Cost of Group Health Cover to Soar

The cost of providing group health insurance is set to go up by 25% to 50% for majority of the corporates that provide this benefit as insurance companies prepare to hike rates in April when most policies come up for renewal.

More than half of the companies that buy group health insurance for their employees have ended up claiming more for employee treatments than what they had paid as premium. This has resulted in what insures describe as an "underwriting loss in their group health insurance business". Many multinationals buy group health policies which coincide with the calendar year and premium under these policies have gone up by 5% to 10%. However, the larger policies which are purchased by big employers like IT companies will come up for renewal in April and insurers say that prices will rise for those companies with an adverse claims ratio.

Under claims data for the last 3 years, 50% companies are observed to be experiencing a high claims ratio of 100-150%, says a report on healthcare trends by Towers Watson, a global consultancy. The report says that all respondent companies with claim costs between 125% to 150% faced premium increase to the extent of 25% to 50% this year as against only 9% last year.

"The insurance industry has realized that it is not worth carrying with losses and every insurer has made correction in their group insurance premium," said Antony Jacob, CEO, Apollo Munich Health Insurance. "I believe that in the next 12 to 24 months group health insurance will stop being a loss making business." 

One reason for the increase in health insurance was the advancement in medical technology which resulted in medical inflation growing at a faster rate than general inflation. Claims are higher for companies that provide insurance coverage to employees' parents. The insurers face a higher level of losses with total parental claims forming 60% of the claims for the companies that cover employee families.

"Companies are also trying to deal with this by putting some restrictions on the cover provided to parents. Some companies have even started excluding parental cover from group benefits," said Sanjay Dutta, head of health at ICICI Lombard General Insurance. "However, the increase is not across the board it is largely on a case-to-case basis," he added.

According to the Towers Watson report, some companies have chosen to introduce new features like co-pay arrangements for meeting parental claims, customized approach to limit risk exposure, and putting sub limits on certain claims, to bring in some respite to high premiums

Insurance companies are under pressure to increase rates wherever possible also partly because they have been asked by the regulator to increase provisioning on motor third-party insurance losses where claims are turning out to be much higher than originally expected. As a result, public sector companies which had been aggressive in underwriting group health business have started becoming conscious of margins.

A Three-Pillar Structure for Public-Funded Healthcare will Work

Healthcare in India is widely recognised as a state responsibility and hence its demand, supply and delivery mechanism cannot be left to the forces of market economics alone. Nor can it be restricted to the care facilitated through public expenditure.

The healthcare spend in India is expected to double (and touch 2,250 billion) by 2014. A widespread lack of health insurance compounds the healthcare challenges faced by India. Barely 12-13% of the population has some form of health insurance cover in addition to the 10% who get covered through some form of government schemes. What then makes for a just healthcare system? I believe, India should work towards a three-pillar structure where the state can help make healthcare accessible to the population below the poverty line through free or almost free healthcare cover schemes such as RSBY, etc.

For the share of population who are covered by schemes like CGHS, ESI, etc., the state should work more as a facilitator for better business environment and ensure the healthcare delivery mechanism is adequately incentivised and disincentivised.

As the third pillar, private health insurance, should play the critical role to support in financing the growing health insurance needs of the rapidly evolving Indian middle class. Health insurance is poised to play the critical role of financing medical innovation and technology and make them readily available within India. This should leave a strong rub off effect for the government run schemes through utilisation of the existing healthcare bandwidth.

India is standing at a crossroad where the need for healthcare is growing every minute. The recently promulgated reforms of the US healthcare system have an early warning for us in India. By taking proactive measures now, the Indian government can avoid the inevitable situation and steps adopted by the US government. Hence a more effective private-public partnership built on trust and transparency would facilitate universal healthcare access while enhancing our readiness to address the growing gap of healthcare demand and supply.

(The writer Antony Jacob, Chief Executive Officer of Apollo Munich Health Insurance)

Health Insurance Portability Soon

The Insurance Regulatory and Development Authority (IRDA) has issued a notice to all general and life insurers stating:

“All insurers issuing health insurance policies shall allow for credit gained by the insured for pre-existing condition(s) in terms of waiting period when he/she switches from one insurer to another or from one plan to another, provided the previous policy has been maintained without a break.” To come into effect from 1 July 2011, it means one can switch health insurers without having to start afresh.

For policyholders it means that they can transfer their health policy from one insurer to another without losing their waiting period benefits such as those for coverage of pre-existing illnesses. They, however, need to take into account the definition of waiting period for different companies. For instance, if for a condition there is a waiting period of two years in an existing policy and four years under the policy being switched to, then the new policy can only exclude the condition from coverage for a period of two more years.

IRDA’s move is an answer to the substantial hike in premium rates by some health insurers. Currently, customers are forced to continue with their policy due to their fear of losing waiting period benefits. Ajay Bimbhet, managing director, Royal Sundaram Alliance, says: “Globally, the concept of ‘portability’ in health insurance has always been favoured and is prevalent across many developed economies. Introduction of portability is a step in the right direction to safeguard the interests of policyholders.” (Also see Plainspeak, page 30.)

Though all health insurers have welcomed the decision, they also see certain issues with the introduction of portability in the short run. “Declaration of pre-existing illnesses on the proposal form, including illnesses contracted during the course of previous policies and its applicability to renewals with different insurers, can be an issue at the time of changing the policy,” says T.A. Ramalingam, head-underwriting, Bajaj Allianz General Insurance. Similarly, guidelines on how portability applies to different kinds of policies (such as indemnity, floater, group or individual, and critical illness) and what will constitute continuity will also be areas of confusion.

Others say that portability of benefits in the short run can be detrimental for insurance companies with superior service standards and can result in facilitation of various frauds and misuses. Antony Jacob, CEO, Apollo Munich Health Insurance, says: “Every company and its policy should be governed by its underwriting principles when it comes to accepting a proposal. We would like to request all consumers willing to port to place such requests with the insurance company of their choice at least 45 days prior to the renewal date. This would enable the incumbent insurance company to ensure all underwriting guidelines are met before accepting a risk.”

Cost of Motherhood a Big Worry? Buy An Insurance

What could be the best gift for a newly married woman on the 100th anniversary of international women’s day? How about a health insurance plan that covers pregnancy!

Given the sharp rise in the cost of maternity care, any woman would be thrilled with a gift that can ensure her good care at the most precious moment of her life. The problem is, the choices for you are few and far between.

While India’s health insurance market has expanded pretty fast over the past few years, offering people an effective tool to reduce the financial burden in healthcare, pregnancy-related expenses have remained excluded from insurance coverage of most health plans.

General insurance companies say pregnancy is not an illness and, hence, it should not qualify for insurance cover.

The entry of standalone health insurers has changed the scenario a bit. All three standalone health insurance companies — Star Health and Allied Insurance, Apollo Munich Health Insurance and Max Bupa Health Insurance — have come out with plans that cover hospitalisation expenses related to pregnancy.

Star Health started operations in May, 2006 as India’s first standalone health insurer. Apollo Munich entered the market as Apollo DKV in December 2007, while Max Bupa came into being in April 2010.

Among them, Max Bupa offers a wide range of sum assured options to choose from. It does not differentiate between expenses incurred in a normal delivery and a caesarean delivery.

Among general insurance companies, ICICI Lombard covers maternity expenses, but it’s limited to OPD charges only. Maternity benefits are also available with most group health insurance policies.

“With medical costs galloping ahead of inflation, having sufficient health insurance is a must for everyone. We strongly suggest family floater plans for maternity as well as other benefits,” said Antony Jacob, CEO of Apollo Munich Health Insurance.

While buying a health insurance plan, it is important to check out the number of years one would need to wait before you become eligible to claim maternity benefits. Max Bupa’s health plans require a subscriber to wait for two years, whereas it is three years in case of Star Health Wedding Gift Plan and four years in case of Apollo Munich Easy Health Family Floater. All these plans cover pregnancy.

“Maternity is one of the most important milestones in every family’s life. For couples planning to start families, there is an immediacy to the decision, especially in India. Four years is too long to wait when you have decided to start a family. Therefore, we offer a comprehensive family cover where maternity is covered with a waiting period of only two years,” said Karanvir Singh, director of sales and distribution at Max Bupa Health Insurance.

As a part of the plan, Max Bupa also provides cover for the newborn immediately after birth, which gets activated automatically. This is a first in Indian health insurance market. The health cover continues for the first year of the child and even provides for vaccinations.

Star Health too extends a similar cover for the baby at no additional cost. Apollo Munich charges a nominal amount to include the new member. This is important considering that the child may require medical attention right after birth. The automatic activation of the health cover may come handy in such a situation.

“Our maternity cover offers total solutions and the newborn is covered right from birth, even for any congenital abnormality,” said D Rama, assistant vice-president for product development at Star Health and Allied Insurance.

Criteria for claiming maternity expenses are the same as any other health plan. Hospitals that are empanelled with the insurance company provide cashless claims while in case of a non-empanelled hospital, you will need to claim reimbursement with necessary papers.

Ladies take control of your finances

In today’s world, women take charge of key decisions, whether it is at home or at work. So why not your finances? To meet the financial goal, all you need to do is plan, execute and track your investments regularly. If this sounds a little complicated, don’t worry, we have simplified the process for you.

Let us take examples of women from four different age and income groups so that it makes defining their goals and requirements simple. Except for Case I, all have a common objective of a financially sound retired life.


Case I:

Women under this category do not have any particular investment objective in the near future as they are young with no responsibilities.

If you fall in this category, make sure that you take an adequate medical cover equivalent to your annual package. It will help you in the long run to cover expenses like maternity, medical emergencies for yourself and family members.

“One should opt for a cover at an early age and keep on increasing the sum insured level at regular intervals to hedge against medical inflation,” said Shobana Kamineni, wholetime director, Apollo Munich Health Insurance.

“For individual policies, along with the sub-limit, also look for the waiting period applicable for claiming maternity expenses as well as any specific exclusions related to the cover,” said Sanjay Datta, head- customer service- health & motor, ICICI Lombard GIC.

If you have dependents (parents), taking insurance for them is essential.

In case, parents are partly or wholly dependent on your income, take life cover so that in dire circumstances like death, the insurance company will pay a stipulated amount to the dependents at regular intervals or in lump sums.

“Individuals who are financially independent with no liabilities, a cover at least 10 times of their annual income could be adequate.” Apnapaisa.com CEO Harsh Roongta said.
Maintaining a contingency fund in cash or savings account which will last for 4-6 months is a wise decision for all.

Start investing regularly via SIP (systematic investment plan) keeping a long-term horizon as your money will be managed professionally at lower cost generating comparatively decent returns.

You can invest in fixed deposits, liquid mutual funds, MIP (monthly income plan) and savings account. Investing in gold via ETF (exchange-traded funds) is wiser as it is the cheapest form to invest in gold, with low-storage costs.

Case II

At this age, a concrete plan is needed to achieve financial goals like children’s education, marriage and retirement plan. Here, goals are lined up after every five years starting from 2015. The plan recommended is 70:25:5 in equity, debt and gold.

For instance, if the down payment is say Rs10 lakh, then 60% of Rs10 lakh is recommended in equity and the rest in debt.

Balance your plan with a combination of low and high risk investment. Hence, SIP in equity mutual fund is recommended for wealth creation.

To achieve long-term goals of 5-15 years, invest in safer asset classes. You can put aside money in FDs, [national savings certificate (NSC) that gives 8% interest for a 6 year lock-in period, kisan vikas patra (KVP) gives 8.4% with 8 years and 7 months lock-in, public provident fund (PPF) gives 8% for 15-16 years lock-in] for your child’s education and marriage as they give fixed returns.

The couple should make sure to have adequate life cover till their retirement as children and grandparents are their dependents.

Along with life cover, get adequate health cover for yourself and the entire family.

“Even if she and her family members are covered under group mediclaim, still she should take an individual mediclaim cover,” Apna Paisa chief editor Bienu Vaghela said.

Case III

Since you do not have regular cash flow, all you can save is from your husband’s income. An allocation of 60:30:10 in equity, debt and gold is recommended.

Be invested in a combination of long-term instruments like equity mutual fund schemes, PPF, KVP, NSC and gold.

“Homemakers may like to demand higher bonuses from their counterparts. I suggest at least 40-50% of this can be allocated to SIP of equity mutual funds, the percentage allocated may lower as one grows older,” said Swati Kulkarni, VP & Fund Manager, UTI MF.

Invest in gold via ETF, MF or e-gold which will help you create wealth over a long term and get safe returns. As most of the financial commitment is taken up by your husband, make sure that he takes adequate life cover and mediclaim for the entire family.

The insurance cover should be at least 10 to 12 times of his annual income so that in the absence of him, you have adequate amount to take care of all family responsibility. You can buy a term policy online as it is cheaper. A health insurance cover of at least Rs3 lakh individually for entire family is recommended.

Case IV

You can go for a world tour in the near future and lead a financially sound retired life if you route the investments through a proper channel. For example, instead of keepingthe FD amount in the savings account, make another FD for 2-3 years for better returns.

You can also put you money in senior citizen savings scheme, where they get 9% for a 5 year lock-in period. At this age, capital preservation along with regular cash inflow is required.

The retired couple should first park corpus in post office -monthly income scheme (max Rs9 lakh is available), senior citizen scheme (max Rs15 lakh is available).

At the same time, they should have adequate mediclaim cover for emergency or else your retirement corpus will be utilised towards medical bills.

“A medical insurance of minimum Rs5 lakh is a must,” Suresh Sadagopan, who runs Ladder 7 Financial Advisory Services, said.

The pre-existing diseases will not be covered from day one, hence take this cover a few years before retirement so that it can take care of retirement easily.

Also, if an employee is covered under a group insurance by his company and the cover is not adequate, buy an independent cover to safeguard retired life, Sadagopan said.

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.

Look Before You Switch Health Cover

The insurance regulator may have stipulated that all health policies will be portable from July 1, but insurers may refuse to accept policies on the pretext of poor risk profile of individuals and upper age of entry — especially for senior citizens. They may also ask for steep premiums in case they do not want to offer health cover to persons opting for transfer of cover from another company.

Portability of health insurance refers to the ability to change companies keeping the cover intact while the risk profile of an individual refers to the probability of a person getting sick and making a claim. The poorer the risk profile, the higher the probability of claims arising from an individual and in such cases, premiums charged are higher. Age of entry, on the other hand, refers to the upper limit for an individual to buy a cover.
"Why would an insurer want to let his premium customers — who have had no claims history, go away to others. And why would they also accept individuals with a bad claims history? We expect some more clarity over the recent guidelines issued by the regulator or there is bound to be confusion," SB Mathur, secretary general, Life Insurance Council, said.

Whether it leads to customers shifting from one insurer to another, companies may be forced to lift their service levels on fears of losing some business. "The move will call for minimum service requirements among all insurance players," said Antony Jacob, CEO, Apollo Munich Health Insurance.

Although the objective behind the move is laudable, there are many shortcomings in it. "The circular on portability issued by the regulator does not mention anything on the premium one has to pay when he transfers his health cover from one company to another. This means that the individual who wants to move will have to accept the terms and conditions of the health policy of the new company," said Subrahmanyam B, head of health vertical at Bharti AXA General Insurance. For example, a `3-lakh cover for a 25-year old will cost `3,039 from United India Insurance while the same will cost `2,776 from Royal Sundaram General Insurance, and a similar cover from Reliance General will set you back by `8,366. Hence, if one wants to move from United India to Reliance General, an individual will have to shell out the increased amount.
"Portability will ensure greater competition among insurers which will benefit customers in the long run," says Subrahmanyam. "However, as an industry, we still need to find an effective data sharing mechanism to ensure continuity in maintaining highest standards of service delivery."

There may not be any immediate monetary gains either for insurance buyers, who are battling rising claims, though customers complain that many claims are dishonoured exploiting many tiny lettered conditions which buyers don't go through. "In fact, insurers are now thinking of hiking premiums to match claims ratio," said Rahul Agarwal, director at Optima Broking.

Just like in the mobile telecom business, many customers may stick to the existing services provider despite complaining about them. The health segment is split into two. The public sector players are National Insurance, New India Assurance, Oriental Insurance and National Insurance Company. Private ones like ICICI Lombard, Bajaj Allianz, IFFCO Tokio and Reliance General are also gaining share.

Additionally, there are three health insurance companies — they only offer medical insurance products, including Star Health & Allied Insurance, Apollo Munich and Max Bupa. Private players held a 42% market share till December 2010 and the remaining is with the public sector. In fiscal 2009, claims ratio was 103% down from 105% a year earlier.

From 2009, the industry started introducing a host of restrictions like sub-limits on room rents, different ailments and doctors' fees. All these pulled down claims ratio below 100% in 2009-10. "The inertia to change insurers is huge, which means most people complain about bad services, but do not generally move. And in any case, customers satisfied with their existing insurers will not move to a new one, but portability offers a sort of peace of mind — that if I am not happy with my insurers, I can go to a new company," said Agarwal.

Apollo Munich are Going Slow on Group Insurance, Focusing on Retail

Interview Antony Jacob, CEO, Apollo Munich Health Insurance

We are Going Slow on Group Insurance, Focusing on Retail

Apollo Munich Health Insurance, a joint venture between Apollo Hospitals and Munich Health of the Munich Re group, is riding on the back of an expanding health insurance market to post healthy growth. A day after signing the accounts for 2009-10, during which the insurer registered a 130 per cent growth in premium income to reach Rs 115 crore, Antony Jacob, Chief Executive Officer told Sarajeet K Zen, that the company is hoping to take the figure to over Rs 200 crore in the present year

• What have been the growth trends in the health insurance market and your company?

The overall health insurance sector has been growing at a healthy rate of 25 per cent per annum compounded growth for the past five years. Our projection is that it will grow at 25 per cent per annum at least for the next bve years and emerge as the largest segment of general insurance, beating motor insurance, which now accounts for nearly 40 per cent of the industry's premairn. As far as Apollo Munich Health Insurance is concerned, we have had a fairly satisfactory year in terms of numbers. For 2009-10, we have signed our accounts on May 6. We have achieved gross written premium (GRW) of Rs 115 crore, nearly a 130 per cent gowth over the rifevious year when we had clocked OWP of about Rs 50 crore. For 2010-11, we are looking at over Rs 200 more in GATE

• What are the business segments that you are focusing on?

We have three types of portfolios, group health insurance, the retail individual health and thirdly, we also participated in some rural schemes. Our primary focus is on the retail business. On the group health front,. unfortunately the experience has not been as we would have liked. It is still a loss-making proposition because of the past trends of cross-subsidy between other general. insurance products and health insurance. So, we have slowed down on the
group health portfolio reach and what we have focused a lot in the past 12 months is on individual insurances. That's doing reasonably well

• You said the group health is still a loss-making proposition. How much would be the average loss ratio on this portfolio"

Our loss ratio is a little over 100 per cent, which is better than the industry, where the i average loss ratio s anywhere between 120-140 per cent. We hope that during the present yea; we will bring our loss ratio on the group health portfolio to sub-I00 per cent.

• Are you looking at adding new products on the retail front?

At present, our product range offers sum insured from Rs 30,000 for below the poverty line (BPL) schemes and goes right up to Rs 20 lakh for the HMIs (high net worth individuals) with different slabs in between We have several policies awaiting approval from the 111am-doze Regulatory and De-✓elopment Autholity.

• Recently, a new standalone health insurance company — Max Bupa Health - entered the maaket How do you see the con-petition for market share? I think the market is wide and open at this stage with just about 30 million out of over a billion people who have health insurance. In the top. eight cities, the penetration is just about 11 per cent. There is room for many more players. I believe that, and new companies, wl be investing a lot in terms of products, infrastructure and distribution capabilities to get a share of the .traristned More players will definitely help increase general awareness on the .need for health insurance in this country, thereby getting more and more people who are presently uninsured to firstly think of health insurance and then decide on whether to buy from Apollo Minch or some-body else.

• There are often complaints against health insurance companies on the claims settlement front. What steps have you taken in the past to improve die claims settlement procedures? The moment of truth of health insurance is at the trine of clams, As a company we believe in this 100 per cent. We offer both cashless facility through over 4,000 hospitals and reimbursement facility for people who choose to go outside of the network We gave very high priority for . settling *genuine clams eqxdalously. We have in-vested a lot in terms of making sure that we have very strong processes and controls to make sure that our claimants are well taken care of

What types of products are most popular? How about your focus for product development in India?

Inpatient indemnity cover is the most preferred and widely bought health insurance product in India. All general and health insurance players offer the same with few variations. However, Health insurance as a sector in India gained in importance post detarification in 2007 and since then there are visible examples of interesting product innovations.

With the strong understanding that Apollo Hospitals and Munich Health bring to healthcare and health insurance, we are in a good position to develop new market leading products. We will do this with a clear understanding of the voice of the customer. Having said that, we already have some of the best products in the market, and the scope for growth is quite substantial.

Nowadays most companies offer corporate health insurance to their employees as a part of their benefits package which is often positioned as an attractive proposition to retain talent but it needs to be noted by India Inc that the cover ceases to exist once the corporate employee moves out of the organization or there is a policy change for the employer side.

Thus keeping in mind the volatility of the professional and economic environment it is imperative for all corporate employee to look beyond the group insurance plan as extended by an employer and choose an adequate health cover for himself as well as his family at an younger age to make sure all diseases are covered when needed.

1. What were the factors driving Munich Re to form a stand-alone health insurance company with Apollo Hospitals Group in India?

The Munich Re group was keen to partner with a brand that shared similar interest in pure health insurance and had a strong provider background, India knowledge and a strong brand equity.

The Apollo Hospitals group, the premier healthcare brand and “architect of modern healthcare” was known for its good reputation for innovative and high-quality healthcare services. In the Group Munich Re identified complementary strengths which have added value to the Joint Venture.

On the other hand, Apollo examined the global market in search for a technically strong partner and found that in the Munich Re Group, DKV was an appropriate choice considering the common commitment to operate in the pure health insurance space.

The Long experience of Munich Re in areas of product innovation, technical expertise in underwriting, actuarial skills etc complement Apollo’s strengths in the Indian market and hence the fit is strategic and perfect.

2. How do you see the potential of stand-alone health insurance operation in India? What are the advantages for this operation model?

At present the health insurance sector is characterized with very low penetration (only 3% of the Indian population is covered with some insurance cover), high out-of-pocket expenses and steep medical inflation (which is much higher to general inflation). It is estimated that 80 per cent of the healthcare spending is actually an out-of-pocket expense for individuals. On the other hand, changing demographics, affluence and work-life balance in India has brought about a paradigm shift in attitudes and demand for better and the best quality of healthcare. Health insurance as a mechanism to finance is therefore finding greater acceptability. Thus the market has great prospects, but the need of the hour is to identify products that will suit customers’ insurance needs and win their confidence.

We believe that through our model of joint venture we will be able to understand the health care financing requirements of this country. Our parentage helps to understand how health care financing through insurance has worked in similar countries overseas through the support of Munich health. This unique blending brings in products and services to this country which is fully researched and tested in other markets. So we do believe that we have the advantage and we have rolled out few of our products which is reflects the blended advantage of the two specialist parents we have. We will continuously innovate and bring in expertise which we believe would be possible only through this unique combination.

Antony Jacob talks about Importance of Health Insurance

'People understand the importance of health insurance but are confused' talks with The Indian Express, March 22, 2010

A plethora of insurance products offered in the market has left the consumers utterly confused. Apollo Munich, one of the three standalone health insurance companies, has embarked upon a campaign to simplify things for the con­sumer. Chief executive Antony Jacob spoke with Suneeti Ahuja Kohli on the importance of health insurance for individuals and how it plans to make a difference. Excerpts:

The regulator has allowed insurance com­panies to launch combi products. How will it benefit the consumer and are you planning to launch one as well?

I think combi product is an interesting concept and has got potential. But since it is a new con­cept, we need to test the market out through our distribution channel and jointly with the distribution channel of a potential life insur­ance company that we could tie up with. To­day, a traditional life insurance product does not cover the cost of a healthcare incident. Similarly, a traditional healthcare product takes care of healthcare financing to a certain extent, but does not take care of the financial needs in the event of loss of life. Here, the reg­ulator has given an opportunity to those who wish to buy a product that combines the merits of two products into one. To me, it sounds like the right thing to do. However, only time can tell what kind of demand will there be for such a product. Nonetheless, we as a company are excited about this and are putting our thoughts together. We are talking to a number of life in­surance companies.

When do you plan to launch this product?

We have started the process and hopefully we should be able to launch a product within a couple of months. The first quarter of the next financial year would certainly see the launch of such products.

Healthcare costs are rising. But insurance companies, largely, still provide a stand­alone cover of just Rs 5 lakh for individuals. Is it sufficient and what is the maximum insur­ance cover that you offer? Our policies provide health cover from Rs 30,000 to Rs 20 lakh. This is the highest limit of­fered in the industry. In a Rs 20-lakh cover, Rs 10 lakh will be for the indemnity cover and a Rs 10-lakh worth critical illness rider can be at­tached to it. So, people are welcome to take any amount of cover they feel is suitable for them.

How much should the ideal sum insured for an individual be?

Health insurance cover really depends upon a person's age, but I think a person in the young to middle age-group must have an indemnity cover of at least Rs 3 lakh. And if you are mar­ried then it is a must to have a floater policy for the family (two adults and two kids). An ideal cover for a floater family is Rs 5 lakh.

The key is that one must have a health in­surance policy. You can start with a policy of Rs 1 lakh but then the sum insured should be upgraded after every year or two.

We often hear complaints that hospitals abuse patients who have health insurance. Have you also encountered such cases and what has been your experience so far?

Fraud misuse and abuse exists everywhere in the world and in every industry. As a stand­alone health insurance company, we understand what processes need to be in place to minimise such practices. I cannot for a minute say that these sort of malpractices do not occur but I can say that we have some strong controls and mechanisms to minimise it. We also take action and blacklist hospitals, if need be.

What is your claim ratio?

I would like to divide health insurance into two parts. One is individual and the other is group. On the group side, the business is not prof­itable and has not been so for many years. The claims ratio in the group segment is more than 100 per cent but is improving slightly. On the other hand, in the individual segment it should be around 60 per cent.

In order to have a direct contact with the cus­tomers, a number of insurance companies are launching in-house TPAs (third party ad­ministrators). Are you, too, looking at this?

Not at the moment. But, yes, we might be looking at this sort of an arrangement in the near future. For now, we have a group TEA — Family Health Plan (TEA) Limited, which has been running for more than 8 years.

You are running a very interesting ad cam­paign that suggests that your company will take bitter out of medicine and trouble out of treatment. How do you plan to do this?

Earlier this year, we engaged ourselves in a very interesting exercise of knowing what is on the minds of our customers and potential customers. Our survey found a common thread among the interviewed people. All of them were interested in buying health insur­ance because they know healthcare costs are rising and insurance is a smart way to take care of unforeseen events. But they are confused on what to buy and from whom. They do not know what an insurance policy cover provides and what it does not.

Maternity is, by far, the biggest reason why people get hospi­talised in this country. Yet, there are hardly any policies that cover maternity costs. Health insurance policies, usually, do not cover consultation fee or the medicine fee. So people are not sure what the piece of paper is worth when the health insurance does not pay for pharmacy purchases. We have tried to uncomplicate the whole process. Today some of the prod­ucts that we have speak this lan­guage. Our policies cover maternity. We cover dental costs, phar­macy purchases, preventive measures. All of this, of course, comes at a cost. But at least we offer it.

Why you must insure your health

Website: www.idiva.com, March 20, 2010

Your health is one of those things you so easily take for granted. I mean, you just have it. It's not something you earned so you don't bother to take care of it, till it's not there anymore. Of course, in the rare event that you do fall sick, you have it all covered. Your partner's job has great perks and Mediclaim's included! But is that really enough? No!

Here are some reasons you need to have your own health insurance policy:

Why your husband's policy is not enough!

· Do you know what the No.1 reason for hospitalisation is? Of course, it's pregnancy! However, the plan / benefit structure of group health insurance policies are customised to suit corporate needs and usually don't cover pregnancy.

· Even if it does, what if your husband really needs to change his job right about the time you are going for your delivery? Worse still, what if he gets fired?

· A mediclaim policy provided by a company will extend upto the day he retires at the most. If you get an independent health insurance policy after that you will have to pay a much, much higher premium thanks to your age!

So now that you know why you need your own retail health insurance policy, it's time to go get one that's right for you.

Start early

First off, it takes about three to four years to really benefit from any health insurance policy. Benefits like waiver of waiting periods, coverage of pre-existing diseases, cumulative bonuses etc take effect only after the first couple of years. So it's better to start early.

Also, at a younger age you can avoid the ordeal of pre-policy check up and avail of lower premium rates too.

And scary as it may be, nowadays, diseases that usually hit people later in life, like heart attacks, arthritis etc, are now occurring much earlier. So you might as well be covered for these too.

Choosing a policy

Just because you need a health insurance policy doesn't mean you buy the first one a salesman offers you. Do a little research on what different insurance companies are offering, the rates, etc.

· Also base your decision on the following:

• Age
• Lifestyle
• Premium paying capacity
• Benefit requirement

You could start with a coverage of Rs. 2,00,000 and gradually increase it as you grow older.

Here's the amount of cover you can look at:

20 to 35 years – Rs 2,00,000

35 to 45 years – Rs 4,00,000

45 to 59 years – Rs 5,00,000

60+ years – Rs 6,00,000 to Rs 10,00,000

Check the fine print

Check and double check the policy details. You don't want your policy to spring any ugly surprises on you. For instance, discovering that your policy doesn't cover certain diseases or that there is one to two year exclusion for certain diseases or that there is a waiting period for pre-existing diseases can be a real downer.

Also check the insurer's credentials and experience in health insurance and ask for details regarding the underwriting approach at the time of entry and claims.

Lastly, make sure your policy does not end at a certain age because this could leave you without any cover at a time when you need it most.

Added benefits

Don't we all love them? Well, all insurance policies don't offer them to you. Look for a policy that gives you the advantages of cover for health check ups, maternity benefits, day care surgeries etc.

Insurance uninterrupted

Once you've found a suitable health insurance product that meets all your needs, it is important to stay insured without interruption. For that, remembering your health policy renewal date is pretty much as important as remembering your partner's birthday or your wedding anniversary!

(With inputs from Antony Jacob, CEO, Apollo Munich Health Insurance Company Limited)