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Health Insurance In India

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COURSE OBJECTIVES• To understand the health insurance industry

in India• To know about the health insurance

companies.• To learn about various health insurance

product features

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PART IHealth Insurance in India: Needs Assessment and Overview

PART IIHealth Insurance Companies and Products

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PART IHealth Insurance in India: Needs Assessment and Overview

PART IIHealth Insurance Companies and Products

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What is Insurance?Insurance is a contract in which an individual or entity, pays the insurance company in return for the insurance company bearing the risk of loss against specified conditions. The individual receives reimbursement against losses from an insurance company. The company pools the clients' risks to make payments more affordable for the insured.

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The Need for Health Insurance?

• For compensating very expensive health care treatment– Over 70% of these spends are out of pocket which leads to lot of

hardships. – According to a survey by NSSO (National Sample Survey

Organization), 40% of the people hospitalized have either had to borrow money or sell assets to cover their medical expenses.

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The Need for Insurance

• High propensity to develop life style related diseases like obesity, diabetes mellitus, hyperlipidemia, hypertension and cardiovascular diseases in India– highest heart disease and diabetes rates in the world

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The Need for Insurance

• Health insurance penetration is at only 3% compared to other countries like UK (12.5%), Japan(10.5%)

• Healthcare spend in India is only 4% of it’s GDP, whereas it has 1/6 of the world population!

• High level of private spending (75%) Vs low level of public spending (23%)

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Healthcare Industry Spends Break-up

Hospital50%

Pharma25%

Diagnostics10%

Insurance and Med equipment

15%

% Spent

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Country wise GDP spending on healthcare

China Brazil India USA UK Global0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

Spending as % of GDP

Spending as % of GDP

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Comparison of healthcare Spend

China Brazil India USA UK Global0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

Public Sector Spending Private Sector Spending

HISTORY OF GENERAL INSURANCE

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OTHER DEVELOPMENT – UNION BUDGET 2014-15

• Upto 49% FDI allowed in Insurance, through FIPB route. Controlling stake must be Indian.

• Insurance Amendment Bill to be taken up by the new Government.

Detariffing Health Insurance• The cost for an insurance policy was earlier decided

by the Tariff Advisory Committee (TAC).– Detariffing was implemented in two phases –January 1,

2007: insurers were permitted to increase or reduce premium by 20% on both sides from their then existing pricing.

– No change in product terms and conditions

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• March 2008: Complete freedom on pricing had been granted, including customisation of product according to each individual.

• The premium amount of an insurance policy can be either loaded or discounted, based on several risk factors, as against the earlier norm of fixed premium prices for a particular sum assured in a category.

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Detariffing Health Insurance

• On detariffing, – Rating will be based on the risk profile of the customer; – Will force insurers to scale up their risk-assessment

capability and give the underwriting function its due importance in the insurance process.

– Focus on the core function of analysing and pricing transfer of risk.

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Detariffing Health Insurance

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GROWTH DRIVERS

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Healthcare Industry - Turnover

2010 2012 20200

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100

150

200

250

300

Revenue(USD Billion)

Revenue(USD Billion)

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Growth Drivers

• Demographic Factors– India has 1/6 of the world population occupying 3% of the

world’s area– Geriatric population expected to increase from 96 million

to 168 million by 2026.– Higher disposable income – rise of double income middle

class families in urban India– Increased incidence of lifestyle related diseases in India

like diabetes, cardiovascular, oncological etc:– Increasing awareness of health insurance

- adult literacy rate 61.3% and youth literacy rate 73.3%

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Growth Drivers

• Economic Factors– Tax benefits by GOI in terms of higher depreciation on

medical equipment, income tax exemption for 5 years for hospitals in rural areas, and for employees tax exemption upto Rs 15000 under section 80D.

– India is one of the emerging destinations for medical tourism

– Insurance coverage to increase due to higher penetration from private players. So also institutional insurance and tertiary care to increase rapidly.

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Growth Drivers

• Economic Factors– Detariffing the General Insurance industry– Rationalization of premium rates

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PART IHealth Insurance in India: Needs Assessment and Overview

PART IIHealth Insurance Companies and Products

PART IIIProduct Pricing and Distribution

PART IVEmerging Problems and Solutions

HEALTH INSURANCE COMPANIES

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PUBLIC SECTOR COMPANIES

1. National Insurance Co Ltd2. New India Assurance Co Ltd3. Oriental Insurance Co Ltd

4. United Indian Insurance Co Ltd

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1. Future Generali India Insurance Company Ltd2. Bajaj Allianz General Insurance Co Ltd3. ICICI Lombard General Insurance Co Ltd4. Iffco Tokio General Insurance Co Ltd5. Reliance General Insurance Co Ltd6. Royal Sundaram Alliance Insurance Co Ltd7. TATA AIG General Insurance Co Ltd8. Cholamandalam MS General Insurance Co Ltd9. HDFC ERGO General Insurance Co Ltd10. Universal Sompo General Insurance Co Ltd11. Bharti AXA General Insurance Co Ltd12. SBI General Insurance Company Ltd13. Raheja QBE General Insurance Co Ltd14. L & T General Insurance Co Ltd15. Magna HDI General Insurance Co Ltd16. Liberty Videocon General Insurance

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PRIVATE COMPANIES

STANDALONE COMPANIES1. Apollo Munich Health Insurance Company

limited2. MAX Bupa Health Insurance Company Ltd3. Religare Health Insurance Co Ltd4. Star Health and Allied insurance Co Ltd

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No subsidyFull subsidy

For Profit

Not for Profit

Mediclaim

Arogyasri

RSBY

CGHSESIS

YeshwiniSEWA Karuna

Kalaignar

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Competition Structure

17.89%

15.09%

14.11%12.04%

11.94%

11.06%

17.87%

Market Share

New India Assurance United India InsuranceNational ICICI LombardOriental Insurance Star Health

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Bajaj Allianz is the joint venture between Bajaj Finserv Limited and Allianz SE. In a short span of time, the brand made its way to the leading health insurers in India. Features like tie-ups with over 3,200 network hospitals and 24X7 call assistance for claims settlement is the proof of their customer oriented approach. •Lowest claim rejection ratio among private health insurance companies•The only private insurer to make a whopping profit of Rs 100 crore in the last 4 years•ISO re-certified for claim processing 

Bajaj Allianz General Insurance Co. Ltd.

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National Insurance Co. Ltd.

Celebrating its 106 glorious years, NIC is the oldest insurance company in India (even older than LIC). With a 14.11% market share, National Insurance Co. Ltd. is the third leading player in the health insurance sector and the fastest growing public non-life insurer.  With its robust network of 1,340 offices and 15,200 employees, NIC serves over 16 million customers. •Business leader award by NDTV Profit in 2011•Unserved market penetration award by Indian Insurance Awards in 2012•Outstanding social contributor of the year award by Indian Insurance Awards in 2012•Recognized as best in service in health insurance•Best customer service by HT-MaRs survey in 2010-11•Rated AAA/Stable by CRISIL, suggesting a sound financial health

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New India Assurance Co. Ltd.

New India is the first wholly Indian owned insurance company in India. With a 17.89% market share, it stands tall as the nation’s leading general insurance company. Bolstered by a network of 1068 offices and 21000 employees, New India has always tried to add an Innovative approach to insurance products. As a health insurer, New India Assurance launched mediclaim policies that cover Ayurvedic / Homeopathic and Unani system of medicine (limited to 25% of the sum insured), a first of its kind initiative. •Rated A- (Excellent) by A.M.Best Co., reflecting its robust financial framework•The only Indian insurance company to be rated by an international rating agency

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Bharti AXA General Insurance Co. Ltd.

Bharti AXA is a joint venture between Bharti Enterprises, India’s leading telecom business group and AXA Group, a global leader in insurance. Recently, it has gained huge attention of the market by transforming the way a claim is perceived by the customer. With their new strategy, they have managed to speed up the claim settlement process by assigning a dedicated claim handler to each insured person making a claim. The brand has also come up with an innovative health insurance product ‘Lifestyle Protection Solution’, that promises to take care of not just health expenses but also lifestyle expenses of the insured. •Claims initiative of the year award by Star of the Insurance Awards in 2013•Best performance in insurance category by Hyundai’s CCS Vendor Conclave in 2013•Best product innovation award by Indian Insurance in 2012

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Oriental Insurance Co. Ltd.

Incorporated in 1947, Oriental Insurance Company is a general insurance company owned by the Central Government of India. With over 900 offices and 16,000 employees, Oriental Insurance enjoys 11.94% market share and stands tall as the 5th biggest player in the health insurance sector. Its claim settlement ratio is high and so is its Incurred claim ratio (102.83%), reflecting a high level of trust and reliability, customers can put in this brand.

•Best public general insurance award by CNBC TV18 in 2011•Best bank and financial institution awards by MCX in 2011•iAAA rating given by ICRA, indicating a sound financial health

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United India Insurance Co. Ltd.

United India Insurance, set up in 1938, is one of the oldest insurance companies in India. In 1972, as a consequence of nationalization of general insurance, a number of Indian and foreign insurers merged together with United India Insurance. From that point, there was no turning back for the brand. At present with a 15.09% health insurance market share, United India stands only second to the New India Assurance in the health insurance domain. Supported by 1,340 offices and a diligent workforce of 18,300 employees, the company has insured over 10 million people. •Innovation in product award for super top-up medicare in 2012•General insurer of the year – public sector award from Bloomberg UTV in 2012

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Future Generali India Insurance Co. Ltd.

Future Generali is a joint venture between Future Group, India’s leading business house and Generali Group, Europe’s largest insurance provider. To give you an idea of how gigantic this group is, Generali Group employs 1,00,000 people  serving  70 million clients in 68 countries. Future Generali differentiated itself as a brand by introducing the concept of mallassurance channel that is providing total Insurance solutions at shopping malls. •A+ rating given by A.M Best global rating agency, indicating a robust financial framework

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HDFC ERGO General Insurance Company Limited is a joint venture between HDFC Limited, India’s premier Housing Finance Institution & ERGO International AG, the primary insurance entity of Munich Re Group. HDFC is renowned for its customer centric approach and its efficient claim settlement. HDFC has one of the highest claim settlement ratios among health insurers (96% CSR in 2011) and has a comparatively shorter claim settlement turnaround time than most of its competitors. 

•ISO 9001:2008 certified for its claim services •Best general insurance company in India by IAIR in 2013•iAAA rating given by ICRA, indicating a sound financial health

HDFC ERGO General Insurance Co. Ltd.

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ICICI Lombard GIC Ltd. is a joint venture between ICICI Bank Limited, India's second largest bank and Fairfax Financial Holdings Limited, a Canada based multi-billion dollar financial services company. With a 12.04% market share, ICICI Lombard is the fourth largest general insurance company and the largest among private players. It boasts of having one of the highest claim settlement ratios in the health insurance segment. •Golden peacock award for corporate social responsibility in 2012•ICICI Lombard Complete Health Insurance was voted product of the year by Nielsen in 2013•Best technology implementation award by NASSCOM - CNBC TV18 in 2010•Most preferred brand in the General Insurance category by CNBC Awaaz Consumer Award in 2010

ICICI Lombard General Insurance Co. Ltd.

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IFFCO Tokio is a joint venture between IFFCO (Indian Farmers Fertilizer Co-operative) and its associates and Tokio Marine and Nichido Fire Group, the largest listed insurance group in Japan.The brand is known for its customer focused strategies such as speeding up claim settlements and conducting bi-annual customer satisfaction surveys. •Mentioned as an innovative distribution channel in Capgemini World Insurance Report, 2009

IFFCO Tokio General Insurance Co. Ltd.

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L&T General Insurance is a wholly owned subsidiary of Larsen & Toubro Limited which was listed as one of the world's top 50 most reputed companies by Forbes in 2009. L&T General Insurance leads all the other health insurance companies in incurred claim ratio. A high ICR (183.40% for the year 2011-12) is a reflection of how dedicated a company is, in paying out the financial cover to its customers at the time of need. •my:health Medisure Prime Insurance was voted product of the year by Nielsen in 2012•Rising star insurer award at the Indian Insurance Awards in 2011•Technology leader award at the Indian Insurance Awards in 2012

L & T General Insurance Co. Ltd.

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Reliance General Insurance is a subsidiary of Reliance Capital, India’s leading financial services company. The company was set up with an objective to make health insurance an easily accessible product in India through a network of hospitals and distribution channels. Reliance is well keeping up with its objectives via 152 offices spread throughout the country and 24x7 customer care center. •First ISO 9001:2000 certified insurance company in India

Reliance General Insurance Co. Ltd.

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Royal Sundaram Alliance is joint venture between Sundaram Finance, a non-banking financial company and Royal Sun Alliance, one of the largest insurance companies in UK. The company boasts of providing cashless facility in more than 3000 hospitals throughout India. Currently, it has over 1700 employees fulfilling the health insurance needs of over 5 million customers. The company’s high claim settlement ratio is a reflection of its dedication to its customers. •First private sector general insurance company in India to be licensed since 2001•First private insurer to introduce innovative health insurance concepts like hospital cash and cashless settlement

Royal Sundaram Alliance Insurance Co. Ltd.

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SBI General Insurance Company Limited is a joint venture between the State Bank of India, the largest banking franchise in India and Insurance Australia Group (IAG), an international general insurance group. With a high incurred claim ratio of 122.82% in 2011-12, SBI gained the trust of the customers and is on its way to capture a big chunk of the health insurance market this year. SBI General registered a staggering 481% growth in premium in 2012.

SBI General Insurance Co. Ltd.

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Tata AIG General Insurance is a joint venture between Tata Group and American International Group, an US based global insurance organization. The brand is a perfect blend of Tata Group's leadership position in India and AIG's global insurance leadership. •Recognized for its effective mobile application in insurance by Celent Model Insurer in 2013

TATA AIG General Insurance Co. Ltd.

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Apollo Munich is a joint venture between Apollo Hospitals Group, Asia’s largest healthcare provider and   Munich Health, a global health insurance leader. With such a cogent tie-up, the brand has created quite a buzz in the market. Apollo Munich Health Insurance is one of the four stand alone health insurance companies in India and purports to offer the fastest claim settlement though its network of 4000 hospitals and 10,000 doctors. The brand is known for its innovative health insurance plans with unique features such as 50% NCB in just a year. The following statistics gives an idea of their customer centric approach. Cashless authorization done within 2 hours of claim intimation – 90%Customer satisfaction – 85%Renewal Rate – 80%<30 days claim settlement – 95%

Apollo Munich Health Insurance Co. Ltd.

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Max Bupa is a joint venture between Max India Limited and the UK based Bupa Finance PLC. This diverse partnership has strengthened the brand with the best of both worlds, Max India’s local expertise and Bupa’s global healthcare experience. •Health insurance company of the year at Indian Insurance Awards in 2012

Max Bupa Health Insurance Co. Ltd.

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Religare Health Insurance Co. Ltd. is a joint venture between Religare Enterprises Limited, a leading diversified financial services group based out of India, Union Bank of India & Corporation Bank. Further, the brand is backed up by Fortis Hospitals and SRL Diagnostics. Incepted in the year 2012, Religare is the youngest player among health insurers. The brand has made quite a place for itself in the health insurance segment for its efficient claim servicing. Some distinguishing features that make it a league apart from its competitors include availing treatment anywhere in the world, no claim-based loading and no maximum-entry age limit. 

Religare Health Insurance Co. Ltd.

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Star Health is India’s first stand alone health insurer. It is a joint venture between Star Health Investments, ICICI Venture, Sequoia Capital, Oman Insurance Company and ETA Ascon Group.

Enjoying 11.06% market share, it is the second biggest private health insurer in India (closely following ICICI Lombard). Imbibed with a rich expertise and experience in the insurance sector, Star Health has well proved its mettle as a specialized health insurer striving to bring the best on the table. The two distinguishing features of Star Health as a brand are its direct tie-up with a wide network of hospitals and cashless service without TPA intervention. Top it up with value added services such as free 24x7 physician consultation over phone.

 

The brand has been a pioneer in introducing innovative insurance products targeting at a niche. Star citizen red carpet is one such health insurance targeted at people aged between 60 and 75. Star cardiac care, their newest offering is also first-of-its-kind initiative pertaining to the health insurance needs of heart patients.

Star Health and Allied Insurance Co. Ltd.

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Insurance Terminology

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• Agent

An agent is appointed by the insurer to conduct business on behalf of the insurance company. An agent must hold a license issued by the IRDA.

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• Claim

The process of applying to the insurer for reimbursement of the expenses incurred for treatment is called “filing a claim”. Usually, this process is handled by a service provider to the health insurance company. This service provider is called a “Third Party Administrator”.

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• Cashless Claim

As the term suggests, the insured can make a claim without paying any cash upfront.The insurer or its Third Party Administrator have tie-ups with network of hospitals and nursing homes called a “network hospital” across the country. The insured can get themselves admitted in these specified network hospitals and take treatment for the disease contracted without any cash payment to the hospital at the time of discharge.However cashless mediclaim settlement is subject to the limits and sub limits which is subject to the sum insured of the policy.

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• Coverage Amount

Coverage amount is the maximum amount payable in the event of a claim. It is also known as “sum insured” and “sum assured”. The premium of the health insurance policy is dependent on the coverage amount chosen by you.

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• Critical Illness Policy

A Critical Illness is a serious possibly terminal disease, which is strictly defined by the insurer. Conditions such as cancer, multiple sclerosis, major organ transplants are deemed as “Critical Illness”. Most critical illness policies provide for the payment of a lump sum benefit if the policyholder is diagnosed as suffering from one of a number of specified terminal conditions.

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Claim under the critical illness policy is payable if during

the policy period the Insured is found to have

contracted a critical illness and survives such critical

illness for at least 30 days from the date of its

discovery.

Any critical illness discovered or discoverable within 90

Days of the inception date of the policy is not covered

under this policy.

Critical Illness Policy

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• Cumulative Bonus

Each claim free year ensures that you get a benefit known as “cumulative” bonus - it is similar to “no claim discount” in concept. The only difference being that instead of giving an upfront discount, the health insurance company adds more benefits for the same premium paid. However, the overall amount of these benefits will not exceed a certain percentage as specified in the policy.

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• Disability InsuranceDisability insurance is a form of insurance that pays a monthly income to the insured when he suffers from total or partial disability. This disability could have been caused due to either illness or injury, but affects his capacity to work and consequently earn.

• Domiciliary HospitalizationDomiciliary Hospitalization is the treatment of the patient is carried out at home. This needs to be as per the doctor's recommendation. Most health insurance companies do cover domiciliary hospitalization subject to a certain limit depending on the sum insured.

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Domiciliary hospitalisation benefit

• Domiciliary hospitalisation means medical treatment for a period exceeding three days for such illness/disease/injury which in the normal course would require care and treatment at a hospital/nursing home but actually taken whilst confined at home in India under any of the following circumstances namely: • The condition of the patient is such that he/ she cannot be removed to the hospital/nursing home. • The patient cannot be removed to the hospital/ nursing home for lack of accommodation therein

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Domiciliary Hospitalization - Exclusions• Expenses incurred for pre and post hospital treatment and expenses

incurred for treatment for any of the following diseases: o Asthma o Bronchitis o Chronic Nephritis and Nephrotic Syndrome o Diarrhoea and all type of Dysenteries including Gastroenteritis o Diabetes Mellitus and Insipidus o Epilepsy o Hypertension o Influenza, Cough and Cold o All Psychiatric or Psychosomatic Disorders o Pyrexia of unknown origin for less than 10 days o Tonsillitis and Upper Respiratory Tract infection including Laryngitis and Pharyngitis o Arthritis, Gout and Rheumatism

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• Exclusions are diseases and conditions for which medical expenses are not covered by the health insurance policy. Exclusions can be of two types – Permanent and First year. Permanent exclusions are never ever covered by the policy for example, AIDS or expenses incurred on cosmetic surgery.

First Year exclusions are ailments which are not covered for the first year of health insurance cover, but are covered subsequently for example surgery for cataract is usually not covered in the first year but is covered starting the second year.

Exclusions

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• Pre-existing diseases• A pre-existing disease is a medical condition that you may

have had (whether you were aware of it or not) at any time prior to the commencement of the policy with the insurance company and this definition also includes any complications arising in the future from such a pre-existing disease. Health Insurance companies do not pay for pre-existing diseases. However, many companies do have specific waiting periods after which pre-existing diseases do get covered provided the policy renewals have been continuous and without any break.

Exclusions

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• Specific ailments• The expenses on the treatment of diseases such as Cataract,

Benign Prostatic Hypertrophy, Hysterectomy for Menorrhagia or Fibromyoma, Hernia, Hydrocele, Congenital Internal Disease, Fistula in anus, Piles, Sinusitis and related disorders, Gall Bladder Stone removal, Gout and Rheumatism, Calculus diseases, Joint replacement due to Degenerative Condition and age related Osteoarthritis and Osteoporosis are generally not payable until a specific period of time, which differs from company to company. The specific diseases may also differ with the company.

Exclusions

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Exclusions• Resulting from War• Treatment for Injuries or diseases directly or

indirectly arising from invasion of a foreign enemy, or due to war like operations, will not be payable by the health insurance company.

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Exclusions

• Dental Care, Hearing and Vision care• For the most part these are not covered as

these do not require hospitalization, and in India, health insurance is mainly associated with the charges for treatment in a hospital. So unless, hospitalization is required, these are not payable.

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Exclusions• Cosmetic surgery • Cosmetic surgery does not affect the life of an individual.

It’s main role and benefit lies only in external looks and beauty, which are not life threatening. Hence, cosmetic surgery of any kind, including Botox, liposuction, et al are not payable by the health insurance company. And it is of note, that circumcision is now considered cosmetic surgery under most health insurance care plans and is not covered. Circumcision, plastic surgery will be payable only if it forms a part of the treatment of an illness.

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Exclusions

• Abortion• As there is still a debate going on, as to

whether to legalize abortion or not and if it should be payable, abortion is excluded from reimbursement, until a consensus is reached and a law is made legalizing abortion in India.

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Exclusions

• Alternative therapies• These include acupressure, acupuncture,

yoga, massage, aromatherapy, reflexology, naturopathy and all those therapies that do not form a part of conventional medicine. These are not covered under health insurance care.

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Exclusions

• Diagnostic Charges• Charges incurred at a hospital or at a nursing

home primarily for diagnosis - including x-rays or laboratory examinations - which does not lead to the conclusion of the existence or presence of any ailment, sickness or injury, for which confinement is required at a hospital or a nursing home, will not be payable.

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Exclusions

• Treatment for pregnancy• Any treatment arising from or traceable to

pregnancy including Caesarean section, is not payable under your health insurance policy.

• The additional charges• Any kind of service charge, surcharge, admission

fees or registration charges levied by the hospital is not reimbursed under your health insurance policy.

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Exclusions

• Additional Supplements• Expenses on vitamins and tonics that do not form a

part of treatment for injury or disease, will not be paid by the health insurance company. But if these supplements do forma apart of the treatment for a specific illness for which the person has been admitted into the hospital, and if it is certified by the attending physician, then it will be payable.

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Exclusions

• It is important that you read your health insurance policy carefully, especially the small wordings that may be disguising the exclusions. It is important to always keep a note of those ailments that are not covered under your health insurance policy, handy. This way you will, be in a better position to make an informed choice as far as your healthcare needs are concerned.

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Exclusions

• Remember not everything is excluded and it’s the job of the policyholder to find out what is excluded and what isn’t.

FAQS

• Entry and Exit Age• Domiciliary Hospitalisation• Critical Illnesses• Day Care Procedures• Pre-existing Diseases• Waiting Period• Free Look period