Need for health insurance
Deputy Manager, National Insurance Company, Kolkata |
Healthcare expenses in India are increasingly going up. A one time heavy expenditure or a recurring cost of treatment of a chronic disease can erode all the savings and even drive people into debt. In India, people are now receptive to insurance as a cost-effective method of risk-mitigation to take care of possible health care expenditure.
Available health insurance covers
Today, the customer has the option of selecting a health product from a variety of options made available by private and public insurers. The different types of cover are: The standard individual health policy which can be availed of by individuals along with their spouse, children and parents, is available from a number of insurers, for an age profile which includes children from the age of three months and adults up to 70 years of age, for Sum Insureds varying from Rs 50,000 to Rs 10 lakhs. Renewals normally take place up to survival of the Insured. It covers hospitalisation expenses (in India) for accidental injuries and diseases. Claims are settled on the basis of incurred medical expenses. As corollaries, the attendant Income Tax benefits under Section 80 D of the Income Tax Act, 1961 as well as cumulative bonus and health-check-up facility are usually available in most of the standard policies. A new concept is the family floater policy. A single sum insured is placed at the disposal of the entire family and one or more family members may avail of the same, as per their requirement. Many employers have a group health policy in place, which covers the employees along with their dependents. A standard product of the Insurer is usually modified and then customised to suit the requirements of the employer-insured. Some insurers have also introduced high value covers marketed as top-up covers for specified critical ailments, with high costs of treatment, such as cancer or organ transplants.
Problems of senior citizens
Many senior citizens do not have any existing health insurance cover, and the ageing population are viewed as potential claimants by their insurers and therefore discouraged. Pursuant to the intervention of the IRDA, some policies have also been designed specially for them like National’s Varistha Mediclaim for Senior Citizens, etc.
Outsourcing of health services
Most insurers have outsourced some health services such as issuance of photo ID cards to insured persons, provisioning of cashless treatment facility at networked hospitals and maintenance of a 24-hour help-line to third party administrators (TPAs). This facility is optional and is available at a nominally higher premium under many health policies. Contrary to expectations, this arrangement has fallen short of the levels of performance originally envisaged. Complaints about delays in settlement and lack of adequate monitoring of hospital charges which contribute to high claims ratio, abound.
Current trendsThe health insurance sector is one of the fastest growing sectors in general insurance not only in terms of persons covered, but also in terms of evolving concepts. Diseases which were conventionally considered to be outside the scope of insurance are now being covered. Eg., AIDS is now being covered by Star Health. Pre-existing diseases such as diabetes and hypertension can now be covered after an upfront declaration by applicants and claims are allowed after a stipulated waiting period. Another new trend is that prospective customers are being drawn towards the health policies marketed by life insurers. Some of their interesting features include the provision of pay-outs, by way of defined benefits, which is paid as compensation and thus go beyond the standard indemnification of incurred hospitalisation expenses. However, the availability of a wide variety of products have now made the selection of a suitable cover quite a difficult task for a prospective customer. ‘Read the offer document carefully before investing’ holds good as much for insurance as for investment in shares, as only a well considered decision will provide the required financial buffer, in a crisis. Health insurance and social security Governmental concerns as to provision of social security for the dis-advantaged sections, with the insurance companies acting as facilitators are reflected in the recently launched Rashtriya Swasthya Bima Yojana.
Changes – anticipated and required
Some important insurance reforms expected in the near future include a hike in FDI cap from 26 per cent to 49 per cent. Another proposed change is that the minimum capital requirement for exclusive health insurance ventures would be restricted to Rs 50 crores vis-a-vis Rs 100 crores for life and non-life ventures. It is anticipated that a lower capital requirement will attract more entrants in the health insurance sector, stimulate competition and improve penetration. The insuring public can also expect a wider selection and a greater variety of products.
Conclusion
The need for health insurance as an essential aspect of financial planning and security is being felt even in developing countries such as India, given the continuous increases in costs of medical treatment. As a result of policy changes in the past years, new players have emerged and all are offering new products in competition with each other.
(The views expressed in this article are the personal views of the author)