Plan Panel for State-Funded Health Cover for All Citizens

The panel has suggested that the government formulate financial incentives for beneficiaries of the insurance programme as well as their employers to encourage them to participate in the plan
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The Planning Commission has proposed the introduction of a state-funded health insurance programme by 2017 to cover every citizen of the country.

The panel has suggested that the government formulate financial incentives for beneficiaries of the insurance programme as well as their employers to encourage them to participate in the plan.

“The 12th Plan (2012-17) will explore the possibilities of introducing a government-funded health insurance plan for every citizen along the lines of the Rashtriya Swasthya Bima Yojana (RSBY), which is currently limited to the poor and for certain select groups,” says the approach paper to the 12th Plan, which has been approved by the Union cabinet. “The premiums should be contributed both by the beneficiaries and their employers.”

RSBY, introduced in 2008, has provided health cover to about 24 million poor people in the country. The plan provides a cover of Rs. 30,000 a year to a family of as many as five people. It covers most surgical and medical needs.

The government and insurance firms are still grappling with the problem of some people fraudulently obtaining payments from insurers under the scheme.

Insurance company executives say the government needs to do a thorough homework before implementing the proposed universal health insurance plan.

Implementation will be a challenge because of India’s diverse demography, climate, scattered poor families and poor infrastructure, said Antony Jacob, chief executive of Apollo Munich Health Insurance Co. Ltd.

“Robust IT projects would be required to make this proposal a success,” he said. “Only about 12-13% of the population has some form of health insurance coverage, apart from the 10% who are covered through some form of government schemes.”

Amarnath Ananthanarayanan, chief executive of Bharti Axa General Insurance Co. Ltd, said it’s a step in the right direction but the government needs to decide on a few things, including “the definition of healthcare, who’ll fund it, whether it will be a public-private partnership and whether it will be for families both above and below the poverty line”.

The success of the unique identification (UID) project is critical for the implementation of the programme as it will help prevent fraud, he said.

UID plans to provide a unique number to all Indians that can be used by the government to identify individuals eligible for subsidies and other entitlements.

Involving the employee and employer in the health cover plan will leave out many of the people who work in the unorganized sector, said Aloke Gupta, an independent health insurance consultant.

“When you talk about employees and employers, does this mean the government is looking to cover only the organized sector, which is only around 30 million, and leave out the majority of the informal sector,” he said.

Details of the plan will be formulated once the actual implementation starts, said a Plan panel official, who declined to be identified. “This is just the idea now. When actual implementation happens then all these concerns will be addressed.”

A Rider Can Help Expand Your Insurance Coverage

If you want to increase the coverage of your life insurance policy so that a higher sum insured is paid in case of eventualities like disability or death due to an accident, then going for the disability and accidental death rider with a term insurance policy or a personal accident policy along with a term insurance are suitable options.

A personal accident policy, offered by general insurance companies, is suitable for those who are adequately covered by a separate term insurance policy to take care of natural as well as accidental death. The disability rider is suitable for policyholders who want the convenience of paying only one yearly premium towards life insurance and riders. An accident policy works as a standalone policy and provides coverage up to the sum insured for accidental death and accidental disability.

A term insurance on the other hand, provides the sum insured in the event of the policyholder's death, however, there is no provision for the sum insured to be paid in the event of disability. Hence, taking a disability rider on term insurance allows a policyholder to claim the sum insured for physical disability due to an accident.

In addition, an accidental death rider on term insurance allows the nominee of the policyholder to claim the total sum insured in term insurance, along with the sum insured for the accidental death rider.

“Personal accident policies offered by general insurance companies are more or less the same with the accidental death and disability riders. However, some term insurance disability riders exclude temporary disability, which is covered in a personal accident policy,“ said Sanjay Datta, head of customer service at ICICI Lombard General Insurance Company.

The premium for a 30year-old person choosing a 20-year term insurance with coverage of Rs 5 lakh has to pay Rs 495 for an accidental death benefit rider and Rs 248 for a permanent disability rider from Kotak Mahindra Old Mutual Life Insurance. Similarly, Max New York Life Insurance Company will charge Rs 675 for an accidental death rider and permanent disability rider combined together. The policyholder must, however, take a base term plan for these riders. Typically, a term insurance policy from Kotak Mahindra for the same person will cost Rs 3,119 with coverage of Rs 15 lakh. The whole policy package with riders will entitle the policyholder to receive Rs 15 lakh in the event of natural death, Rs 20 lakh in case of accidental death and Rs 5 lakh in case of total physical disability.

On the other hand, a 30year-old person opting for Rs 5 lakh coverage on a personal accident policy will have to shell out Rs 589 for Royal Sundaram Accident Shield policy and Rs 650 for Bajaj Allianz General Insurance Company’s Personal Guard policy. These policies will pay the sum insured of Rs 5 lakh in case of accidental death or permanent total disability of the policyholder. Also, a policyholder is eligible to claim a certain fixed sum insured depending on his policy terms if he suffers from temporary or partial disability. “The sum assured is also payable on account of disablement coverage (permanent or partial). However, the exact percentage payable will be determined based on the extent of disability and that varies from insurer to insurer. Like in our case, we pay 50 per cent of sum insured if the person becomes incapable of speech or loses hearing capability in both ears,“ said Arun Mehrotra, head of retail underwriting and product development at IffcoTokio General Insurance Company.

“General insurers offer features like accidental medical expenses, ambulance charges, and education fund, which are not available in life insurance riders. So, depending on the policyholder's needs, he can choose the product and insurer that best suits him,“ said Antony Jacob, chief executive officer of Apollo Munich.

Save on Health Cover Cost with a Floater Plan

Kirti Shah, 36, was shopping for a health insurance cover for his family of three. He was surprised when his insurance advisor gave him two quotes: one was the total cost of individual covers for the three and the other a family floater policy, covering all of them — him, his wife and his six-year-old son. Kirti didn't know the difference between an individual plan and a floater policy. The advisor said the premium for a family floater plan with a sum assured of Rs 3 lakh would be Rs 7,753 (excluding taxes), while the total cost for individual covers would workout to be Rs 12,166 for a cover of Rs 3 lakh each. Needless to say, Kirti is now confused.

The pros and cons

To begin with, one should understand the difference between an individual cover and a family floater plan. An individual plan covers only the policyholder, where as a family floater covers the entire family, usually comprising self, spouse and two dependent children. There is usually a family discount of up to 10% on the total premium when the husband, wife, dependent children and/or dependent parents are covered under the same policy. "Since the insurance company is aggregating risks, the premium is lower," explains Sanjay Dutta, head — customer service, health & motor, ICICI Lombard General Insurance Company.

The other advantage of a floater plan is the flexibility that comes with it. Any family member can lodge multiple claims, totalling Rs 3 lakh, the sum assured, in a year. So, any member of Kirti Shah's family can claim up to Rs 3 lakh. But in an individual cover, only the individual who has taken the policy can make a claim and that too for the amount he/ she is covered for.

A family floater policy is also easier to manage than an individual plan. "While renewing, you just need to remember a single date, instead of three or four dates in the case of individual plans," says Anup Bhaiya, MD & CEO of Money Honey Financial Services.

Also, in a floater, it is easy to add a new family member. But, with individual cover, a fresh policy needs to be taken every time there is an addition to the family. In case of the unfortunate demise of the senior-most member of the family, other members of the family can continue with the floater without losing any benefits. "The surviving members can continue to hold the cover as per the policy terms in the case of the death of the eldest member. The policy can be renewed again with the next eldest member becoming the primary member and the policy continuity benefits can be availed of as per the terms and condition of the plan," says Antony Jacob, chief executive officer, Apollo Munich Health Insurance.

"However, a floater policy carries a rare risk," says Sanjay Datta. If a family has a floater plan for a sum assured of say Rs 2 lakh, and if the entire family suffers medical emergencies in an accident, for instance, then in such a case the cover would be inadequate for the family, as each of them may require Rs 2lakhfortreatment.The individual will then have to shell out money from his/her pocket for treatment. In such a scenario, an individual cover will score better . If there is a medical cost of Rs 2 lakh on each individual due to an accident, each of them can claim Rs 2 lakh, provided they are insured for that amount, and they will not have to shell out from their pockets.

Taking a call

Most of us are diligent while buying health insurance covers. On the face of it, a floater policy does come with the cost benefit when compared with individual policies, but then that should not be the only deciding factor while choosing a plan. You need to consider several other factors, too, to figure out which will suit you better. Age would be one of the important parameters to look at. In a floater policy, the cost is governed by the age of the senior-most member of the family to be covered, says Jacob. So it makes sense for a young family to opt for a floater plan. Also if your parents are above 60, then it is likely that they could have higher claims. Hence, they would be better off with individual plans.

If you are covered by your employer , experts recommend that you buy your own family floater also, to add to the one offered by your employer, as it helps take care of interim periods between job switches. "Although you are covered by a floater offered by your company, an additional floater cover is advisable as it would offer coverage to your whole family even if you leave the job or retire ," says Jacob. Also floaters help you get additional cover. So, suppose the organisation you work for covers you for Rs 2 lakh. But if you feel you need a cover of at least Rs 4 lakh, you can opt for a floater of another Rs 2 lakh.

"If the earning member is covered by the employer and does not want to pay double premium, he could opt for a floater," says Gaurav Garg, MD and CEO, Tata AIG Life Insurance. Some financial planners recommend having an individual cover first and adding a floater to that. "As people get afflicted with medical issues separately and at various ages, it is always better to have a primary cover first," says Vishal Dhawan, founder, Plan Ahead Wealth Advisors . If you wish to have higher medical insurance as your age increases, you can take a floater plan, he says.

Insurance Cover for Very Senior Citizens; IRDA Examines Proposal by Apollo Munich

No Bar for Very Senior Citizens

Apollo Munich's new plan promises to break this ceiling, allowing even very senior citizens (above 80) and nonagenarians to buy the cover.

The cover, however, will have a fat price tag. A Rs3-lakh cover for a 70-year-old will come at Rs19,000 a year. At 80, it will costRs32,000 a year and at 90, Rs57,000. Add the 10.3% service tax and the total yearly cost is more than 20% of the cover. "These are tentative figures submitted to the regulator; the final figures may change marginally when the product is finally cleared," says Jacob. The conditions don't end there.

There's a waiting period of one year before the plan covers all diseases, and a long four-year wait for covering pre-existing diseases. Also, senior citizens won't get all the facilities of a normal cover. "There will be a co-payment clause as well as sub-limits in the policy," Jacob clarifies.

The co-payment clause requires the buyer to shell out a percentage of the claim (normally 20%). Under the sublimit clause, there are limits on expenses incurred under various heads, such as room rent, doctor's fee, nursing charges and cost of medicines. However, this applies to all patients irrespective of age.

An Insurance Cover will be the Least of Your Problems at 90

If your parents are above 80 years it is impossible for them to buy a fresh health insurance cover.This may change if a new plan filed by a health insurance company and currently being examined by the Insurance Regulatory & Development Authority (Irda) is cleared.The policy from Apollo Munich Health Insurance is aimed at senior citizens and places no limit on the age at which it can be bought.

"We have recently filed a health insurance policy with the Irda that will have no upper age for entry.Anyone can buy the cover at any age,be it 70 years or 91 years.We hope that the policy will be cleared by the insurance regulator by end of August and we may be able to start selling it by beginning of September, says Antony Jacob,chief executive officer of Apollo Munich Health Insurance."

The new plan signifies a major shift in the way senior citizens are covered by medical insurance.Most health plans cover a person till 75-80 years.Some policies offer lifelong renewal,but this is possible only if the cover is bought early.The Varishtha Bima Yojana from public sector insurer National Insurance can be bought by anyone between 60 and 80 years of age and renewals can be done up to the age of 90.

Apollo Munich itself has a policy that covers an individual for a lifetime,but the policy should be bought before 65.

Other PSU insurers also offer health covers to senior citizens,but there are a host of restrictive conditions and all have an upper age of entry.

Health Insurance Portability:Change your Health Insurer With Caution

Three years ago, Mumbai-based Ashish Shah bought a family floater health cover for Rs 5 lakh. This year, he was in for a shock when his insurer decided to raise the premium from Rs 5,415 to Rs 26,719 despite the fact that he had made no claims.

But Shah did not want to let go of the policy because he had completed three years, the period after which specific diseases, such as hernia, cataract, dysfunctional uterine bleeding, are covered. He was also just one year short of getting a cover for other pre-existing conditions. What was Shah to do?

He needn't have worried. With health insurance portability likely to come into effect from 1 July this year, there may be respite for people like Shah. Portability allows you to carry over the pre-existing disease (PED) benefits in your previous policy to the new service provider.

This was one of the biggest deterrents for switching because the customer had to serve the waiting period all over again and PED claims were covered only after a waiting period of 2-4 years. However, Irda has waived this condition, making for a smooth shift to a new insurer provided the previous policy has been maintained without a break.

When to move 

You can look for a new insurer not only because of a sudden jump in premium but because a job shift has landed you in a place where the coverage of the existing insurer is inadequate. "People shifting from one place to another face problems due to lack of policy servicing at the new location," states Irda. Service standards, network of hospitals, lack of coverage in areas such as dental treatment, maternity benefits, etc, could also prompt you to shift. 

Portability can be carried out only at the time of renewing a policy, not at any time during the year. However, it is advisable to approach the new insurer at least 45-60 days before the renewal date in order to ensure a smooth transition. Says Sanjay Datta, head of customer service, ICICI Lombard General Insurance Company: "A smooth sharing of data between insurance companies is a must to facilitate portability. For this, the industry wants to move to an IT-based platform for exchange of information regarding waiting period, existing claims, etc. The glitch is that all insurance companies don't have data that is online and in a standardised format." 

If you don't start the procedure well in advance, there is a chance that you could go coverless for a certain period. "To avoid such a situation, one can look at a short-term extension of the policy. Besides, a 60-day period is given before a break in cover is considered," says Arun Mehrotra, head, retail underwriting & product development, Iffco Tokio General Insurance. 

Insurance companies have been advised by Irda to acknowledge all applications for portability within three working days. Also, the previous insurer has been advised to share the policyholder's claim history with their counterparts within seven working days. 

Look before you switch 

While portability may seem like a welcome development, exercise the option with caution. So if you are motivated by lower premium to move to a new insurer, remember to check for all services, including the coverage of pre-existing diseases. As the waiting period for companies usually differs, you may have to serve a longer period even if you have completed the term with your existing insurer.

 

BK Sinha, managing director of Unison Insurance Brokers, says, "You should make sure that you are getting continuity benefits since the year you started the policy with the initial insurer. Any diseases contracted after you started the first policy should not be treated as pre-existing." 

"As per Irda guidelines, all insurance companies will have the flexibility to offer a waiver of waiting period as per their terms and conditions with a maximum of four years for pre-existing disease coverage," says Antony Jacob, CEO, Apollo Munich Health Insurance. 

The exclusions will also differ from one company to another, which is why you must check all the parameters before you decide to switch. To help compare, log on to websites such as www.click2insure.in and www.myinsuranceclub.com.

 

It is also likely that your premium will increase or decrease depending on the insurance provider, the policy that you opt for, and on the risk assessment done by your new insurer. B Subrahmanyam, vertical head, health insurance, Bharti AXA General Insurance Company, says, "Policyholders are advised to study the coverage provided by the new insurer before they take a final decision on portability. At the moment, there is no standardisation across the industry in terms of coverage or pricing as each insurer decides on these matters according to his respective underwriting philosophy." 

Antony Jacob, Interview of 15 Questions in 15 Minutes

Antony Jacob, Chief executive officer, Apollo Munich Insurance Company 15 questions in 15 minutes

1. Tell us about your job in a sentence  
I am excited and pleased to run the fastest growing health insurance company, perhaps the fastest growing industry in India. Personally, it is very satisfying to think that I have a role as an individual and as a corporate to bring in a difference to someone’s life.  

2. What does your secretary think about you?  
Antony begins every task with careful consideration of all aspects of the project at hand and this is the one thing that enables him (and his team) to prepare extremely well and be confident for every project undertaken by the company under his leadership. Also, his vast experience about the industry is remarkable… (this is what his secretary writes)

3. What’s the smartest business idea you have ever had?   
Identifying with the thought of ‘let’s uncomplicate’ and walking the talk as an organisation.  

4. And the most embarrassing?  
Nothing as such, I can remember.  

5. Who has been your biggest influence?   
I have started to believe that everyone is unique inside. Whenever I meet and interact, be it at office or while travelling, everyone leaves me something to learn or be influenced. I think it is a constant process.  

6. How important is money to you?   
Reasonably important and a great enabler.  

7. What is your most important work ethic or maxim that you practice every day?  
Integrity is the first among all equals and I value it to the highest level. However, I also believe that you should enjoy what you do.  

8. Has your personal life suffered due to work?  
In the past I tended to think so. But recently I have managed to bring in the balance.  

9. How do you want you to be remembered by your colleagues?  
I want to be remembered as a motivational leader who walks the talk.  

10. What time do you start and finish work?  
Formally on all working days between 9am and 6pm. However, as a habit I am available round the clock on need basis.  

11. What is the most valuable memento in your office?  
 I have a hand crafted statue of Jesus Christ in my office that I value the most.

12. Does retirement scare you?  
No. Not at all.

13. Have you been ever been tempted to start out on your own?
 No.  

14. What do you hate the most at work?  
In some cases when I had to deal with unethical behaviour of individuals.  

15. How do you unwind?  
I am an avid lover of all kinds of sporting activities. I mostly unwind by watching sports, news and movies. On the weekends, I tend to engage in various sports, games and of course, socialising.

What's New in Group Plans?

If you retire or change jobs 

Most advisers suggest an individual health plan along with the employer group cover because you are liable to be left in the lurch after retirement or if you change jobs or the entrepreneurial bug bites you. Not any longer. Insurers are now offering plans that enable seamless transition from a group to an individual cover while continuing with the benefits and without impacting your claim status.

"In case of small and medium enterprises of 10-100 employees, we offer pre-underwritten insurance covers, wherein benefits, such as a waiting period waiver and pre-existing disease coverage, can be carried forward after retirement or while leaving an organisation," says Antony Jacob, CEO, Apollo Munich Health Insurance.

So you can easily transit from the group policy to an individual or a family health insurance policy. Max Bupa Health Insurance also offers this facility, but instead of only SMEs, it provides this for all corporates. "We are the only ones who offer a benefit where the employee can shift from a group to an individual cover," says Damien Marmion, chief executive officer, Max Bupa.

If you have senior citizen dependants 

Though corporates have not yet put a blanket ban on group covers that include senior citizen dependants, more and more are opting out of such policies or asking for a higher premium to be paid by the employee. "Insurers are requesting the corporates that an additional premium be paid by employees. In fact, this year, they are insisting that if the employee doesn't accept such a cover, he will not be made this offer again," says Sudhir Sarnobat, co-founder and CEO, Medimanage, a health insurance broking firm.

So it makes sense to pay a little higher premium and take the dependant cover from your employer because of the benefits it offers. "In the corporate group policy, there are no medical tests, all pre-existing diseases are covered, and you can have a cover for your parents till the time you retire, an age at which they are unlikely to get any other cover in the market," adds Sarnobat.

If you choose a PPN hospital 

In case of an individual policy, you can get cashless facility at a number of hospitals, but the employer cover may now restrict you to a lesser number of hospitals. This is because the public sector insurers, which cover 70% of the corporate and retail market, are enticing corporates to buy a plan which covers the preferred partner network (PPN) of hospitals.

"If the corporate agrees to restrict itself to a network of, say, 650 hospitals, the insurer offers a 10% discount in premium over and above the regular discount. The premium is higher if the corporate insists on all the 3,000 hospitals. This is because they have a negotiated rate with the PPN hospitals and would like to get more business at that cost," says Sarnobat.

Health Insurance Should be Sold Through Banks

The health insurance sector will become the largest component in the general insurance industry by 2016, but there are several challenges for growth. Antony Jacob, chief executive officer of Apollo Munich Health Insurance in an interview to FE's Saikat Neogi talks about issues in health insurance portability, growth and challenges for the sector ahead.

How do you see the health insurance sector moving in the next five years? 

The health insurance sector has been growing quite impressively in the last few years and in 2010-11 the sector saw one of its highest growth ever in the recent past. The growth was around 34% over the previous year 2009-10. The health insurance sector offers huge opportunity entirely based on low penetration levels of health insurance in the country. Looking ahead, I do see health insurance sector to continuing to grow between 25 to 35% every year for the next five years making it the largest component in the general insurance industry by 2016. Currently, motor is the largest component in the general insurance industry and health insurance accounts for around 23%.

What are the challenges that the sector is facing for growth? 

There are several challenges for growth as the sector has been unprofitable in the past because of cross subsidy which had taken place when there were tariffs in fire and marine in the past. Almost every player is now conscious of not subsidising and the claims ratios are coming down, which suggests that in the years to come we will see profitability in the health insurance sector. So, the immediate challenge will be to make the sector profitable, grow faster from a penetration point of view and that's where we will need some regulatory changes like access to health insurance products to be sold through banks. If health insurance companies are given an opportunity to leverage the distribution network of banks, that could help the industry to grow. We will have to work with the regulator to find out cost effective distribution channels. There is also a huge need to increase the awareness level amongst people about health insurance to finance health care. About 70 to 80% of today's healthcare is funded out of pocket and as healthcare costs go higher because of medical inflation, there is an urgent need to educate potential consumers on health insurance.

What are the issues that still need to be resolved before the industry rolls out health insurance portability from July 1 this year? 

I am not so sure about July 1 as there are a lot of process and procedures that need to be clarified as to how it will work in terms of the fine print. All of us do need some more time to put the processes and system in place. It is important for the regulator, companies and customers to be clear as to how the system will work because we have about 50 companies who are engaged in health which includes life, general and specialist health insurance companies. The products vary in terms of features, limits, sub-limits and pricing and the industry needs and the regulator will have to understand how some of the finer processes and features will work when we flag off portability.

Since we have a large younger population, what are the products that you are offering to this category?
If you look at the age group of 20 to 45 years, the big need is outpatient cover. We have a policy called Maxima which covers outpatient and inpatient. We have cashless or reimbursement for doctor's consultation, laboratory and diagnostic tests and these are costs which are most likely to be incurred in that age group. There is also a fair amount of hospitalisation expenses incurred on maternity and in the past there was no cover which covered maternity. Our Easy Health products have certain variants which cover maternity expenses.

How are you looking at health insurance products for senior citizens? 

Insurance products for senior citizens will become common now and grow. For example, at Apollo Munich, once you enter our products before the age 60, you can continue till life long. We offered life-long guaranteed renewals and now we are in the process of finalising a product, which we will shortly file with the Irda, where anybody at any age can subscribe to the product forever. We are working out the cost structure which will be risk-based. As India is the diabetes capital of the world and with changing lifestyle there are more and more issues which a common man will face. The other area where we are working on is disease management. We will bring out a hospitalisation cover along with the disease management.

We are in the Business of Paying Claims

Antony Jacob, CEO of Apollo Munich Health Insurance believes that a robust IT platform and knowing details of the customer at the proposal stage helps reduce chances of claims rejection later. In an interview with Ritu Kant Ojha of The Indian Express, Jacob says, “We are in the business to pay claims”. Excerpts:

You are a fairly new player with 3 years in the health insurance market. How has the journey been for last 3 years? 

During the financial year 2011-11, Apollo Munich has garnered Rs 283 crores of GWP compared to Rs 114 crores in the year 2009-10, signifying a growth of 148 per cent compared to the last financial year. We have has insured over 27 lakh lives in the country.

Health insurance distribution has been challenging in India. How does a health insurance agent with a 15 per cent commission compare with the 30 per cent commission of a life insurance agent?

Yes, I believe that health insurance distribution has been a challenge till date. With the health insurance premium expected to grow at a compound annual growth rate of over 25 per cent for the period spanning from 2009-10 to 2013-14, this challenge does seem to be waning. All emerging trends clearly point to the fact that the Indian health insurance market is the new and lucrative growth avenue. The projected growth makes health insurance an attractive proposition for agents. Life insurance clearly constitutes a dominating share in the total insurance pie and has more sales persons promoting it, but I think what remains lesser known is that health insurance has the benefit of attractive commissions spanned equally over the life span of an agent.

Settlement of claims has always been an issue with health insurance companies. 

At Apollo Munich, we believe that we are in the business to pay claims. At the same time, we have an obligation to our shareholders to ensure that we pay genuine claims and have enough checks and balances in place to repudiate non-genuine claims. We have a robust IT platform and strong provider relationships to minimise such cases.

Ultimately, we also believe that if we very clearly explain to our customers what is covered and what is not and the circumstances under which claims are paid, we will be in a position to pay every single genuine claim.

What are the fine prints one must look at while buying a health policy? 

We advise health insurance buyers to take special notice of the following tips before signing on a policy: fill up proposal form yourself, know the exclusions, and read policy wording.

What is your break even point? Are you looking at raising long term capital through FDI if the cap is raised? 

I believe the health insurance business usually breaks even between the 5th and the 7th year of operations and we are on track to achieve the same. On the need for capital, our shareholders are committed to fund the growth plans of our company in line with the IRDA regulations.

There is a mandatory clause of rural sector obligations for the insurance companies. How is Apollo Munich doing on that front? 

Apollo Munich has participated in a few micro insurance projects, but to enter the rural insurance sector in a big way, we are trying to build our understanding of the requirements and the challenges of the sector.

In the last couple of years we have participated in the RSBY Meghalaya and Maharashtra project to get an experience of the issues and garner thorough knowledge of the needs of the rural folks. May be in a year or two we will be focusing more on the rural segment based on our experiences.

Take Maternity Coverage with Low Waiting Period

While buying health insurance, the policyholder mainly compares the features available under various products and premium payable for each one of them. In the past few months one distinct feature that has come to fore is the maternity coverage. Although all insurers under their retail product lines do not provide this, it is being provided by all three standalone health insurers, Star Health and Allied insurance company (Star Wedding Gift Insurance Policy), Apollo Munich Health Insurance Company (Easy Health Family Floater Exclusive and Platinum Plan) and Max Bupa Health Insurance Company (Heartbeat Family Floater Plan).

An FCRB analysis reveals whether taking a health insurance policy to get coverage for maternity expenses is practical or not. As it turns out it is beneficial if the waiting period is low and the extra premium paid by the policyholder is not too high.

FCRB found out the estimated child delivery expenses of few hospitals in Delhi and compared them with the actual premium being charged by these insurers.

The charges in economy accommodation for a normal delivery at DR Maternity and Nursing Home in north-west Delhi are around Rs 18,000 to Rs 22,000 while the charges go up to Rs 25,000 to Rs 30,000 for the caesarean delivery. Sri Balaji Action Medical Institute in west Delhi, charges about Rs 17,000 to Rs 20,000 for normal and Rs 24,000 to Rs 27,000 for caesarean. BL Kapur Memorial Hospital in central Delhi, charges around Rs 20,000 to 22,000 for normal and Rs 35,000 to Rs 37,000 for caesarean. Holy Family Hospital in South Delhi, charges around Rs 12,000 to Rs 14,000 for normal and Rs 24,000 to Rs 28,000 for caesarean. In these charges, the expense for medicine, room charges, doctor’s fees, dietician and pediatrician’s fees, medical investigation charges, operation theatre charges and nursing expenses are included.

In order to get coverage for maternity and delivery charges, one has to opt for family health insurance policy and wait for a few years before becoming eligible to claim the same from the insurance company.

Apollo Munich has the longest waiting period of four years, while in Star Health it is three years. In case of Max Bupa the waiting period is two years.

The analysis shows that the average premium for a couple of around 27 years of age, the premium for a plain vanilla family health insurance policy with Rs 3,00,000 sum insured comes to Rs 4,700. While the premium comes to Rs 6,167, Rs 7,354 and Rs 11,366 from Apollo Munich, Max Bupa and Star Health respectively for their family health plans with maternity coverage. “The extra premium being charged by insurers to cover maternity is reasonable and is based on actuarial calculations for bearing extra cost of maternity,” said SK Sethi, vice-president of Insurance Foundation of India.

Also, premium for 32-year-old couple, the premium for Max Bupa policy increases to Rs 7,910 while it remains same for other health insurers.

Under the family health insurance policy with sum insured of Rs 3,00,000 the policyholder is allowed to claim upto Rs 30,000 for normal as well as caesarean delivery from Max Bupa, Rs 15,000 for normal and Rs 20,000 for caesarean delivery from both Apollo Munich and Star Health.

Supposing the policyholder has to avail the maternity cover after two years and is insured under Max Bupa, then in that case the extra premium (as compared to a normal health insurance policy) that he has already paid for the cover is Rs 5,308. If the same benefit is availed after four years, then the extra premium paid for Apollo Munich is Rs 5,868, Rs 10,616 for Max Bupa and Rs 26,664 for Star Health. After six years of policy period, the excess premium comes to Rs 8,802 for Apollo Munich, Rs 15,924 for Max Bupa and Rs 39,996 for Star Health. The difference comes to Rs 11,736 for Apollo Munich; Rs 21,232 for Max Bupa and Rs 53,328 for Star Health after eight years of holding the policy.

This clearly shows that Apollo Munich which charges around Rs 1,500 of extra premium on yearly basis, is value for money in long run, however the waiting period is high and coverage for maternity is low.

The extra premium charged by Star Health is highest, the waiting period is also high and coverage for maternity is low.

Stay Insured for Just Rs 99 While you Travel

Cover yourself from losses arising due to risks such as flight delays, cancellations and baggage loss with domestic travel insurance for as low as Rs 99 while booking air tickets online. These domestic travel insurance policies bundled with air tickets are customised especially for travel portals, such as Makemytrip.com and Yatra.com and airlines, offer good value for money.
Though only 15-20 per cent of customers booking tickets online opt for travel insurance. For premium as low as Rs 99, one gets risk coverage against flight delays, trip cancellation, medical emergency and baggage loss.

A basic policy offers personal accident cover, hospitalisation expenses in case of injury, loss of baggage and compensation for cancellations or delays.

“These policies are customised as per the requirements of the client after understanding the profile and geographical scope of travel of the customers. The inclusions and exclusions vary with the coverage offered to the clients,” said Amit Bhandari, vice-president – corporate solutions group, ICICI Lombard.

Such customised policies are better suited to occasional flyers, while frequent travellers should take travel policy that coverage risk for longer period of time and for multiple travels.
For example, ICICI Lombard General Insurance’s travel insurance for Rs 99 pays Rs 10,000 for baggage loss, Rs 3,000 for baggage delay and Rs 10,000 for trip cancellation and interruption.

Apollo Munich Health Insurance’s travel insurance for Yatra.com customers pays for medical expenses in case of treatment due to accidental injuries up to Rs 1,00,000, checked in baggage loss up to Rs 7,500 and return airfare and accommodation expenses for one immediate relative in case of traveller’s hospitalisation up to Rs 10,000 each, all for premium of Rs 111.

ICICI Lombard General Insurance has tied up with Ezeego, Akbar Travels, Jet Airways and Kingfisher Airlines. ICICI’s premium varies with respective partners. Tata AIG general insurance offer domestic travel insurance for Rs 129 to Yatra customers, covering for medical emergency up to Rs 5,00,000 and up to Rs 7,50,000 for accidental dealt and dismemberment, apart from flight delays, baggage loss and trip cancellation.

Like all insurance products, these policies also come with a conditions apply tag. Before taking up such product one must see the inclusions and exclusion under the policy to be sure of the scope of policy. To make each kind of claim, such as baggage loss, every insurance company has conditions which one must fulfil to be eligible for claim. The policy comes into effect on the day of travel. All the companies offer 30 days of cover or until the person returns to the destination of origin.

Standard Treatment Norms on Cards

Both the health insurance and healthcare industry seem to be converging on the need for standardising treatment protocols with cost indicators and a combined group is ready with 20 most common surgical procedures and medical conditions.

As hospitals do not follow any ailment-specific treatment processes, the absence of a standard treatment protocol has often led to vast differences in treatment procedures and consequent costs for seemingly identical ailments across hospitals. This situation has increasingly led the health insurance industry and healthcare providers being at cross roads as instances of over treatment or more than necessary diagnostic testing for insured patients have been on the rise.

Industry body Ficci, in consultation with heath insurance companies and healthcare providers such as Aiims, Medanta, Arvind Eye Care and Narayana Hrudayalaya, has developed a list of ‘standardised treatment protocols and cost indicators’ for 20 common procedures and medical conditions.

“This has been prepared. Based on its acceptance, the effort could be channelised to cover 50 surgical procedures. We were in touch with the health ministry and Insurance Regulatory Development Authority on the issue. The list will be submitted to the health ministry in the next four-six weeks,” said Narottam Puri, advisor, Ficci Health Services Committee and chairman, National Accreditation Board for Hospitals & Healthcare Providers.

Experts also point out that this list is a notable progress from the point of view of cost standardisation and could be expected to reign in arbitrary treatment costs. Eventually, one of the favourable impacts could be on the adverse claims ratio and related outgo for the health insurance industry, which collected around Rs 11,000 crore as premium last year.

According to a new report by Foundation of Research, Training and Education in Insurance, an initiative of Ficci and ING Insurance, general insurers have a deficit of Rs 6 for every Rs 100 collected as premium because administrative cost collection, agent commission and third party administrator fees as well as claim pay-outs account cost around Rs 106. Plus, claims payout ratio at an industry-level is around 100-150 per cent, which means insurers pay more claims than the premium collected.

Puri added the initial list contains treatment protocols with cost indicators for cataract, respiratory ailments, diabetes and specific forms of cancer. After the documents are submitted, health ministry officials along with a team of renowned doctors are expected to consider the issue and draw up a standard.

“If this gains ground, private hospitals and health insurance could settle mediclaim easily. Though finalising the standardised protocols is not an easy task as both diseases and their treatment depend on individuals, but this is a good move,” said Antony Jacob, CEO of Apollo Munich Insurance and co-chairman, Ficci advisory group on Health Insurance.

Out Of Bounds

You don't have to look too far to find someone who has some woes or other to narrate about health insurance. Why, even you, or a close relative, might have been a 'victim' of claim rejection.

 

One of the most common reasons for rejection of claims is that not many people are aware of ailments that are covered by their health insurance policy and those that aren’t. For instance, not all critical illnesses are covered under a critical illness policy. A policy taken from one company may cover an end-stage lung disease or liver failure, but that from another company may not. To weed out these last-minute surprises, you must carefully examine the policy details before buying it. The best way would be to buy a policy with the fewest exclusions.

Says Antony Jacob, chief executive officer, Apollo Munich Health Insurance: “It is imperative for all policyholders and prospective customers of health insurance to remember that every health insurance policy is unique and is guided by underwriting principles, making the coverage and exclusions vary from plan to plan and insurer to insurer.”

It is important to note that the coverage of pre-existing diseases and waiting periods differ from plan to plan and company to company. Says Subrahmanyam B, vice-president and head, health vertical, Bharti AXA General Insurance: “There are certain standard exclusions, such as pre-existing illnesses, maternity expenses and congenital diseases, which are excluded under all conditions. Then, there are certain exclusions which are time-based, that is, they are excluded only for a certain number of years.” (See No-Go Area).

There are different kinds of health insurance policies available in the market—indemnity, critical illness, daily cash hospital, unit-linked health policies, and so on. Before buying, be clear about what the policy is about and what ailments it covers. Says Sanjay Datta, head, health insurance, ICICI Lombard General Insurance: “It's prudent to get things clarified before buying a policy. For instance, a policyholder should know that pre-existing diseases are excluded as a general rule from health insurance policies. Then, there is a 30-90-day waiting period followed by various time and permanent exclusions.”

Indemnity Policy
These are traditional policies which mainly cover hospitalisation expenses, subject to a minimum 24-hour stay. Some of the expense covered are room fees, consultant fees and surgeon fees, among other things. The traditional policies are of two types: individual health policies and family floaters (FF). While in an individual policy, only the policyholder can avail the sum assured, an FF is a combination of several individual health policies. So, under FF, the sum insured can be availed by any or all members of the family and not just a single person. For example, in an individual policy, you need to buy a cover of Rs 2 lakh separately for each member of the family of four for a total cover of Rs 8 lakh. On the other hand, in an FF, for Rs 8 lakh, each person covered under it can avail benefits up to Rs 8 lakh as opposed to Rs 2 lakh in the earlier instance.

Exclusions. Be aware of the sub-limits under different heads, such as room fees and consultancy fees, to avoid last-minute surprises. This is important because most of these plans now come with sub-limits, which is usually 1 or 2 per cent of the sum assured. Also, these plans do not cover pre-existing diseases or complications arising from them for the first four years of the policy. Claims for specific ailments, such as cataract and age-related eye ailments, arthritis and stone in gall bladder, may not be allowed in the first or second year. Before buying, always check the list of standard and time exclusions.

Critical Illness policy
Under this policy, a lump sum is paid if the insured acquires a serious ailment, such as cancer, or has a stroke, and the policy terminates after that. You need to check the list of diseases covered under a policy. Each policy has a list of ailments, usually 10-20 of them. Keep in mind your and your family's medical history before buying a policy. The critical illness policy can either be purchased in the form of a rider attached to a life insurance cover, or as a standalone policy from a life insurer or a non-life insurance company. If this cover is bought from a life insurer as a rider, the policy term is usually for 10-20 years. When bought from a general insurer, it's for 1-5 years.

Exclusions. To receive the payout, the insured has to survive for at least 30 days after the diagnosis. Like in other cases, a critical illness policy doesn't cover pre-existing diseases and no claim can be made during the first 60-90 days of the policy coming into force. Hospitalisation expenses due to accident may or may not be covered. So, you need to check all these details before buying a policy. Various permanent and time exclusions apply to critical illness policies as well.

Daily Hospital Cash Policy
Instead of reimbursing your hospital bills, a daily hospital cash (DHC) policy pays you on the basis of the number of days spent at the hospital. The policy has a predefined limit in most cases, say, Rs 500 per day for up to 50 days in a year, and up to 250 days during the entire term. This should be the last layer of your insurance cover.

Exclusions. DHC offers the benefit after discharge from hospital and only after the policyholder produces proof of the hospital stay. These policies, too, have pre-existing illnesses and waiting period exclusions, along with a list of permanent and time exclusions.

Unit-Linked Health Plans
Here, the payout is not dependent on the costs incurred on hospitalisation as these are defined benefit plans. Unit-linked plans consist of two parts—a health plan and a unit-linked investment plan. Out of the premium one pays, a portion goes towards medical coverage and the rest is invested in a fund that operates like a mutual fund.

Exclusions. Unit-linked policies do not cover pregnancy, infertility, congenital external diseases and genetic conditions. Similarly non-allopathic, cosmetic surgery and plastic surgery, hearing impairment correction, self-inflicted injuries, STDs and AIDS are not covered under the policy. There is a waiting period of 30 days. For the investment plan, the lock-in could be as long as three yeas with subsequent cap on withdrawals.

While it may be difficult to find out exactly all what your policy covers, the best option is to be aware of all the exclusions. It might be a time-taking exercise, but it's worth the trouble.

Health Cover or Cell Number Portability’s for Your Good

New Delhi’s Dhruv Sharma, 47, had a family health insurance of Rs 5,00,000 from Reliance General Insurance Company for four years and was paying a yearly premium of around Rs 5,700, but in March this year when he received the renewal notice he was astonished to see a nine times hike in the premium, to Rs 50,000, although he had not registered any claim in the previous year. He then decided to discontinue that plan and take a new plan from Star Health and Allied Insurance Company by paying around Rs 18,000, by sacrificing his no-claim bonus and coverage of pre-existing diseases. He thinks that the Insurance Regulatory and Development Authority’s move to make health insurance portability mandatory will benefit the end customer and will make insurers more policyholder friendly.

With all the excitement over implementation of health insurance portability from July 1, Financial Chronicle sought the opinion of policyholders to understand their expectation from portability.

Mumbai’s Vishal Mundadha, 31, who had an ICICI Lombard individual health cover of Rs 3,00,000 for past four years found the claim procedure to be too complex when he was hospitalised. He was asked to submit various documents on numerous occasions and he felt that if insurer had better tie-up with the hospital, he would have faced less difficulty. Later, on a friend’s recommendation he decided to buy Bajaj Allianz health insurance with an annual premium of around Rs 9,000 for a cover of Rs 4,00,000. He now thinks if portability had been introduced earlier he would have been able to transfer the cover for pre-existing diseases while switching over to his new policy.

The portability regulation allows policyholders, who have continued their policy from one insurer for certain period to switch to some other insurer, in which case the waiting period for some pre-existing diseases will be waived off and policyholders gets cover for those diseases in the new policy. Also in cases where policyholder believes some features such as life-long renewal, maternity or critical illness cover available in other insurer’s health policy to be useful, he will now be allowed to port his policy to that new policy under the portability regulations.

However, there are customers who are satisfied with their insurers.

New Delhi resident VC Dogra, 62, has never faced any difficulty with New India Assurance in claim settlement or services and so he is inclined to continue with the existing policy. But he believes portability guidelines will bring more discipline among private insurers and would make them develop better relations with health care centres and customers so that in cases of emergencies patient is not harassed.

It is clear that allowing portability will force the insurers to set their own benchmark in terms of service standards and delivery mechanisms. “Portability will call for minimum service requirements among all insurance players and in the long run, it would be the company with better services and integrity that would stand to gain,” said Antony Jacob, CEO, Apollo Munich Health Insurance Company.

Jump in Travel Insurance Sales as Holiday Season Takes Off

As many Indians pack their bags and head beyond the boundaries for a vacation, insurers are witnessing a 30-40 per cent jump in travel insurance policy sales during the summer season.

The May-June months traditionally see an increase in travel and tourism activities as most families and students plan their vacation during this period. This is because schools and colleges are closed for summer vacation and many of them look to escape the hot weather in the subcontinent.

Though North America and South-East Asia have been traditionally popular with domestic tourists, Europe has also received a lot of interest this time around, Mr Gaurav Garg, Managing Director and Chief Executive Officer, Tata AIG General Insurance, told Business Line.

“Europe is more expensive than Asian or American destination. However, with awareness increasing, Indians getting richer and travel companies offering better packages, we have seen an increase in the popularity of European destinations,” he said.

He added that the take-up rate of policies, the highest in May, has gone up by 30-40 per cent. Over the same period last year, the increase was around 25 per cent.

Apollo Munich Health Insurance said that the April to June period accounts for 40 per cent of its total travel insurance business for the whole year.

“Over the last few years we have witnessed a rise in the volume of travel insurance business during the summers, which eventually peak between the months of April and June. In the last couple of years, the maximum policies were sold for worldwide option where the US and Canada are also included,” said Mr Antony Jacob, CEO, Apollo Munich Health.

Travel insurance premiums are also the highest for North America, as medical costs in the US are higher than most other regions. Companies usually bracket North America into a different premium slab from the rest of the world.

“The cost of treatment, even for a medical emergency in the US is very high in comparison to Asian countries. The premium rate for travel insurance, for a trip by an individual to the US or Canada, is approximately 20-25 per cent higher than that of a trip to West Asia ,” said Mr Jacob.

The exact premium, however, is calculated based on the age of the traveller, sum insured, trip duration, type of travel (annual multi-trip or single travel), besides the region.

Apollo Munich Health Insurance Wins Celent Model Insurer Asia 2011 Award

Apollo Munich Health Insurance Co. Ltd. (AMHI), was felicitated with the Celent Model Insurer Asia 2011 award in the Policy Administration System (PAS) category. The award recognizes excellence in technology best practices at insurers in Asia, in various categories.

Apollo Munich implemented Mastek's ElixirAsia Health within a period of 60 days. The workflow-enabled system supports straight through processing (STP) of the whole health product life cycle with integration to all back end systems. Mastek is a high-end IT solutions player with global operations, providing new technology and IP-led enterprise solutions with a focus on the Insurance and Government verticals worldwide.

Apollo Munich has multiple product lines in the health insurance space and caters to the retail as well as the corporate market segments. AMHI wanted to administer multiple health insurance product lines through a single system that could support the entire health insurance business, within the challenging timeline of two months. The application went live in 60 calendar days thus meeting the challenging implementation target.
The ElixirAsia Health solution standardized insurance activities for different lines of business providing integrated support for distribution management, underwriting and financial receipting. The system's customer-centric framework allowed a single-window view of all insurance functions thereby increasing productivity of the Business Users.
The solution enables AMHI to configure new products in 1-2 days with a significant improvement on time to market.

Commenting at this achievement, Mr. Antony Jacob, Chief Executive Officer, Apollo Munich Health Insurance Company Limited said, "It gives me immense pleasure to receive this award. We are committed not only to improve our business efficiency and growth but also enhance the customer experience through systematic development of our systems and processes. To meet the challenge, we needed a solution provider that had the domain knowledge to understand and implement the needs of our industry and work on our vision with immediate effect. Mastek helped us implement the right kind of solution using its industry insights within the stipulated time of two months. The solution has truly facilitated higher customer satisfaction index and live our promise of Let's Uncomplicate."

On this occasion, Wenli Yuan, Senior Analyst, Asia Research Group, Celent, said, "Apollo Munich Health Insurance Company has implemented a workflow-enabled system that supports straight through processing of the whole health product lifecycle with integration to all back end systems. Apollo Munich was chosen for Celent Model Insurer Asia because of the company's best practices for automation, system integration, and STP."

Mr. Vilas Kanyal, Head - Asia Pacific at Mastek, said, "We congratulate Apollo Munich Health Insurance for receiving the Celent Model Insurer Asia award. We are honoured to partner with AMHI to implement our ElixirAsia Health solution, which supports their entire health insurance business. They are a leading player in the industry and have helped shape the growth of the insurance industry. We are committed to providing best-of-class IT solutions and services on our Elixir platform to our customers and have successful implementations in health, individual and group life in the Asian Insurance industry."

About Apollo Munich Health Insurance

Apollo Munich Health Insurance Co. Ltd. is a joint venture between Apollo Hospitals Group and Munich Health, Munich Re's newest business segment.

Apollo Munich is a specialized health insurance company in India that has expertise in both health and insurance and is able to leverage this understanding for the benefit of its customers. The company offers comprehensive health insurance plans for individuals and their families as well as for corporate houses. The company also offers individual personal accident plans and travel insurance for individuals, families and senior citizens.

About Mastek

Mastek is a publicly held (NSE: MASTEK; BSE: 523704) leading IT player with global operations providing enterprise solutions to government, insurance and financial services organizations worldwide. Headquartered in India, Mastek has offices across North America, Europe and Asia Pacific regions. Mastek has over 17 years of insurance experience with over 100 insurance customers globally. With over 5000 man years of experience in the insurance domain and a dedicated centre of excellence, Mastek's intellectual property spans across Life, Annuities & Pensions and Property & Casualty domains.

How You Gain From Health Portability

Are you satisfied with your health insurance provider? Most Indians aren't. A study conducted by the Voluntary Organization in Interest of Consumer Education a few years ago found that a majority of the 3,600 respondents across eight metros had faced some problem or the other while dealing with their insurance providers. Health insurance holds the dubious distinction of having the highest level of customer dissatisfaction.


Despite the disenchantment, policyholders don't want to switch their health insurance provider because they lose out on certain benefits, such as the cover for pre-existing diseases. Certain pre-existing diseases and medical conditions are covered by health insurance only if the policy has been in force for 3-4 years.
If the customer switches to a new company, the waiting period starts all over again. Last week, the Insurance Regulatory and Development Authority (Irda) declared that from 1 July this year, all existing medical insurance policies will become portable.


This means that if a customer changes his insurer, he can carry forward the benefitswaiting period for pre-existing diseases to the new company. If your current insurer requires you to wait for four years before pre-existing conditions are covered and you switch after two years to a new insurer (which also has a similar four-year waiting period for pre-existing conditions), the waiting period with the new insurer would only be two years.


It's a move that will help customers and allow them to switch to better, more responsive companies without losing any of the accumulated benefits. It will also nudge health insurers to improve their service levels in order to retain customers. "Portability would call for minimum service requirements among insurance companies. It is expected to bring in new benchmarks in terms of service standards and delivery mechanisms," says Antony Jacob, CEO, Apollo Munich Health Insurance.


To be fair, much of the displeasure among customers stems from a poor understanding of the features and benefits offered by health insurance plans. This leads to a lot of heartburn at the time of making a claim.
On the other hand, there are many cases where customers have genuinely suffered due to clerical lethargy in PSU firms, high-handedness of third-party administrators and denial of claims by private insurance companies. Delhi-based entrepreneur Ajay Sharma (see picture) is one such dissatisfied customer who wants to change his insurance provider once portability is introduced.

In some cases, one might want to shift because there are better options available. For instance, one may want to switch from individual health policies for all family members to a floater plan that offers a larger cover at a lower price.