levy and Meltzer
(2004, 2008) in both our choice of U.S. studies and in our main conclusions.
important for understanding both how well targeted the insurance product is
and the financial viability of the insurance program. As explained below, the
costs. Standard insurance theory predicts that insurance markets will suffer
from adverse selection, which occurs when less healthy people or people who
are more risky with their health are more willing to purchase health insurance
19
because they know that the amount they spend on healthcare will be larger
than the premium they will pay. (e.g., Rothschild and Stiglitz 1976; Akerlof,
selection is severe, since only the most costly patients would find it worthwhile
to purchase insurance, and premium levels will not be able to cover the high
costs of care.
Some studies in wealthier nations find evidence that people with higher
are more likely to buy insurance or pay for health insurance at higher premiums
than those with lower expected medical expenditures (e.g. Cutler and
Zeckhaus, 1998). However, the extent of adverse selection in health and other
2006; Cardon and Hendel, 2001; Cawley and Philipson (1999). There is also
some recent evidence of positive selection into health insurance (e.g. Fang et
al., 2008).
Trivedi et al. 1988, Savage and Wright 1999). Income has been found to
(1989) in UK; Cameron, Trivedi et al. (1988)in Australia and Hurd and McGarry
20
the premise that families which have higher chances of requiring
Some other socio economic factors like age, education etc. have also
important factor for health insurance purchase decision. Very few studies
India (Wadhawan 1987, Ellis 2000, Bhat and Mavalankar 2001). Some
(Devadasan, Ranson et al. 2004, Ahuja 2005. Rao (2004) discusses the
issues and challenges for health insurance sector in India. These and
other studies have tried to analyse health insurance sector in India, but
not much systematic empirical work has been done and this area is largely
unexplored.
The theory of risk has been applied extensively to the literature related to
private health insurance (Barrett and Conlon 2003). Binary discrete choice
models using either legit or probit has been used to analyze determinants of
health care regimes. The consumer chooses the regime that maximises
expected utility The utility gains, expected from the purchase of private
21
insurance are related to the expected medical need of the people in the first
instance. Some individuals face greater risk vulnerability than others due
to their age, pre-existing health status, job profile and marital status.
For example, Hopkins and Kidd (1996) suggest that the probable
Health status, Health care expenditure of the household may be anther proxy of
health status of the household this view of the role of education in Health.
Health status of the household This view of the role of education in health
Muurinen (1982). The implication is that not only is a better educated person
likely to be healthier which would lower the probability of insurance, but also
he/she is likely to be better informed about both the services available in the
public hospital system and the benefits of joining a private health insurance
fund. The indirect effect of education is and the benefits of joining a private
Education and income are generally positively correlated (Van De Ven and Van
are employment, age, marital status and gender. The available evidence
ways. Those who are employed and those in executive positions are
22
likely to purchase insurance (Butler 1999; Savage and Wright 1999).
Married respondents are more likely to take out coverage (Cameron &
McCallum 1995), though family size apparently has been of little influence
PERCEPTION OF CUSTOMERS
group of people with high-risk characteristics (e.g., those who know they
and Kidd (1996) and Butler (1999) found that smokers are less likely to
premium revenue (averaged over policies sold) and the expected benefits
The studies in Indian context on health insurance are scanty. Several recent
papers and reports have critically reviewed the Indian health delivery and
financing system (Bhat and Mavalankar 2000, Berman and Khan 1993,
World Bank 1995, Planning Commission 1996, etc). These studies have
23
accessibility, efficiency and quality of the health care delivery.
RESEARCH GAPS
As associated with every project, time and money were the major
limitations with project.
While studying the report the above facts should be taken into
consideration.
24
OBJECTIVES OF THE
METHODOLOGY
25
CHAPTER 3
STATEMENT OF PURPOSE
The purpose of this study is to find out the Awareness, Preferences and
services to the masses, the number of people with Health Insurance coverage
is low in India. There are some structural issues with system. The present study
is an attempt to find the cause for low Health Insurance coverage. The study
address the awareness and buying pattern of Health Insurance and scope of
the private Health Insurance companies schemes. Given the growing interest
considered useful in guiding policy making and to help to knowing the complete
Research methodology
26
purpose of generalizing to extend, correct or verify knowledge, whether that
In short, the research for knowledge through objective and systematic method of
Research design provides the glue that the research project together. A
designed is used to structure the research to show how all of the major parts of
Hence, it is clear that research design is the blueprint for researcher it lays down
This classification are made according to the objective of the research ,in some
causes the research will fall in to one of this category but in other cases
1. PRIMARY
2. SECONDARY
prepared questionnaire. The researcher tried to find out the awareness and
27
Personal Approach
Surveys
Mails
questionnaires
articles ,magazines
telephone ,discussion meeting with Managers, Agents of all the four Health
Insurance companies &customers etc. for this project personal interviews was
Books
websites
news papers
journals
magazines
research papers
ICICI LOMBARD 80
BAJAJ ALLIANZE 50
OTHER COMPANIES 60
TOTAL 300
28
A comparative study health Insurance has been done in ICICI Lombard ,Star
agent, broker, customers . the sampling technique was Quota sampling , The
29
CHAPTER 4
HEALTH INSURANCE
4.1 Introduction of Health Insurance
4.2 Background of Health Insurance
4.3 Features of Health Insurance
4.4 Main Function of Health Insurance
4.5 Importance
4.6 kinds Of Health Insurance
4.7 Essential Guidelines Availing Health
Insurance Policy
30
CHAPTER 4
HEALTH INSURANCE
its broader sense, it would be any arrangement that helps to defer, delay,
reduce or altogether avoid payment for health care incurred by individuals and
this is the definition, we would adopt. The health insurance market in India is
very limited covering about 10% of the total population Health insurance
insurance agent. Depending on the premium paid the health insurance policy
will pay specified amounts for the medical expenses incurred to overcome the
health problem. Currently the trend of some of the reputable companies seems
countries offers free health insurance to their citizen. In India certain sectors
like railways, army and the employees working with the central government are
Health like education should be essential and should be freely available to all
31
have advanced facilities in their government run hospitals. Some examples
include the United Kingdom where the National Health Services hospitals
provide all the health requirements to majority of their citizens. Sweden and
Norway follow similar government run health schemes. As per the census of
USA in the year 2004, it was noted that 245.3 million people had health
"Great physicians and nurses, skilled, caring and unparalleled in their training,
intervened in my life and probably saved it. I was lucky but other Americans are
not. It is time to speak again and stand again for the ideal that in the richest
nation ever on this planet, it is wrong for 41 million Americans, most of them in
working families, to worry at night and wake up in the morning without the basic
spending in other sectors like the army and the infrastructure development and
barely 2% of the GDP is spent on the health and results in the government
hospitals lack in facilities especially for any advanced procedure such as heart
for individuals from the lower income group to provide them and their family
members with adequate cover in event of any mishap or illness. The escalating
medical costs are due to the advanced diagnostic and therapeutic procedures
that have become the hallmark of modern medical care. An insurance scheme
will guarantee that no compromises are made in your treatment for wants of
funds. Remember when negotiating a policy you ask for adequate cover as the
provided by the health insurance will depend on the type of policy purchased.
Before you ask for the best health insurance quote or plan to buy a health
32
insurance plan become an informed consumer. Find definitions of commonly
insurance.
“Health insurance aims that one can access to the best health care
without fearing the financial strain, it help people to have peace in mind
facilities include teaching hospitals, secondary level hospitals, first- level referral
(PHCs), sub-centers, and health posts. Also included are public facilities
for selected occupational groups like organized work force (ESI), defense,
government employees (CGHS), railways, post and telegraph and mines among
others.
The private sector (for profit and not for profit) is the dominant sector with 50%
ambulatory care (or outpatient care) from private health facilities. While
33
continues to grapple with newer challenges. Not only have communicable
diseases persisted over time but some of them like malaria have also
financial burden on the poor and erosion in their incomes. Around 24% of all
people hospitalized in India in a single year fall below the poverty line due to
borrow money or sell assets to pay for hospitalization This situation exists in
community financing, out of pocket payment and social and private health
insurance schemes. India spends about 4.9% of GDP on health.. The per
capita total expenditure on health in India is US$ 23, of which the per capita
34
budgetary allocation for health (as a percentage of the total Central budget)
has been stagnant at 1.3% while in the states it has declined from 7.0% to
5.5%.
SOCIOECONOMIC INDICATORS
Achievements: 1951-2000
changes
rate
35
In light of the fiscal crisis facing the government at both central and state levels,
in the form of shrinking public health budgets, escalating health care costs
coupled with demand for health-care services, and lack of easy access of
people from the low-income group to quality health care, health insurance is
During the last 50 years India Has developed a large government health
Infrastructure with more than 150 medical collages, 450 district hospitals,3000
community Health centers 20,000 Primary Health care centers and 1,30,000
sub- Health centers . On the top of this there are large number of this there are
large number of private and NGO health facilities and practitioners scatters
Over the past 50 Years Indian has made considerable progress in improving its
health status. Death rate has reduced from 40 to 9 per thousand, infant
mortality rate reduced from 161 to 71 per thousand live birth and life
and these are: life expectancy 4 years below world average, high incidence of
million people are on medication for major sickness in India. About 200 million
workdays are lost annually due to sickness. Survey data indicate that about
60% people use private health providers for outpatient while 60% use
government providers for in-door treatment. The average expenditure for care
36
India spreads about 6 percent of GDP on Heath expenditure. Health Care
negligible .Most of the public funding is for preventive, promotive and primary
care programs care expenditure has grown at the rate of 12.84 percentage per
annum and for each one present increase in per capita income the private
doctors and private clinical facilities are also expanding exponentially. Indian
health care cost , high financial burden on poor eroding their incomes,
Increasing burden of new diseases and health risks and neglect of preventive
and primary care and public health function due to underfunding of the
Given the above scenario exploring health- financing options become critical.
insurable for various season , it makes a strong case for potentiality of at least
50 crore plus people to be under some health insurance scheme apart from
opening of market the penetration has been poor and roughly only about 3.5
crore people are covered under various insurance scheme as mentioned above
making the market quit big ,only being scratched at the surface without being
properly tapped. However, since last 2/3 years health insurance has picked up
37
with aggressive selling coupled with awareness making it the second largest
PRIVATE PROVISION
The experiences in liberalizing the private health insurance suggest that it has
undesirable effects on the costs of health care. The costs care generally goes
up. Given the present system of fee for service and current scenario of health
improve quality will result in to high cost and therefore increase in prices of
options of managed care, which would help in reducing the costs. The
managed care, which would help in reducing the costs. The developments
system for providers. The structure of the health sector will have to change
from multi-single doctor hospitals and clinics to large hospitals and polyclinics
which provide services of multiple specialties and can operate at larger scale.
This will aloe them to provide high quality professional care at competitive
prices. As one of the responses to these Third Party Administrator (TPA) are
rapidly emerging in India. Here we can learn from the models, which we have
examined carefully. These aspects of the health sector will need detail study.
38
their history. Health reforms experiences in many countries are replete with the
Now a days there are different insurance policies coming in the market like life
person from any unexpected medical expenses incurred due to any illness.
With the present condition, it is observed that with the latest technologies or the
advancements taking place, the health care has immensely improved but so
has the expenses. The treatments are becoming more and more expensive
with each passing day. It is required that every individual gets a financial
security related to any unexpected medical expenses coming his way. The
1. Medical cash benefits- this benefit entitles you to get cash benefits, if you
are hospitalized. All the financial expenses incurred would be covered in this
plan. The amount provided to you will be on per day basis and the amount
2. Cashless facility- in this benefit, you can get hospitalized on the basis of
this plan without paying a penny. But this benefit can be availed only in some
hours.
39
3. Before and after expenses- as per this policy all the expenses related to
illness incurred 60 days prior to 90 days after hospitalization would come under
4. Floater benefits- this is an add-on benefit for the health insurance policy
holders. In this policy, an individual can take a single policy for the whole family
sum assured every year as a bonus. This policy includes, all the expenses
1000 per family. It even provides tax benefits as per income tax act.
Considering all the aspects, health insurance has advantages which could be
availed very easily. The health insurance is needed now more than ever due to
you still don‘t have a good health care plan, just go for it at the earliest.
Though the features may vary from insurer to insurer, some basic
features are:
3. Pre-hospitalization Expenses
4. Post-hospitalization Expenses
5. Ambulance Charges
6. Cashless Access
40
7.Income Tax Benefit etc
and property. Under the plan of insurance, a large number of people associate
Since the past two decades, there has been a phenomenal surge in
coverage not only for themselves but also for their family members including
circumstances. I
Company, New India Assurance, United India Insurance, ICICI Lombard, Tata
Categories
•Cashless Hospitalization
• Medical Reimbursement
41
a) Cashless Hospitalization
discharge from the concerned hospital. The settlement is done directly by the
insurance company (or insurer). However, prior approval is a must from the
TPA (Third Party Administrator) before availing the benefits under this option.
vary from case to case. Examples include: FTND (Full Term Normal Delivery),
b) Medical Reimbursement
this procedure, the insured has to bear the entire expenses incurred during
can claim medical reimbursement. For availing benefits under this option, the
insured has to approach the concerned TPA under which he/she is covered, fill
42
the requisite form and satisfy all the requirements as mentioned. This includes
A recent survey conducted in 2008 showed that only 3% of the entire Indian
population has availed some sort of insurance policy and enjoys benefits
the general public are by and large ignorant about the benefits of availing
healthcare insurance policies, there lies an urgent need to educate the masses
regarding the importance of Health care insurance and the benefits derived on
account of it. There are numerous reasons for not availing health insurance.
available only to a miniscule section of BPL (Below Poverty Line) groups, low-
players have entered the healthcare segment, but inspite of the entry of private
43
legislature has been passed in the Indian Parliament allowing 49%of FDI in
Insurance Industry.
two elements, one being hospitalization expenses and the other being for the
access to it through their employment. Not all employers offer it, and for those
their own.
indemnity plans, which are becoming less common, and an array of managed
Organizations. Both of the latter provide medical care on a prepaid basis, but
differ in their delivery models, including by the degree of choice of provider that
insured/member must pay before the insurer's liability for payment is triggered.
of a covered expense, and the insured pays the remainder. The size of the
44
Under the plan of insurance, a large number of people associate themselves by
healthcare costs and is called Health Insurance Since the past two decades,
availing healthcare insurance coverage not only for themselves but also for
closely concerned with security. Insurance acts as a shield against risks and
The importance of Health Insurance can never be undervalued for the following
reasons:
• An answer to the solution of uncertainties and risks that are prevalent and
45
• Provides financial stability in life.
deductions.
46
MAIN IMPORTANT TYPES OF COVERAGE OF MEDICLAIM
You go to your family doctor for any health services. If there is urgency in going
to a specialist, your family care doctor will help you in referring one. Mediclaim
companies will not insure you without the referral from your family doctor and
therefore, you will have to pay yourself for such specialist services.
Through this plan you can analysis to any primary, specialist, or medical facility
without referral and get totally covered. It is the Mediclaim companies that
cover you when your child breaks a bone accidentally and you approach
This plan essentially includes both an HMO and a PPO plan. Mediclaim
companies give you the option from the two plans for every medical case. The
plan offers extra covered preventative programs, however, you may have to
pay more from your pocket, if you choose a doctor outside your plan.
This plan is much more superior than the above mentioned mediclaim plans.
47
are concern for medical expenses. Funds outstanding at the end of the year
Individual
Health
Insurance
Policy
Floater
Tax Saver
Policy
Kinds of
Health
Insurance
Student Overseas
medical Mediclaim
policy policy
Critical
Illness
Policy
individual protecting this person from the expenses incurred due to disease or
injury.
48
2. Floater Policy
A floater health insurance policy covers your entire family under one policy with
one sum insured and one premium. It covers all the expenses as covered
under mediclaim only the cover is now extended to the family instead of one
person. This cover can be used by any member of the family any number of
times. The advantage of this policy is that saves money by spreading the cover
you have a critical illness policy, then the insurance company will pay you a
lump sum payment if you are diagnosed with a critical illness as defined by the
deemed critical are Cancer ,Heart Attack, Kidney Failure, Major Organ
Unlike other general insurance policies, these policies come with multiple
options in terms of sum assured and term of the policy. For example ICICI
Lombard provides critical cover for 5 years for a Rs. 12, 00,000 coverage.
These policies are also available with disability coverage to ensure that you are
49
3. Overseas Mediclaim Policy
Student Medical insurance covers the cost of health care while studying abroad.
6. Tax Saver
This is a new class of insurance launched to take full advantage of the income
tax benefit under section 80 D of the Income Tax Act 1961. The premium is
fixed at Rs 15,000 for all plans. For Senior Citizens aged 65 and above, the
upto Rs. 10,000. This includes diagnostics tests, dental treatment and related
expenses. This insurance is suitable for people who are looking to cover all
50
4.7 ESSENTIAL GUIDELINES FOR AVAILING HEALTH INSURANCE
POLICY :
clearly comprehend the extent of medical coverage being offered under the
particular health insurance policy before opting for it. The individual should
covered or not, as well as the extent of the coverage under that particular
policy.
under the policy: Before availing a particular health insurance policy, the
prospective policyholder should note the medical expenses not covered under
that Insurance policy. It is important to note that deductibles are a part and
parcel of any insurance coverage and the expenses incurred as part of the
policy with a co-insurance payment option. The maximum amount does not
51
particular policy. Non-payment of premium within the stipulated time results in
the lapsing of the policy with subsequent break in the policy coverage of the
concerned individual. Even though the concerned individual holds policy with
an Insurance company for many years together, a break in the policy coverage
(Which generally does no exceed more than 15 days is treated as fresh policy
cover.
52
CHAPTER 5
53
CHAPTER 5
common man. In case of a medical emergency, cost of hospital room rent, the
doctor's fees, medicines and related health services can work out to be a huge
sum. In such times, health insurance provides the much needed financial relief.
senior citizens insurance schemes, long-term health care and insurance cover
54
HEALTH INSURANCE IS DIVIDED INTO THREE TYPES IN INDIA
1) SOCIAL
3) PRIVATE
a) Individual policy
INSURANCE
amount each year for specified services. The premium are usually flat rate (not
income-related) and therefore not progressive. Making profit is not the purpose
status. Exemptions may be adopted as a means of assisting the poor, but this
will also have adverse effect on the ability of the insurance fund to meet the cost
55
contribution level and collecting mechanisms, defining the content of the benefit
A2003).
care, though ambulatory and in-patient care is also covered. Such schemes
donations. Increasingly in India, CBHI schemes are negotiating with the for profit
However, the coverage of such schemes is low, covering about 30-50 million.
include the poorest-of-the poor, have low membership and require extensive
schemes.
This scheme established in 1992, provides health, life and assets insurance to
women working in the informal sector and their families. The enrolment in the
year 2002 was 93 000. This scheme operates in collaboration with the National
Rs 85 per individual is paid by the woman for life, health and assets
Rs 20 per member is then paid to the National Insurance Company (NIC) which
56
hospitalization. After being hospitalized at a hospital of one‗s choice (public
for processing and approving of claims rests with SEWA. NIC in turn receives
premiums from SEWA annually and pays them a lump sum on a monthly basis
with free care to the poorest. The benefits include discounted rates on both
outpatient and inpatient care, with the VHS functioning as both insurer and
health care provider. In 1995, its membership was 124 715. However, this
scheme suffers from low levels of cost recovery due to problems of adverse
selection.
benefits in return for payment. It is usually compulsory for certain groups in the
population and the premiums are determined by income (and hence ability to
pay) rather than related to health risk. The benefit packages are
Since 1954, all employees of the Central Government (present and retired)
fighters and journalists are covered under the Central Government Health
57
Scheme (CGHS). This scheme was designed to replace the cumbersome and
offered include all outpatient facilities, and preventive and promotive care in
hospitals are also covered. This scheme is mainly funded through Central
for Allopathy. Beneficiaries at this moment are around 432 000, spread across
22 cities.
The CGHS has been criticized from the point of view of quality and
(as only 80% of cost is reimbursed if referral is made to private facility when
patient surveys conducted in Gujarat found that over half of those covered
did not seek care from ESIS facilities. Unsatisfactory nature of ESIS
Apart from the government-run schemes, social security benefits for the
58
disadvantaged groups can be availed of, under the provisions of the Maternity
Act 1984, Plantation Labour Act 1951, Mine Mines Labour Welfare Fund Act
1946, Beedi Workers Welfare Fund Act 1976 and Building and other
Act, 1996.
fairer access to public health services. Ensuring more equitable access to health
services across the social and geographical expanse of the country is the main
company that pools people with similar risks and insures them for health
expenses. The key distinction is that the premiums are set at a level, which
provides a profit to third party and provider institutions. Premiums are based on
employees) and the level of benefits provided, rather than as a proportion of the
consumer‗s income.
In the public sector, the General Insurance Corporation (GIC) and its four
59
the Life Insurance Corporation (LIC) of India provide voluntary insurance
schemes.
The Life Insurance Corporation offers Ashadeep Plan IIand Jeevan Asha Plan
II. The General Insurance Corporation offers Personal Accident policy, Jan
Disease policy. Of the various schemes offered, Mediclaim is the main product
of the GIC.
November 1986 and it covers individuals and groups with persons aged 5
–80 yrs. Children (3 Months – 5 yrs) are covered with their parents. This
as per the sum insured. There are exclusions and pre-existing disease clauses.
Premiums are calculated based on age and the sum insured, which in turn
policies were issued with about 1.8 million beneficiaries. The coverage for the
Another scheme, namely the Jan Arogya Bima policy specifically targets the
discount or agent commission. However, like the Mediclaim, this policy too has
had only limited success. The Jan Arogya Bima Scheme had only covered 4 00
60
000 individuals by 1997.
The year 1999 marked the beginning of a new era for health insurance in the
Authority Bill (IRDA) the insurance sector was opened to private and foreign
participation, thereby paving the way for the entry of private health insurance
ensuring orderly growth of the insurance industry. The bill allows foreign
requires them to have a capital of Rs 100 crore along with a business plan to
begin its operations. Currently, a few companies such as Bajaj Alliance, ICICI,
described briefly.
3) PRIVATE-:
a) Individual policy-
One may obtain a health insurance policy through two different ways:
Individual health insurance is such that one is able to choose what s/he wants,
and is not saddled with any and everything. Many people prefer to go for
individualized health insurance because they get to choose what they want to
61
their family history in terms of illness so that their cases can be assessed
thoroughly. In the case of an individual policy, the risks of being rejected before
commencement of the policy are higher. This is because of the possibility of the
companies do this to save on expenses and payments that may not really be
required.
In contrast to this is a group insurance policy because there are fewer chances;
insurance policy. Group insurance policies tend to be more successful and less
prone to obstacles; often in-depth checkups are not conducted as they are with
individual health policies. The reason behind this is that insurance companies
are suspicious of individuals who approach them; they feel that there must be a
particular reason for them approaching them. This is sometimes true, and so,
62
5.2 CURRENT STATUS OF PRIVATE/PUBLIC HEALTH INSURANCE IN
INDIA
India has lessons to learn from the experience of Chile. India too has a dual
sector where the providers are salaried. Utilization of insurance under both
For example, a problem such as asymmetry in information puts the patient and
absence of knowledge of prices, the provider can short change the two by
costs as it appears to be a free‗ good for the patient and the provider, often
frivolous use by the patient taking treatment even for a condition which he
would normally have ignored or cured with a home remedy (moral hazard).
Third, it is only the patients who know their health status. Since it is normally
those in need of health care who tend to subscribe to health insurance, this
an enrollee and focusing on low risk groups, such as the young or healthy. Risk
63
selection in individual- based policies however results in increasing the loading
fee and consequently the cost of premium. This is one reason for the attractive
group discounts being as high as 67%. For these reasons, private commercial
Health insurance in India is usually associated with the Mediclaim policy of the
scheme offered by the public sector. The premium based on the age, risk and
the benefit package opted for, ranged from a minimum premium of Rs 201 for
discounts for group memberships. In 2001, there were 78 lakh persons covered
under Mediclaim. The subscribers are usually from the middle and upper class,
The standard Mediclaim policy covers only hospital care and domiciliary
birth, HIV/AIDS, etc. Hospitals with more than 15 beds and registered with a
The Insurance company (or the TPA, where applicable) administers the
scheme. Being an indemnity scheme, the patient pays the hospital bills and
There is also uncertainty about the amount reimbursed, there are times when
the patient is reimbursed only partially, the usual reason being the
64
insufficiency of documentation. The policy is not renewed automatically and is
dependent on the timely payment of premium. Ellis et al. observed that the GIC
whether the facility was qualified or not, but spent little time on detecting fraud.
With claims exceeding 30% a year, more than the household spending, it
Second, it was also observed that the GIC sets premium on the filing of claims
settled claims amounts are always lower than those filed, an amount that
remains unadjusted. During 1994, 4.4% of the insured persons made a claim, of
which only 75% of claims were settled. The claims ratio was 45%. However, of
From the above discussion, five features that characterize the Health
1. By and large, the system offers traditional indemnity, under which the insured
first pay the amount and then seek reimbursement. Under indemnity, all known
diseases or health conditions are excluded and therefore such policies typically
have a large number of exclusions. This also means that those most in need of
insurance, i.e. The sick, get excluded for any financial risk protection against
is advantageous for the provider since he bears no risk for the prices he
can charge for services rendered by him. Combined with the asymmetry in
65
3.Policies provide a ceiling of the assured sum. Such a system, and that
insured as he gets less value for money, as the provider and the insurer
services so long as the amounts are within the assured amount of the insurance
policy.
4.The system is based on risk-rated premiums. This again puts the risk on the
insured as the premium is fixed in accordance with the health status and age.
Under such a system, women in the reproductive age group, the old, the poor
and the ill get to pay higher amounts and are discriminated against.
5.The system is voluntary, making it difficult to form viable risk pools for
66
5.3 HEALTHCARE INSURANCE AWARENESS IN INDIA
and property. Under the plan of insurance, a large number of people associate
Since the past two decades, there has been a phenomenal surge in
coverage not only for themselves but also for their family members including
medical emergencies.
large, Indians are traditionally risk-averse rather than risk lovers by nature.
Categories
•Cashless Hospitalize
• Medical Reimbursement
A) CASHLESS HOSPITALIZATION
discharge from the concerned hospital. The settlement is done directly by the
insurance company (or insurer). However, prior approval is a must from the
67
TPA (Third Party Administration ) before availing the benefits under this option
vary from case to case. Examples include: FTND (Full Term Normal Delivery),
B) MEDICAL REIMBURSEMENT
Under this procedure, the insured has to bear the entire expenses incurred
holder can claim medical reimbursement. For availing benefits under this option,
the insured has to approach the concerned TPA under which he/she is covered,
fill the requisite form and satisfy all the requirements as mentioned. This
A recent survey conducted in 2008 showed that only 3% of the entire Indian
68
population has availed some sort of insurance policy and enjoys benefits
PSUs (Public Sector Undertakings) and Private insurance companies. Since, the
general public are by and large ignorant about the benefits of availing healthcare
insurance policies, there lies an urgent need to educate the masses regarding the
are numerous reasons for not availing health insurance. There is a lack of knowledge
regarding the existing insurance products/services in the markets. On top of it, there
are numerous misconceptions about Insurance prevalent in the Indian Markets. Also
there are numerous fly-by-night agents out to fleece the gullible Indian public.
(Below Poverty Line) groups, low-income groups and to government employees. The
Indian Government has formulated Employee State Insurance Scheme (ESIS) that
focuses on the public healthcare policy for low-income groups. The government
employees can avail Central Government Health Scheme (CGHS) that offers medical
With the opening up of insurance sector for private participation, numerous players
have entered the healthcare segment, but inspite of the entry of private sector,
been passed in the Indian Parliament allowing 49% of FDI in insurance industry.
population does not use health insurance to finance their medical expenditure.
These people pay for their medical expenditure from their pocket. As a result,
many of these uninsured individuals either end up with poor quality healthcare
69
or have to bear financial hardships. The financial stress that is engendered due
members for years. If the same continues, how will the people of India pay their
medical expenses in the future? How will the efforts of medical care providers
Working in this direction, every individual, every medical care provider and
every health insurance company should play an active role. It is only then
insurance in the country can be improved. The products and offerings brought
by different medical insurance providers vary from each other. The only point
that should be brought to light is that people should buy these products to
much relief to them and their family members at the time of medical
arrangement of funds at the last hour. Hence, the Government and all the
associated bodies should all offer their support in spreading health insurance
awareness so that Indian citizens are aware of the right to seek quality
Health of its citizen is one of the top priorities of a nation. A nation with Healthy
people would be able to pursue its agenda with dexterity and execute those
with fine see. Total Health care boost economic growth , reduces poverty and
70
lowers mortality rate. The success of many countries lies in their special effort
to cover the entire population with a scheme of health insurance that keep
straightway . In India as also in many other countries with low per capita, the
burden of having to pay for unplanned and expenditure for medical treatment is
very acutely affecting large population. The total health expenditure in India is
The Government should educate people about the rise of medical costs and
guidelines, allowing only the right players to enter the health insurance market.
of target customers and encourage people to buy them. The combined efforts
In the Indian non-life insurance industry, health insurance is the second largest
segment. It has picked up pace in previous fiscals, and is set to reach new
heights in the coming few years as public and private insurers are coming up
with various schemes to cover the untapped insurance market. As per our
latest findings, the Indian health insurance industry is one of the most prolific
ones in the world. As the healthcare costs and awareness are rising in the
71
landscape has undergone tremendous changes in the last few years with the
schemes. Besides, private and public health insurers have introduced a large
number of plans and schemes to cover an individual and his family against
policies for such people. India could soon see a national medical insurance
policy for people living with HIV (PLHIV). The National Aids Control
we observed while studying and analyzing trends in the Indian health insurance
industry.
During the health insurance market analysis, researcher found that there are
around 28 active third party administrators (TPAs) in India, and the TPA
infrastructure in the country has witnessed a strong growth with the rising
report also identified that emergence and growth of health insurance have
given rise to a need for maintaining and optimizing claims processing and
72
According to the study, health insurance portability is also gaining popularity in
retaining their no-claims benefit. The report also provides an overview of the
rural health insurance segment, and expects that the number of uninsured rural
Development Authority (IRDA) acts and amendments have also been studied
to understand the regulatory framework for the industry. The research also
looks into profiles of various players in public and private sectors to present the
industry to clients.
73
CHAPTER 6
REGULATORY FRAMEWORK
6.1 IRDA
6.2 Rules for Health Insurance Claim Settlement by IRDA
6.3 Third Party Administrator
6.4 Role Of TPA
6.5 Standard Health Insurance Model
6.6 Structural and Operational Working Of Health Insurance
6.7 Claim management
74
CHAPTER 6
REGULATORY FRAMEWORK
6.1 IRDA
regulation, which would address issues arising out of claims not honored by the
February 2011 against IRDA which said ―there are a great deal of
directly detrimental to the interests, health and financial well being of crores of
Indian consumers.‖ The fight between the hospitals and insurers and their third
After hearing the petition last month, a division bench of Chief Justice Mohit
Shah and Justice Roshan Dalvi said in its order, ―We expect that the IRDA will
display the draft regulation for health care on its website as possible.
There are currently more than 7 crore health insurance customers with a total
premium of Rs. 11,000 crore. Out of the 4 public sector general insurers, New
India Insurance incurred a loss of Rs 422 crore in FY ‗11 and the rest were
75
making profits. Out of the 15 private non-life insurance companies only 2 made
profits. The net loss of the general insurance industry was Rs 1,019 crore
There have been number of cases where insurers were accused by the
In2010, the 4 public health insurance companies, having a 60% share of the
total market, struck off a large number of hospitals from their Preferred Partner
Network (PPN) in almost all metros. PPN hospitals provide cashless medical
facility under the health insurance policy. Insurers alleged that there were some
hospitals who along with the patients were inflating the medical bills and
however, feel that when there are mechanisms the IRDA has developed to deal
Insurance) Regulations 2012. The exhaustive 44 page new draft regulations for
76
6.2 RULES BY IRDA
term of 3 years.
plans.
customer.
77
Standard Definitions, Exclusions, and Forms (like Claim Forms) are
communicated with the policy holder 3 months before the renewal date.
delayed submission, if the customer can provide valid reasons for the
delay caused.
Company, and not the TPA (which is the case currently) Insurance
for issues that arise in the network. (Since TPAs were originally brought
78
Any Change of TPA in a policy should be informed to customer with
claim processing, TPA processes claims for both retail and corporate policies.
The risk of loss incurred remains with the insurance company. The insurance
network and utilization review. While some TPA operates as units of insurance
using a specialized set of manpower and technology, therefore hiring a TPA for
the same is a more cost effective method. The Insurance Regulatory and
Administrator who, for the time being, is licensed by the Authority, and is
Being one of the prominent players in the managed care industry, it has the
expertise and capability to administer all or a portion of the claims process. The
79
cashless processing. Insurance companies setting up its own health plan often
The TPA acts like a claims adjuster for the insurance company. In some cases
the insurance company sets up an entire department within their own company
Large number of the health insurance companies in India suffer losses and
have been doing so for years together. The group health insurance profile is
what may cause optimum leakage to the health insurance companies in India.
between the insurer and the insured and facilitate the cashless services of
insurance .For this service they are paid a fixed percent of insurance premium
companies, which have been searching for ways and means to get their
management expenses in line with the specifications laid down by the IRDA.
TPA is maintaining a database of policy holders and issue identity cards with
unique identification numbers to them. They also handle all the policy- related
issues, including claim settlements for the policy holders Insurance companies
of claims, to third party administrators, who offer such services for a cost. The
at no extra cost. Once the policy has been issued, all the records will be
80
passed on to the TPAs and all further correspondence of the insured will be
The TPA's are expected to provide value-added services to the consumers, like
for specialized consultation, and providing information about 24- hour help
In the middle of 2010, the public sector health insurance companies, namely
United India, New India, Oriental Insurance and moreover National Insurance
took a tough stand and penalized major hospitals where such procedure were
taking place. They eliminated these hospitals from the list from which cashless
medical services can be availed by the customers. This caused a lot of pain to
the insured, however the industry woke up to the fact that insurance companies
were being taken for a ride. The 4 public sector health insurance companies
then decided to float a TPA of their own and even do away with the middlemen
who were not falling in line. This action is likely to cut down the frequency of
false claims creeping their business. The move has acquired big support even
from the private health insurance companies. The issuer was not of the public
companies have done away with the practice of TPAs as well as used to
81
THE SERVICES PROVIDED BY TPA ARE AS FOLLOWS:
their 24 hrs call center that provides information regarding policyholder's data,
provider network, claim status, benefits available with existing cardholder, etc
and settles claims for hospitals and policyholders .Policyholders have the privilege
consumer's court if they are not satisfied with the services of a TPA.
The TPA keeps and maintains all the records of medical insurance policies of
an insurer.
The TPA issues identity cards to all the policyholders. The policyholders will
have to show the identity cards to the hospital authorities before availing any
82
After informing the TPA, the policyholder will be directed to a hospital where the
reimbursement basis.
TPA pays for the treatment; they issue an authorization letter to the hospital for
At the point of discharge, all the bills will be sent to the TPA while they are
TPA sends all the documents necessary for consideration of claims, along with
Before IRDA allowed the TPA‘s to formally enter in to the insurance market
there were intermediaries who were acting on behalf of the corporate and
playing very similar role of present days TPA‘s. Corporate were utilizing these
smoother for their employees, Also these agencies were helping to market the
,2001er IRDA , the following are the conditions , specified for the TPA‘s. Figure
83
Only a company with share capital 1crore of registered under the companies Act.
1956 can function as TPA
Every TPA approved by the Authority shall pay a further Rs.30000(Rupees thirty
thousand only )to the authority as license fees before the license granted to it.
Every TPA shall appoint , with due intimation to the authority ,from among its
directors or senior employees, a chief Administrator officer (CAO) Chief executive
officer(CEO) who shall be responsible for the proper day to day administration
activities of the TPA
Where the authority decides to issue a license to the applicant to act as TPA, it shall
issue the same in the form TPA-2
Every License granted by the Authority to a TPA, shall remain in force for three years
, unless the authority decides , either to revoke or Cancel it earlier , as provided in
these regulations. A license granted to a TPA may be renewed for a further period of
three years
source :www.irda.gov.in
84
6.5 STANDARD HEALTH INSURANCE MODEL
REGULATOR
INSURER
GOVERNMENT OR PRIVATE
( for PROFIT OR NON PROFIT)
P REIMBURSMENT
A
HEALTH CARE
CUSTOMER PROVIDER
INDIVIDIUAL and/ OR GOVERNMENT
EMPLOYER OR PRIVATE
Making regular payments ( for PROFIT OR
to a fund NON PROFIT)
HEALTH SERVICES
role of TPA in the system .The core product or service of a TPA is ensuring
that policy holder hassle- free services. Insurance companies pay for efficient
85
And cost efficient services and health care providers get their reimbursement
policies where the insurer directly pays the hospital bill to the health care
Other than the above diagram we can see that there are main three
Health care providers and customers. Other than these, two more parties which
are important and involved in the process are of Third party Administrator and
regulator. Important difference between health insurance and any other kind of
insurance there are more stakeholders than in the other type of insurance and
this makes the whole process more complex and difficult to control.
86
6.6 STRUCTURAL AND OPERATIONAL WORKING OF HEALTH
INSURANCE
Step 2-Cashless
Hospitalization Step 2-Receive benefits Step 3- Filling all the
as applicable (Payout required claim
may be reduced by 20 documents within 60
to 30% in case of days of the date of
hospitalization or happening of the event
undergoing surgery in a
network Hospital
Source:www.assocham.org
87
6.7 CLAIM MANAGEMENT
Health insurance claims management has evolved significantly in India over the
past 10 years. Since the introduction of Mediclaim in the mid 1980s till the
vital for providers and payers. Time, which was not a crucial element in
request reached a TPA, this meant that a response had to be given within 4-6
were also sought as the treatment progressed or as the patient was ready for
The early claim systems were ad-hoc applications, frequently improvised upon
reactive systems, supporting existing products and practices and not designed
existed- how could an insurer introduce a new product when systems to service
it did not exist? A good claims management system must service existing
products well while having the in-built flexibility to support products with new
and rules based prompts and alerts are now available in newer claims system.
88
Not only do they reduce manual intervention and improve process efficiencies,
they can auto adjudicate and process claims which meet all compliance
parameters thus enabling claims staff to provide more time for claims that
Over the next decade, the insurance industry will witness continuous evolution
in health insurance products and processes. The trend to move the claims
function in-house may also be adopted by more insurers. This will create a
unique opportunity for claims system vendors who can offer systems and
applications with a high level of flexibility and automation. The starting point is a
well defined and intelligent work flow management module to ensure optimum
SMS gateway). The ability to easily configure new products at a granular level
fact in the U.S. auto adjudication rates of 65% to 85% are not uncommon,
albeit a very high percentage of these are simple primary care claims. Since
new products will attempt to differentiate themselves with new service models,
the claims systems will require business process builder to build operational
module, business process builder and rule engine is already becoming the core
89
of the new generation claims systems. Such integrated solutions enable the
policy and the product level including verification of benefit and coverage limits
Access to data in the policy administration system and provider module is vital
at this stage. Once the claim data is in the system, pre-defined rules and
product specific processes can be applied. After ensuring that all mandatory
information is provided and is valid, the first step would be to match the claim
against the prior authorization. The second step would be to conduct checks for
usual and customary practices. Much of this can be automated through the use
or unwarranted billing item, therefore generating cost savings for the insurer.
Once a claim has been processed the claim payment process starts.
insight to management. Not only can past trends be identified and leveraged,
the vast amount of claims data can be combined with enrollment data to be
90
In summary, underwriting and claims handling are two core functions of an
insurer and technology offers a lot to streamline both these functions. The
intervention.
Cashless Hospitalization
prior approval is required from the TPA before the patient is admitted into the
hospital.
advance.
Emergency: Where the insured or any covered family member meets with
hospitalization.
91
Fax / submit the required documents. E.g. Doctor‘s certificate, etc.
A non-cashless claim is when you avail treatment in hospitals that do not form
part of insurer‘s network. In such cases, you have to pay the hospital bills and
92
Duly completed claim form
Read the list of coverage and exclusions in policy wordings (which comes to
Ensure that you declare all the pre-existing diseases at the time of enrolment.
hospitalization.
After filing the claim, make sure that maintain minutes of interaction with the
Understand the policy in detail. Be informed about the ‗Fine print‘ , exclusions
93
CHAPTER 7
94
CHAPTER -7
Value Chain
Insurer
Private companies
IDRA-Regulator
Public companies
Employer, TPAs
Hospitals,
Government, Distribution
diagnostic centers
Mediclaim Channel Partners
, Nursing Homes ,
policy Holder HMO
Doctors
NGO/ SHG PPO
Source-http://www.slideshare.net
95
7.1 VALUE CHAIN
96
DISTRIBUTION CHANNEL IN INDIA
AGENCY MATURE
BANKASSURANCE GROWING
BROKER GROWING
TELEMARKETING GROWING
MICROINSURANCE GROWING
In India distribution channel has increase day by day there has been many
are emerging slowly in the market. The Agency , Direct marketing ,Banc
97
assurance, brokers plays an very important role to fulfill the need of the
Agency and direct marketing channels stable in the market, now many of the
banks has started there own insurance product or they are tie up with the
insurance company so the banc assurance channel now growing in the market
, many of the customers maintain their loyalty towards the company hence they
Brokers and the telemarketing is the easiest way to get the product, by setting
at home customer get there product in hand so this is also one of the growing
ubran and group polices & brokers can tap the worksite.
98
7.3 HEATH INSURANCE PORTABILITY
their previous policy. These benefits are gained by being under continuous
coverage for a certain period. This is essential for getting coverage for pre-
Those covered under employer group health insurance policies or family floater
policies can also port to an individual health cover .However, they will first have
to switch to a plan offered by their existing insurer and will be allowed to switch
Insurance
The entire data base of the companies , including the claim details ,
99
request. A time period of three days has been granted by the
and services.
set out.
100
PORTABILITY IN HEALTH INSURANCE: HELP TO INCREASE
The IRDA, vide circular dated February 10, 2011, had issued guidelines
1st July 2011. Subsequently, on 24th June 2011, it was felt necessary to
no later than 1st October 2011. In continuation of the above guidelines, the
these guidelines.
1. In these guidelines, the following terms shall carry the meanings as assigned
to them.
the insured for pre-existing conditions and time bound exclusions if the
policyholder chooses to switch from one insurer to another insurer or from one
plan to another plan of the same insurer, provided the previous policy has been
1.2 Break in policy: A break in policy occurs when the premium due on a given
policy is not paid on or before the premium renewal date or within 30 days
thereof.
101
2. All policyholders are hereby vested with the right of portability, i.e.,
another insurer from amongst the products such insurer is marketing and the
right will be limited to transfer of the period gained in the existing policy (ies)
which would account towards PEDs and the time-bound exclusions of the new
policy.
shall apply to such insurance company at least 45 days before the premium
approach the new insurer at least 45 days before the premium renewal date.
3.2.The insurer may consider a proposal for portability even if the policyholder
fails to approach the insurer at least 45 days before the renewal date, it may be
free to do so.
3.3. Where the outcome of acceptance of portability is still waiting from the new
policyholder, for the short period by accepting a pro- rate premium for such
3.3.2 shall not cancel existing policy until such time a confirmed policy from
3.3.3 the new insurer, in all such cases, shall reckon the date of the
wherever relevant.
102
3.3.4 if for any reason the insured intends to continue the policy further with
the applicant, the Portability Form as set out in Annexure ‗A‘ to these guidelines
together with a proposal form and relevant product literature on the various
5. The policyholder shall fill in the portability form along with proposal form and
6. On receipt of the Portability Form, the insurance company shall address the
claim history of the concerned policyholder. This shall be done through the web
portal of the IRDA within 7 working days of the receipt of the Portability form.
request for relevant data shall furnish the requisite data in the data format for
porting insurance policies prescribed in the web portal of IRDA within 7 working
8. On receipt of the data from the existing insurance company, the new
103
decision to the policyholder in accordance with the Regulation 4 (6) of the IRDA
9. If on receipt of complete information and data within the above time frame,
the insurance company does not communicate its decision to the requesting
policyholder within 15 days then the insurance company shall not retain the
right to reject such proposal and shall have to accept the proposal.
10.2 Individual members, including the family members covered under any
group health insurance policy of a non-life insurance company shall have the
policy or a family floater policy with the same insurer. One year thereafter,
The application to port your health insurance policy should reach the new
insurer 45 days prior to the last date of renewal of your existing policy.
On receiving your request, the new insurance company will provide you a
proposal form and a portability form along with details of various products
offered by it.
Choose the product which suits your requirement, fill up the proposal and
104
Once the insurance company receives both these forms, it will approach
your existing insurer seeking details such as medical records and claim
history .
developed by Irda for all insurers. The existing insurer will have to furnish
After the new insurer has the requisite information, it has to take a
Merits
does not respond into specified time then proposal would be considered to be
accepted.
Portability also allows policyholder to switch from group health insurance policy
waiting period credit. This will help those employees who solely depend on
group health insurance policies provided by their employer as now they can
shift to individual health insurance policy without waiting for four years to pre-
105
Demerits
Policyholder would think to shift to another insurer only if he is not happy with
the claim settlement of the existing insurer that means he had made a claim;
proposal hence no insurer would like to have a policyholder who had earlier
made a claim.
Another drawback of portability is that there is high probability that insurer will
reject the proposal of senior citizen who are considered high risk category.
insurance policy then you will have to pay higher premium for same cover
policy then he will get credit for period he has been insured with current insurer
only this is a compromise for the insured especially if he has not made claim
Another thing that you need to remember is that you can shift to individual
health insurance policy of the same company which has provided you group
health insurance policy; however, you can shift to another insurer after one
year.
a policyholder has gone for treatment for a disease and his earlier insurer had
settled a claim then in such condition will the new company can deny a cover
for that disease. If new insurer does not provide cover without waiting period for
the ailments suffered during the tenure of the old policy then health insurance
106
portability does not serve its purpose for senior citizen and persons having
chronic diseases. Hence new insurer should cover such diseases. If disease is
listed as pre-existing disease in the current policy then new insurer should also
107
SAMPLE PORABILITY FORM
Portability Form
2) Date of Birth/Age
v. Policy number
take
to be ported:
policyholder
108
7.4 THE GAPS AND IMPROVEMENT AREA IN HEALTH INSURANCE
insurance really helps defray that expense. To save money, it is better to work
with a health insurance agent who can help you compare plans and costs to find
hospitalized for any reason, your costs are going to be a lot higher than you
might have anticipated. They could be so high that you simply can't pay them,
and bankruptcy is your only recourse. It doesn't make sense to go bankrupt, and
ruin your financial future, just because you didn't buy affordable health
insurance.
Think about another importance of health insurance. Your family. Your children
need health care throughout their young lives, and it seems like kids are always
getting into scrapes that require a trip to the emergency room. If you take care
of a family, you owe it to them to get health insurance. Without it, your entire
family is vulnerable, and if anything happened, would you want to live with the
difficult to come u with the money for individual health insurance. But can you
This private sector bridges most of the gaps between what government
health care technologies and general price rise, the cost of care has
109
health financing options to manage problems arising out of growing
Public spending in health care is very low at 17% and the National Health Policy
110
CHAPTER-8
111
CHAPTER-8
Health Insurance is one of the India Largest sector, in terms of revenue &
at 32%
12000
10000
8000
6000
4000
2000
0
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-2011
112
8.2 GROWTH DRIVERS:
Research has shown that Indians across all segments and age groups are
generations. This fact, undoubtedly negative, stands out as the root cause for
the potential growth of the health insurance sector. Jacob informs, ―The
increasing .healthcare cost is also adding to the growth of the health insurance
about a paradigm shift in the attitude of people, who demand for a better
therefore, finding greater acceptability. Thus, the market has great prospects,
but the need of the hour is to identify products that will suit customers‘
insurance needs and win their confidence.‖ Biggest target for the insurance
companies in the next five years would be to cover 20 per cent of the Indian
Organisation (NGO)/self-help groups. He further adds, ―Over the past few years,
many companies have entered into the market, and the industry is seeing a lot
more innovation with product offerings for different segments including senior
citizens, corporate, low poverty line and affluent class. Information Technology
(IT) has also been one of the significant enablers of growth in the sector. Given
the current health insurance penetration levels in the country, at about three to
four per cent, there is a significant potential and a long way to go.
113
There will be the number of factors, which will lead to growth for the Health
world.
sector in India.
annum.
Along with these other reasons, as why the Health insurance will see a major
Easier Financing
The majority of health care services in India are provided by the private sector
& the private sector in India is one of the largest in the world, having:-
75 percent dispensaries
114
60 percent of hospitals in India belonging to the private sector
With the booming economy and High literacy rates, the capacity to spend along
with the capacity of the people to pay has increased. As people earning &
education level increase with it will lead to more spending in health care. The
come
115
A Great Future of Health Insurance Industry of India
As People are conscious of health care and hence need for Health Insurance is
increasing year by year. Healthcare costs are increasing at 20% per year.
People have started giving more importance to health insurance with a life
insurance. large number of people are now on the verge of becoming buyer/
Health Insurance industry achieve figure of 30% then the portfolio will be Rs
Health Insurance industry achieve figure of 60% then the portfolio will be Rs
a) People are conscious of health care and hence need for Health Insurance is
116
b) Healthcare costs are increasing at 20% per year. People have started giving
number of people are now on the verge of becoming buyer/ customer of health
insurance.
on this topic in near future. May be in the beginning health insurance will be
made compulsory either for senior citizens or some specific weaker segment of
our society- but sooner or later our society/ government will go for it on full
fledged basis as a part of its social security programme and implement this
proposal. This aspect will become more and more important as the population
In the light of these facts , Health Insurance has a great future in our
117
8.3 MARKET DRIVERS
(2008-2011) (2012-2015)
Increasing awareness of
Health Insurance
supportive demographic
profile(proposing middle
class, increasing dieses state
population)
Rationalization of the
premium rates (e.g. trends
of the upward revision of the
group health policies)
10 5 10 0 5 10
Figure no. 8.3.2 Market Drivers
118
Market Drivers Current Impact (2008-2011) Future Impact (2011-2014)
the general insurance industry (which has increased emphasis and efforts by
health insurers to enter the Indian market the government has recently
proposed to raise the foreign direct investment (FDI) limit in insurance from
2005 to 2025. The prospering middle class in India supports this spending
between INR 2,00,000 and 04,99,999) and strivers ( annual income between
119
8.4 Market Restraints
Limited Reach
0 5 10 0 5 10
120
Market Restraints Current Impact (2008-2011) Future Impact (2011-2014)
pricing 0 5 10 0 5 10
121
8.5 COMPANY WISE GROSS DIRECT PREMIUM INCOME IN INDIA:NON
LIFE INSURERS
INSURER TOTAL PREMIUM MARKET SHARE
122
The premium underwritten by 15 private sector insurers (other than the insurers
sector non- life insurance Company, with market share of 9.99 per cent. It
reported a marginal increase in market share up from 9.52 per cent in 2009-10,
Bajaj Allianz , the second largest private sector non-life insurance company ,
from 7.17 per cent in 2009-10 to 6.74per cent during the year under review. Of
underwritten (reported a negative growth of 16.38 per cent). The other two
In case of public sector non life insurers, all four companies expanded their
of these companies, other than for national, however, declined from their
previous year respective levels, which helped to improve its market share to
growth of 34.50 per cent , which is higher than the industry average for 2010-
11, New India , with insurance premium of 7,097 crore , remains the largest
123
8.6 Non- Life Insurance claims settlement facts –figure
processe claim
d process
ed
2011
Source- Irda
From the total no claim processed during the year by the non-life insurers, the
As against this, the industry settled 85.3 per cent claims of the total claims
lodged and the balance 12.1 percent outstanding at the end of the year.
Overall the number of repudiated claims has been increasing. The rise is due to
the fact that the sector is expanding rapidly and business volumes are
increasing year on year, the same stood at 7.93 crores in the year 2010-11.
The number of claims intimations would also be more and there for an increase in
124
8.7 Budget 2012: Hike Sec 80D limits to boost health insurance
Budget, and both, the common man and industry have always been anxious to
insurance products such as health among retail consumers will get only better
changes that can help the insurance industry move to the next level of growth
and consolidation. The measures will also help the industry to render better
pressing need for concerted effort to make insurance all the more affordable
and an attractive proposition for the common man. Clearly, abolition of the
service tax will enable this process. Currently the service tax stands at 10.3%
including education cess and the Government should consider waiving off the
service tax on premiums paid. Alternatively, they should at least exempt health
insurance products from the purview of service tax. This move will help to
Currently, the qualifying amounts under Section 80D for self, spouse and
15,000 for the parents. Given the high cost of medical care and to encourage
125
CHAPTER 9
126
CHAPTER 9
Penetration of health insurance has been slow and halting, despite the huge
explain for the slow expansion of health insurance in the country are as
follows:
The unregulated environment and a near total absence of any form of control
underwriting and actuarial premium setting. This puts the entire risk on the
insurer as there could be the problems of moral hazard and induced demand.
Most insurance companies are therefore wary about selling health insurance as
they do not have the data, the expertise and the power to regulate the
Increased use of services and high claim ratios only result in higher premiums.
overestimate the risk and fix high premiums. Besides, the administrative costs
are also high—over 30%, i.e. 15% commission to agent; 5.5% administrative fee
127
reimbursements
important clients, cross-subsidizing the resultant losses. With a view to get the
at unviable premiums. Thus, there is total lack of any effort to promote health
lack of innovation to make the policies suitable to the needs of the people.
difficult for the insured to know about their entitlements, because of which the
insurer is able to, on one stratagem or the other; reduce the claim amount, thus
demotivating the insured and deepening mistrust. The benefit package also
needs to be modified to suit the needs of the insured. Exclusions go against the
logic of covering health risks, though, there can be a system where the
existing conditions can be excluded for a time period—one or two years but not
128
5. Inadequate supply of services
There is an acute shortage of supply of services in rural areas. Not only is there
non-availability of hospitals for simple surgeries, but several parts of the country
have barely one or two hospitals with specialist services. Many centres have no
cardiologists for several non communicable diseases that are expensive to treat
availability of institutional care, the variance is high with Kerala having 26 beds
6. Co-variety risks
High prevalence levels of risks that could affect a majority of the people at the
same time could make the enterprise unviable as there would be no gains in
forming large pools. The result could be higher premiums. In India this is an
claims (Bhat 2002) found that 22% of total claims were for communicable
diseases.
129
9.2 MAJOR ISSUES IN HEALTH INSURANCE
Health Insurance
In India there has been many issues in handling the Health Insurance
more, because of this major problem customers did not get there product in
proper manner.
very high so to reduce such type of problem government has to take strict
action against this issues , because it affect the loyalty of the customer and
130
brand image of the company also. Insurance company is leading in product
oriented firm always looks beyond the existing products or services and there
firm should respond to dynamic environment & offer new services. So because
of lack of product innovation customer are not ready to purchase that product.
because of such awareness. The firm has to fight competition, promotion will
be focused on attracting new users and retained repeat customers . The firm
may improve service quality and new features and offer low premium prices to
131
9.3 MAJOR ISSUES IN HANDLING HEALTH INSURANCE
There are many Indian citizens who are dissatisfied with the services of health
insurance providers. The main reason for their dissatisfaction is the rejection of
health insurance claims. Majority of these people do not want to know the
cause behind the rejection, but instead show frustration for not being offered
People should understand their health insurance plans before buying to avoid
these confusions. One important point that everybody should keep in mind is
132
the associated waiting period. This is the time period before which there is no
coverage offered for the particular ailment. If a person claims for the same
illness before the waiting period elapses, he/she would not be offered the
coverage. The other important point that a person should ponder over is to go
through the exclusions section. It will help in informing him/her about the
uncovered perils.
The single grievance that any dissatisfied health insurance consumer would
overcome the concept of Third Party Administrators was introduced which was
hospitalization also depends on the TPAs, where policy holders are allowed to
avail medical treatment at any of the networked hospitals without having to pay
consumers. The survey shows that their quality of service and infrastructure
needed to improve, and that the service form hospitals was really not up to the
mark.
Most of the brokers are not provided the services up to mark, after selling the
policy they are not taking care about the after sale service procedure The study
revealed that the satisfaction levels in health insurance plans was the least.
Indicating that the health insurance segment needs to consolidate its services
and bring down the dissatisfaction levels of consumers who use the service.
because of the half knowledge of the customer ,the policy can get not approve
should remember that this facility can be availed only in network hospitals and
133
thus, going to non-network hospitals to seek treatment on cashless basis does
not make any sense. The common cause behind all these problems is that
people do not read the terms and conditions of their health insurance policy
carefully and thus, face problems at the time of claim settlement. Many of these
people do not look into their healthcare needs while buying insurance, which is
134
9.4 FRAUD IN HEALTH INSURANCE
major concern for insurers and business leaders. Insurers will need to
continuously reassess their processes and policies to manage and mitigate the
risk of fraud. Fraud risk in the insurance value chain can emanate from internal
and external factors External fraud risk can arise at various stages, e.g.,
In the insurance industry, fraud has always been considered a sensitive issue.
The million dollar question continues how to reduce fraud , these companies to
prove that fraudulent activities exist, for instance, knowing a claim is fraudulent
claims and surrenders received by insurers, which also adds up our survey
frauds, which occur in all the areas of insurance e.g., as claims and surrenders,
fraud can be classified under the categories of soft and hard fraud, as describe
below:
135
Different types of frauds affecting Insurance
Companies
Misselling
Commission Rebetting
Hard fraud : This occurs when people unlawfully obtain money from insurance
Soft fraud: This happens when people either lie to their insurance companies or
Today when India‘s insurance industry is working toward reducing cost, one of
its main focus areas to control or reduce costs is by proactively arresting fraud,
program.
136
Effective claims validation
In its quest to restrict unfair practices, IRDA has formulated the insurance
frauds, IRDA has announced draft regulations for open market consultation, to
The Insurance Regulatory and development authority (IRDA) has put in place
complaints from policy holders within 14 days and any failure to do so will
attract penalty . Any failure on the part of insurers to follow this procedure and
products
137
In its bid to check financial fraud , IRDA has made it mandatory for all insurers
138
CHAPTER 10
INSURANCE GUIDELINES
139
CHAPTER 10
CUSTOMERS
licensed broker
Ask the agent to Explain thoroughly the policy , the policy ,the coverage and its
customer claims
Get copy of every document you sign as apply for and buy the Insurance
policy.
Read your policy as soon as you received it .Be sure that what you received is
140
10.2 SWOT ANALYSIS OF HEALTH INSURANCE
sector in India
annum
limited Reach
industry in India
141
There is clear indications that seekers(annual income
142
10.3 HOW TO CHOOSE BEST HEALTH INSURANCE PLAN?
Ever since the new ideas and new techniques have been witnessed in the
choose the right kind of plan not only for your benefit but for family‘s as well.
The basic idea of the insurance companies is to bring more and more plans
which would suit your needs the best way. And hence, there are innumerable
unique plans made available in the market by the insurance companies. The
only thing you need to know is the right kind of criteria while choosing any plan.
There are certain tips which would surely help you choose the right kind of
plans;
While choosing a plan, the first priority for is to acknowledge your needs
and then act accordingly while choosing the kind of plan you need.
Check out the prices of the various policies available in the market.
Compare them and buy the plan as per your paying capacity.
Search for the individual or family policies available, as are much more
economical and provides higher coverage for all the members of your
family.
can review all the terms of the policy properly and doesn‘t push an
143
The most important thing is to be truthful with the broker or the insurance
company and give them all the proper details required for their
procedures.
Rest will depend upon the insurance policy taken by you and the way it would
be helpful in the near future. The better way is to maintain utmost care in your
well being and your eating habits. This would keep you away from the germs as
144
CHAPTER 11
Key Players
145
CHAPTER 11
Limited, India's second largest bank with consolidated total assets of over USD
91 billion at March 31, 2012 and Fairfax Financial Holdings Limited, a Canada
management.
ICICI Lombard GIC Ltd. is the largest private sector general insurance
company in India with a Gross Written Premium (GWP) of Rs. 5,358 crore for
the year ended March 31, 2012. The company issued over 76 lakh policies and
settled over 44 lakh claims and has a claim disposal ratio of 99% (percentage
The company has been conferred the "Golden Peacock Award 2012" for
Inclusion Award-2011" in the micro finance category. The company has been
conferred with 'NASSCOM - CNBC TV18 IT User Award 2010' for Best
CNBC Awaaz Consumer Award 2010 for being the 'most preferred brand' in the
146
General Insurance category. ICICI Lombard Auto Insurance has been rated
auto insurance providers. It was awarded Customer and Brand Loyalty award
in the 'Insurance Sector - Non-Life' at the 3rd Loyalty awards, 2010 and the
'General Insurance Company of the Year' at the 11th Asia Insurance Industry
Awards. The company also won the NDTV Profit Business Leadership Award
2007 and was adjudged as the most Customer Responsive Company in the
Responsiveness Award 2006. It has the Gold Shield for 'Excellence in Financial
Reporting' by the ICAI (Institute of Chartered Accountants of India) for the year
PRODUCT OFFERED
Critical Care
Personal protect
Popular Product
but also outpatient expenses like dental, up to a limit. Maternity cover is also
available under this product. The company has also added Health insurance
Guide, an interactive tool to help the customer Selecta plan to suit his
requirements.
147
Health Advantage Plan has two fixed Premium brackets of Rs.
15,000 and Rs. 20,000 for senior citizens. This ensures that you get the entire
Tax benefit.
1. A Choice of cover of Rs. 2 lakh and Rs.3 lakh at the same premium rate
3. You can cover 2 individuals in the same policy at the same rate.
148
11.2 BAJAJ ALLIANZ
Bajaj Finserv Limited (recently demerged from Bajaj Auto Limited) and Allianz
India. The Company has an authorized and paid up capital of Rs 110 crores.
Bajaj Finserv Limited holds 74% and the remaining 26% is held by Allianz,
SE.As on 31st March 2010, Bajaj Allianz General Insurance maintained its
Bajaj Allianz has made a profit before tax of Rs. 180 crores and has become
the only private insurer to cross the Rs.100 crore mark in profit before tax in the
last four years. The profit after tax was Rs. 121 crores, 27% higher than the
previous year.
Bajaj Allianz General Insurance has received the prestigious "Business Leader
in Bajaj Allianz today has a countrywide network connected through the latest
technology for quick communication and response in over 200 towns spread
across the length and breadth of the country. From Surat to Siliguri and Jammu
to Thiruvananthapuram, all the offices are interconnected with the Head Office
at Pune.
149
Bajaj Allianz has received iAAA rating, from ICRA Limited, an associate of
Moody's Investors Service, for Claims Paying ability. This rating indicates
Bajaj Allianz General Insurance has received the prestigious "Business Leader
2008. The company was one of the top three finalists for the year 2007 and
2008 in the General Insurance Company of the Year award by Asia Insurance
Review.
PRODUCT OFFERED
3. Extra Care
4. Health Ensure
Popular Product:-
Health Guard
Health Guard (Mediclaim), Silver health (Senior Citizen) and Star package
(Family Floater), there are also other plans like Hospital Cash which gives an
amount on every day of hospitalization and Critical Illness which gives a lump
sum in the event that the insured contracts one of the critical illnesses listed like
cancer during the policy period. Bajaj was the first company to come up with a
150
MAIN IMPORTANT FEATURES OF HEALTH GUARD:-
The member has cashless facility at over 2900 hospitals across India
With Health Guard, the member has access to cashless facility at various
20% co-payment applicable for members of age group 56 -65 years, opting this
Allianz
151
11.3 STAR HEATH AND ALLIDE INSURANCE
Star Health and Allied Insurance Company Limited (Star Health) is a joint
venture between Oman health Insurance Company, ETA Ascon Group and a
number of insurance veterans in the country. It is also the first dedicated health
insurance company in India. Known for its innovation, Star has some very
unique products like Diabetes Safe which is for diabetic patients and Star Net
plus which is designed for HIV+ patients. Star Health insurance has an in-
house TPA which increases its efficiency in dealing with cashless cases. They
also have a unique feature where in customers calling a toll free number can
Star Health and Allied Insurance Company Limited (Star Health) has a capital
PRODUCT OFFERED
Medi Classic
Diabetes safe
152
Star Health
Popular Product
Star Health brings you this Unique insurance policy with unique benefits for -
coverage for both future ailments / diseases and for pre existing diseases /
conditions
STAR ADVANTAGES
Cashless hospitalization
quoting the policy number, any person can contact our Doctor on the toll free
153
11.4 NEW INDIA ASSURANCE
New India is a leading global insurance group, with offices and branches
throughout India and various countries abroad. The company services the
Indian. It is one of the first Indian owned companies when it was formed in
1919. It offers different health insurance products like Mediclaim policy, senior
citizen and universal health insurance policy. New India is a leading global
insurance group, with offices and branches throughout India and various
and 648 branches. With approximately 21000 employees, New India has the
magnitude. New India has been rated "A-" (Excellent) by A.M.Best Co., making
154
PRODUCT OFFERED
Mediclaim Policy
Popular Product:
Mediclaim Policy
We have designed a new Policy called as Family Floater Mediclaim Policy for
covering the family members with one sum insured. All the terms and
years. The persons beyond 60 years can continue their insurance provided
they are insured under Mediclaim policy with our Company without any break.
lifelong
155
11.5 OTHER HEALTH INSURANCE COMPANIES
HDFC ERGO
M AX B U P A
UNITED HEALTHCARE
156
11.6 COMPARISON OF HEALTH INSURANCE COMPANIES
underwritten by non-life insurers in the health segment during the period April
Source:IRDA
157
Notes: The total health premium figure includes domestic and overseas
medical insurance
Among the Public Sector Undertakings (PSUs), United India Insurance and
National Insurance each registered a strong growth of 29.1 per cent and 24.8
Among private players, ICICI Lombard occupied the top position with a market
share of 12.7 per cent and growth of 13.2 per cent. With the exception of
Reliance General, Star Health & Allied Insurance, Bajaj Allianz all the other
record good growth and as per the statistics released by the Insurance
Regulatory and Development Authority (IRDA), the industry recorded 17.5 per
cent growth in gross premiums written during the period between April to
financial year.
With the health insurance portability in place, the sector has seen a range of
keeping the prices consistent. The products include critical illness, travel
insurance and products that reinstate the sum insured. IRDA is working to roll
out both Life and Non-Life insurance cover to people with HIV/AIDS and those
158
As per the recent insurance fraud survey, rising incidences of fraud have
impacted claim costs for insurance companies and premiums for policy holders.
159
DATA ANALYSIS
AND
FINDINGS
160
CHAPTER 12
Survey has been done to know the Awareness, Preference and consumption
SAMPLE SIZE-300
Yes No
70%
60%
50%
40%
30%
20%
10%
0%
Figure no.12.1
Parameters Percentage
Yes 54%
No 46%
Table no.12.1
Respondents having Insurance Policy 32% Respondents don‘t have any kind of
Insurance Policy.
161
Q.2 Are you aware about Health Insurance?
(a)Yes (b) No
Yes No
70%
60%
50%
40%
30%
20%
10%
0%
Parameters Percentage
Yes 68%
No 32%
Table no.12.2
Analysis:-
respondent does not use health insurance to finance their medical expenditure.
These people pay for their medical expenditure from their pocket. As a result,
many of these uninsured individuals either end up with poor quality healthcare
162
Q.3 If yes, do you know benefits of health insurance?
Yes No
70%
60%
50%
40%
30%
20%
10%
0%
Figure no.12.3
Parameters Percentage
Yes 64%
No 36%
Table no.12.3
Analysis:-
Because of lack of product benefit customer are not ready to purchase that
product. Lack of product awareness among distributors ,if they are not in
understand the importance and uses of health insurance. it is rightly said that
163
Q.4 Do you have any Health Insurance Policy?
Yes No
54%
52%
50%
48%
46%
44%
42%
Figure no 12.4
Parameters Percentage
Yes 54%
No 46%
Table no 12.4
Analysis:-
164
Q.5 If yes, which companies plan do you avail?
(c ) Star Allied
(e)Others
Companies
40.00%
35.00%
30.00%
25.00%
20.00%
Companies
15.00%
10.00%
5.00%
0.00%
ICICI Bajaj Star Allied New India Others
Lombard Alliance Assurance
Figure no.12.5
Parameters Percentage
OTHER COMPANIES 8%
Table no.12.6
165
Analysis:-
India‗s largest Pvt. Sectors Bank, which is also in Health insurance, ―ICICI
Lombard‖ is one of the best health insurance company and ―Star Allied Health
been successfully able to sustain in this competitive market. The company offer
amount is high but customers still opt this companies Insurance product. It
has created as his own brand image. only because of quality services. In case
of New India Assurance company and Bajaj Allianz the most target audience
are middleclass and lower middle class , as the companies premium amount is
166
Q.6 How did you get this health Policy?
Health Policy
60.00%
50.00%
40.00%
30.00%
Health Policy
20.00%
10.00%
0.00%
Own Purchase Employer Family Provides
provider
Parameters Percentage
Table no.12.6
Analysis
The Analysis shows that 57% respondents purchased own Health Insurance
floater plan customer will get maximum sum assured. very few companies are
provide health insurance for their employee and in case of family floater
company charge more premium as per the age of the family member.
167
Q.7 How much premium do you pay annually?
(a) 1000- 5000 (b) 5001- 10000 (c) 10001 – 15000 (e) Above 15000
Premium
35.00%
30.00%
25.00%
20.00%
Premium
15.00%
10.00%
5.00%
0.00%
1000- 5000 5001- 10000 10001 – 15000 Above 15000
Figure no.12.7
Parameter Percentage
1000-5000 33%
5001-10000 35%
1001-15000 25%
Above 15000 10%
Table no.12.7
Analysis:
Most of the respondents having insurance policy between the range of 1000-
15000 ,Insurance companies offered insurance policy as per the age of the
customer but one most important thing researcher found that as the premium
amount is increase automatically customer will get better coverage and benefit
but some middleclass and lower-class customers not able to pay more amount
for premium.
168
Q.8 Why did you purchase this health insurance plan?
50.00%
40.00%
30.00%
20.00% Health insurance plan
10.00%
0.00%
Health Tax benefits Recover Future
Expenses uncertainty
recover
Figure no.12.8
Parameters Percentage
Analysis:-
cover their Health expenses ,the number of diseases increases day by day and
peoples are paying high amount for that so to recover that expense people
preferred Health Insurance. and most of the customers purchase health plan
169
Q.9. Kindly Rate The Following Factors Important To You In Opting Health
Insurance (More than one)
b) Service of Insurer ( ) ( ) ( ) ( ) ( )
e) Premium Amount ( ) ( ) ( ) ( ) ( )
f) Coverage Amount ( ) ( ) ( ) ( ) ( )
g) Coverage of Diseases ( ) ( ) ( ) ( ) ( )
Important Factors
30%
25%
20%
15%
10%
5%
0% Important Factors
figure no.12.9
Parameters Percentage
Table no.12.9
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Analysis:-
For the continued development of the health insurance market, and also to
protect the long-term interests of the insured persons, the prices of health
acceptance and increased reach, while on the other, the insurance industry
requires that this line of business remains commercially viable and better after
sale service.
Q.10 How Well Do You Think, You Are Covered By Your Current Health
Insurance Policy?
a) Definitely well-covered
b) Probably well-covered
c) Not well-covered
35%
30%
25%
20%
15%
0%
figure no.12.10
171
Parameters Percentage
Table no.12.10
Analysis:-
43% respondents says that their health insurance plan not well covered and
probably not well covered the percentage is quite high. people should
confusions. One important point that everybody should keep in mind is the
associated waiting period. This is the time period before which there is no
coverage offered for the particular ailment. If a person claims for the same
illness before the waiting period elapses, he/she would not be offered the
coverage.
Q.11 Which according to you is the most important aspect that every
a) Hospital care
b) Preventive care
c) Maternity
d) Health specialists
e) Choice of doctors
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Plan Cover
35%
30%
25%
20%
15%
10%
Plan Cover
5%
0%
Figure no.12.11
Parameters Percentage
Preventive care 8%
Maternity 13%
Table no.12.11
Analysis:-
Most of the respondents says that they want better coverage of hospitals and
coverage of maternity also because many of the reasons doctors are taking
decision for suzerain so its not affordable for common men and they want their
own family doctors for treatment so this are the main things that researcher
found.
173
Q .12. What Are The Reasons, You Do Not Have Any Health Insurance
f) All of Them
Reasons
30%
25%
20%
15%
10%
5% Reasons
0%
Figure no 12.12
Parameters Percentage
Too expensive 28%
Table no.12.12
174
Analysis:-
Respondents think health insurance is too expensive high premium and other
mislead people and not provide them actual hidden charges information and
because of other customers experience other peoples are also not having trust
on Insurance company.
175
ON THE BASIS OF VARIABLES THE RESPONDENTS HAS GIVEN
ICICI LOMBARD
4
3.5
3
2.5
2
1.5
1 Rank
0.5
0
Figure no.12.13
1 Rank
176
BAJAJ ALLIANZE
4
3.5
2.5
1.5
Rank
1
0.5
Figure no 12.16
177
OTHER COMPANIES
5
4.5
4
3.5
3
2.5
2
1.5 Rank
1
0.5
0
Figure no.12.17
Based on the responses collected from the respondents and after tabulating
ICICI LOMBARD consistently stand on 1st and 2nd rank , The policy covers
approximately equally preferred by the customers they given similarly 2nd rank to
both of them. But in case of Bajaj Allianz and New India Health Insurance, both
178
the companies premium is low as compare to other company most of the middle
class people preferred this companies plan but they are not providing the
services up to the mark the coverage of health hazard , Converge of risk and
not up to level.
Insurance policies, it has become the 3rd most preferred Health insurance
company. Many of other companies like HDFC standard life Insurance, Apollo
179
FINDINGS
Today everyone believes investment in Health Insurance –it is vital for the
future.
Health insurance has emerged as one of the fastest growing segments in the
non-life insurance industry with 30 per cent growth in 2010-11. For the purpose
Despite the high growth, the business is a huge challenge for insurers because
Awareness and Perception of policy holder: Out of total 300 respondents only
shows that there has been 30:70 split between cashless and Reimbursement
Health insurance policy. Even from researcher field experience it was quite
evident that policy holder has not wider information about their insurance
policy.
Knowledge about coverage and exclusion of policy: Most of the time Policy
empanelled hospitals. Similarly only 8.2% of policyholders are aware about the
fact that insurance companies charged extra fees for TPA. Claim settlement
and after sales Services:- Majority of the customers complaining that there has
been always delay in claim settlement and other after sale service. Most of the
180
time the agreed time for claim settlement is one month but actual time for claim
Generally Policy holders avoid dealing directly dealing with their Insurance
major influence on policy holder s decision and policy holders more trust and
faith of them On one hand, because the prices of health insurance products
181
CONCLUSION
AND
RECOMMENDATION
182
CHAPTER 13
CONCLUSION :
The result of this study shows that the annual premium is the most important
factor that influences the decision or choice of health Insurance plan. This
means that households having higher income have higher probability of buying
healthcare plan. Thus, less income groups may not opt for health insurance
plan. Thus there is a need to develop more products that cater to need of larger
and all levels of income groups. Apart from annual premium, hospital network
network of hospitals and services in their plans in order to satisfy their customer
influence the decisions. The decision made for choosing the plan is mainly
influenced by self perceptions. Family and relatives and past experience hold
second position for assisting in the choice of plan. Most people would prefer to
buy healthcare plan from private insurance companies for they provide better
services and innovative products. Thus, there is large scope for private
183
characteristics and ability to pay. Regulations, aside from their aim of providing
Mutual Benefit Associations and Cooperatives would further increase the reach
the medical profession and within provider groups are necessary for continuing
The analysis clearly shows that there is demand for cash less health insurance
the insurers are providing need based plans but more should be done to meet
the needs arising out of changing lifestyles of people. The population of elderly
people, in India, is rising and they would require institutional care, which is
inclusion of chronic and debilitating diseases, HIV and AIDS, TPAs need to be
more efficient in claims processing and providing better networking for the
alone health insurance companies that are run on-profit objective. In most of
184
the countries life insurance companies underwrite health insurance. In India,
life insurers should be allowed to underwrite health insurance. The tax benefits
available at present should be hiked and continued with. The health plans
should be wide based in order to include outpatient care along with in-patient.
and all the associated bodies should all offer their support in spreading health
insurance awareness so that Indian citizens are aware of the right to seek
quality healthcare without any financial thought. and it will help to increase the
185
RECOMMENDATION
The Health Insurance recommendations, some of the keys ones are as follows:
The foreign direct investment (FDI) limit be raised to 51 % from the existing %.
This could attract global health insurance players and encourage them to take
regime. The parameters used to evaluate the hospitals would include medical
could be taken up by the Tariff Advisory Council in active collaboration with the
IRDA.
186
concept in rural areas under the guidance of the ministry of finance and the
IRDA.
(2) Multiple health insurance products should be offered at various price points
to customers.
(3) IRDA should engage the services of the Ministry of Health and Family
Other Recommendations
♦ Abolition of the service tax on health insurance products. It has also been
187
ANNEXURE – 1
BIBLIOGRAPHY
188
ANNEXURE – 1
REFERENCE
Ellis RP, Alam M, Gupta 1.1996 Health Insurance in India: Prognosis and
prospectus Bostan University: Bostan and Institute of Economic growth :Delhi
December 18.
Gumber A, Kulkarni V.2000, Health Insurance for informal sector: case study of
Gujrat Economic and political Weekly, sep 30
Berman and M. E.Khan (1993): paying for Indias Health care, New Delhi, sage
publication.
189
Jyitsna sethi and nishwan Bhatia(Dec.2008):To study the Type of Health
Insurance and Health Insurance scheme in India, PHI Learning pvt.ltd
publication
M.N. Mishra and S.B .Mishra, To study the environment product design And
structured Facilities, S chand and company pvt ltd publication.
Hopkins S. & M.Kidd(1966). The determinants or the demand for private Health
Insurance under medicare.
190
BIBLIOGRAPHY
www.google.com
www.mediindia.net
www.healthinsuranceindia.org
www.bimabazar.com
www.timesofindia.com
www.irda.govt.in
www.policymantra.com
191
ANNEXURE- 2
QUESTIONNAIRE
192
ANNEXURE – 2
QUESTIONNAIRE
Name of Respondent: -
Date: -
Gender
(a) Male (b) Female
Age (in Years)
(a) 18 - 25 (b) 26 – 35 (c) 36 - 45 (d) above 45
Qualification
(a) 12th (c) Graduate (d) Postgraduate (e) Professional
Monthly Income (in Rs.)
(a) Below 10,000 (b) 10,001-20,000 (c) 20,001-30,000 (d) above 30,000
Occupation
(a) Student (b) Private Employee (c) Govt. Employee
(a)Yes (b) No
(a) Yes ( b ) No
193
Q.4 Do you have any Health Insurance Policy?
(c ) Star Allied
(e) Others
(a) 1000- 5000 (b) 5001- 10000 (c) 10001 – 15000 (e) Above 15000
Q.9 Kindly Rate The Following Factors Important To You In Opting Health
Insurance (More than one)
194
(e) Coverage of Diseases ( ) ( ) ( ) ( ) ( )
Q.10 How Well Do You Think, You Are Covered By Your Current Health
Insurance Policy?
Q 11. Which according to you is the most important aspect that every
(a)Preventive care
(b)Maternity
(d.)Choice of doctors
195
If Not……..
Q 13. What Are The Reasons, You Do Not Have Any Health Insurance
196
Article
197
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