Proposes Portability In Draft Guidelines IRDA seeks health cover up to 65 years

New Delhi: Sectoral regulator IRDA has proposed to make it mandatory for health insurers to provide policy cover to people up to 65 years and settle all claims within a month. 

    In its draft guidelines for health insurance companies, IRDA said that insurers would have to provide cashless facility to policyholders undergoing treatment in a particular hospital even after it is removed from the list of preferred service providers. 

    These provisions form part of IRDA's exposure draft on Insurance Regulatory and Development Authority (Health Insurance) Regulations 2012. The draft also talks about portability, under which a policy holder can migrate to another health insurance providing company, without losing any benefit. Besides, it has also proposed special provisions for senior citizens whose need for health care is pressing. 

    Under the proposed norms, insurer will have to provide customers all relevant information in a simple language and on a single page. The insurer will be required to provide reasons for denial of claims to insured persons. 

    According to the draft norms, insurers should ensure that empanelled hospitals—where cashless facilities are offered for policyholders—are spread across different cities and not confined only to metros. IRDA has also suggested that insurers should keep policyholders informed on nearest hospital where cashless facility is available. The insurers should also display the updated list of network providers on their websites. 

    "For the purpose of claim settlement, insurer shall make direct payments to the network provider and to the policyholders by integrating their banking system platform with the network provider or the insured, as the case may be," the draft said. The insurers, it said, will also be allowed to come out with 'Health-plus Life Combi' products which would be a combination of life and health insurance cover. AGENCIES 

BOOSTER SHOT 

tInsurance regulator seeks special provisions for senior citizens 

tDraft guidelines call on insurers to provide all information on a single page in simple language 

tIRDA also wants to make health insurers settle all claims within a month tSeeks provision of cashless facility to policyholders in a hospital even after it is removed from list of preferred service providers 

tSays insurers should ensure listed hospitals are spread across different cities and not just to metros

Get Ready to Pay More for Insurance Cover

Finmin tells the 4 state insurers to better manage claims, cut expenses and end price wars, especially in fire, health and motor businesses

The finance ministry has told the four state-owned general insurance firms to restructure their fire, health and motor businesses to cut losses that run into hundreds of crores. It wants better management of claims, reduction in expenses and end to the pricing war that have resulted in a combined loss of nearly . 1,500 crore in the last financial year on group health insurance alone. 

"We want insurers to come with realistic pricing for all products and not to take on lossmaking portfolios in order to gain business share," said a finance ministry official who did not want to be identified. 

The finance ministry has sent a detailed advisory to the four insurers (New India Assurance, Oriental Insurance, United India Insurance and National Insurance) asking them to cut losses on third party motor insurance, group health policies and fire insurance. 

The government has from April 1 this year discontinued the third party motor pool, a mechanism to distribute losses among all the insurance companies, and is worried that most of this loss-making business could come to the state-run insurers. "The PSUs are advised to be more cautious and prudent in underwriting motor business by devising a proper underwriting/marketing strategy to minimise TP (third party losses)," a finance ministry missive to the insurers stated. 

The restructuring could mean higher premiums for buyers. 

"This may lead to increase in premiums as insurers would now be forced to keep their claim ratio to the minimum," said Vivek Gupta, partner, BMR Advisors. 

The state-owned firms are confident of keeping a lid on prices. "Any owner would like its companies to achieve 100% combined ratio and not survive only on investment income. Companies are already working on the same, the ministry's guidelines are a step in right effort," Oriental Insurance Chairman RK Kaul said. 

The finance ministry is concerned that while private players have been exiting loss-making portfolios, state insurers have been taking on loss-making businesses, such as group health insurance. 

In 2011-12, these companies had a combined ratio of 130%-140% on their health portfolio, or for every . 100 premium they were spending . 130-. 140 in claims, management expenses, broker/ agent commissions and thirdparty administrator commissions. This means a loss of . 30-. 40 on every . 100 of premium. 

In the case of group insurance policies, which account for 50% of the total health insurance business, the combined ratio is over 150%. 

The ministry has asked stateowned insurance firms not to give any discount on standalone group health insurance policies where combined ratio is more than 100%. 

PSUs have been told not to renew the policies if the revised premium does not bring down the combined ratio to less than 95%. Further, in case of standalone group health insurance brokerage has been restricted to a maximum of 5%. 

In the case of fire insurance, PSUs have been told that no insurance of more than . 100 crore can be shifted from one PSU to another, except with the order of the CMD of the company issuing such a policy.

Q&A Insurance

Delay in Claim 

My father was a member of the Country Vacations Club, Hyderabad, which had agroup accident policy from HDFC ERGO General Insurance with a cover of . 5 lakh for each member. My father died in an accident in August 2007. The family members were not aware of the accident policy at that time. After we came to know of the policy, we forwarded the claim form with attached details to the company. But the same was rejected with the reason of delay in claim intimation. We have approached the insurance regulator too, but so far have not received any reply from them. Kindly tell us what to do. 

SRIKRISHNA RAMTEKE 

Irda has directed insurance companies that they cannot reject claims on technical grounds, such as delay in intimation and submission of documents, particularly if the delay is due to unavoidable circumstances. You can register and track your complaint with Irda through their website 'igms.irda.gov.in'. The regulator will follow up with the insurer on your behalf. 

Multiple Policies 

Iam 42 years old and working in a private company. My monthly income is . 25,000 and I have three insurance policies from LIC and one in the name of my wife. Bima Kiran, sum insured . 1 lakh, premium . 1,064 for 30 years; Jeevan Mitra Triple Cover, sum insured . 1 lakh, premium . 5,710, for 20 years; Asha Deep, sum insured . 1 lakh, for 20 years, premium . 5,115; and Jeevan Saral, sum insured . 1.25 lakh premium . 6,064 for 20 years. Should I continue or surrender them? Should I take a pure term insurance? 

RAVINDER 

You should buy term insurance plan on your own life and also on the life of your wife if she is an earning member of the family but not on the life of your child. Check the surrender value before taking your decision to surrender your existing policies as you may lose a big portion of your policy cash value if you surrender the same before the maturity. You can consider various investment avenues like mutual funds, bank fixed deposits and small saving schemes based on your risk appetite and investment horizon to achieve your various financial goals.

Pankaj Mathpal 

CFP, Managing Director Optima Money Managers

Ensure Your Dependents Get Policy Benefits, not Creditors

Preeti Kulkarni & Vidyalaxmi advise bringing insurance policies under the purview of Married Women's Property Act to ensure that only dependents receive the proceeds in case of death of the policy holder

  Buy a life insurance cover and secure the future of your family". You might have listened to this axiom countless times from insurance sales persons, financial advisors, talking heads on TV, among others. Sure, it is a great sales pitch that always works. It gets your attention to this essential cover which will protect your family in case of your sudden demise, an unpleasant thought you wouldn't entertain otherwise. 

However, what these experts don't tell you is that buying a life insurance cover alone won't necessarily assure the well-being of your dependents. For example, if you are a proprietor and have accumulated debts, your creditors will have the first claim on your policy proceeds. Or your insurance policy (with savings element like endowment plan, unit linked plan and so on) will be attached if you file for insolvency. 

There is a way out, though. 

"We always ask our clients to bring their policy under the purview of the Married Women's Property (MWP) Act. This ensures that on the death of the life assured, the dependents receive the proceeds, not the creditors," says Ashish Kehair, head, private wealth management at ICICI Securities. "It is a very important sales pitch for us. We always advise businessmen to go for this option. Even salaried individuals can exercise this option," adds G Nageswara Rao, managing director, IDBI Federal Life Insurance. "It's extremely beneficial for proprietors from the small and medium enterprises (SME) sector since their personal property will get attached if there is a winding up order," says P Nandagopal, MD and CEO, IndiaFirst Life Insurance. 

However, despite being a fairly simple and inexpensive procedure, not many policyholders opt for it, primarily because of lack of awareness. Remember, every policyholder can adopt this route to protect his family and does not have to shell out a single penny for the purpose. "Any married man can take a life insurance policy under the MWP Act. This includes divorced persons and widowers, who can use the provision for their children. The policy can be taken only on one's own name, i.e., the life assured has to be the proposer himself. Any type of plan can be endorsed to be covered under the MWP Act," says Sandeep C Nerlekar, CEO of Warmond Trustees and Executors. 

All you have to do to get the policy covered under the MWP Act is simply inform your life insurance company about your intention, and fill up a simple application form. Some companies include this option in the main proposal form itself and the policyholder is required to merely tick the right box to indicate his acceptance. "It is not significantly different from buying a regular policy. In addition to the regular proposal form, which contains the policyholders' details, the policyholder has to fill a separate form which will include the details of the beneficiaries and the share of benefits for each of them. Along with the form, the policyholder has to submit a letter stating that the policy has to be issued under MWPA. Then the original policy bond/document will capture the fact that it has been issued under MWPA," informs Suresh Agarwal, executive director, Kotak Life. 

If you have a joint family, MWPA could be a great solution for your opaque financial setup. "In a joint family, there can be several ambiguities and obligations. The structures may not be clear, which increases the scope of family disputes on money and property. An MWP policy will give a clear title to the beneficiary and an exercising right for the policyholder as well," says Agarwal. However, you need to exercise caution if you plan to cover your insurance policies with savings element under the Act. Unlike term policies, Ulips and endowment plans are expected to generate returns on your investment at maturity. "If you choose to get policies with savings component issued under the MWP Act, you cannot hope to individually benefit from the 'investment' made, as you would be surrendering all your rights on the policy in favour of your wife and children," says Gaurav Rajput, director, marketing, Aviva Life Insurance. 

Only your wife and children will be entitled to the sum assured in the event of your demise. Similarly, the maturity proceeds too will go to your wife and children if you outlive the policy term. 

"Once a policy is purchased under the MWP Act, the same ceases to be part of your estate and cannot be attached by courts for repayment of your personal debts. You need to take into account these factors before getting the policy issued under the MWP Act," he adds. 

Protect Your Family's Financial Interests 

Merely buying a life insurance policy will not necessarily take care of your dependents in the event of your death 

You need to put in place certain safeguards to ensure that the sum assured is indeed passed on to your dependent family, specifically wife and children 

Getting the policy issued under the Married Women's Property Act is perhaps the simplest and least expensive way of protecting your family's financial interests in your absence 

WHAT YOU NEED TO DO 

Inform your life insurer at the time of buying the policy and fill up the required application form, along with the proposal form 

Bringing the policy under the purview of the MWP Act is highly recommended for proprietors and businessmen from the SME sector as their personal property is liable to be attached to pay off their debts 

If you are planning to buy policies with savings component under this Act, remember that you will not be individually entitled to the maturity proceeds as you will be surrendering all your rights in favour of your wife and children

Growth in health cover moderates Group Buyers Go Slow On Renewals

Mumbai: The share of health insurance in the non-life business has shrunk marginally with the group health segment seeing some pullback from buyers and retail not replicating the 30% plus growth in earlier years. 

    Data released by the insurance regulator shows that motor insurance has the highest growth of 31.3% with premium collection of Rs 24,176 crore. As aresult the share of auto insurance in the non-life business has risen from 38.8% last year to 41.1% as on March 2012. 

    According to Sanjay Datta, head of underwriting and claims at ICICI Lombard, there was some pullback from buyers of group policies. This includes state level health insurance schemes bought by states, including Andhra Pradesh and Tamil Nadu. 

    "Corporates are reluctant to pay more for health insurance. They typically shop for the best rates and in many cases because they have may have a fixed budget for employee costs, they cut back benefits rather than pay more," said Shreeraj Deshpande, head of health insurance at Future Generali Insurance. 

    He added that reduction in benefits were usually in the nature of curtailing coverage for parents by making this a voluntary cover where there employees pays on his own. According to Deshpande, although companies have been taking measures to bring down losses, most insurers continued to bleed on their health portfolio. 

    One reason for this was medical inflation which was higher than general inflation. "We are seeing some hospitals revise their charges twice a year as against only once in the past," he said. 

    Health insurance—the second biggest segment—has grown by 18.6% to Rs 13,345 crore which is slower than the overall growth in the non-life business. As a result its share has shrunk from 23.7% in FY11 to 22.8% in FY12. Overall the non-life industry has grown 23.2% to Rs 58,357 crore. 

    Meanwhile, the Insurance Regulatory and Development Authority (IRDA) has formed a panel which will recommend the way forward to provide health cover to those infected with the HIV virus.

FM asks PSU insurance cos to hike group health insurance premiums

Amol Dethe

New Delhi: The Finance Ministry is believed to have directed the four general insurance companies-- New India Assurance, United India insurance, National insurance and Oriental insurance -- to reduce losses in group health insurance segment. 

In a letter written to all the companies (a copy of which was seen by Zee Business), the ministry asked the companies to take up some remedial actions, including increasing premiums in the group health insurance segment. 

The ministry also called for an increase in premiums in cases where claim ratio is 100 per cent. "The hike should take into consideration factors like medical inflation, margins and management expenses," ministry said in the letter. Also no discounts should be given in stand-alone group health insurance policies for companies which pay out more than they earn. 

The claim ratio of all the four insurance companies in group health insurance segment is much higher than the premium they earn. In 2011-12, PSU insurers collected premium of Rs 4,500 crore and paid the claims of around Rs 6,000crore and booked losses of Rs 1,500 crore.

These directives were issued by the ministry after it called a meeting with all the four chairmen of these companies, at the North block. The ministry has known to have asked them to implement these immediately. 

As per the FM, brokerage or commission shall be restricted to a maximum of five per cent. "Unhealthy practices of letting the broker to hike the premium, by assuring him of brokerage at a higher percentage, shall not be entertained," the letter said. 

The ministry also cautioned insurers against such insurance policies of private sector companies. It asked the companies to obtain necessary financial details of these companies for the last three years. The ministry asked them to take these claims only if combined ratio is lower than 95 per cent. 

In addition, the PSU insurers should now share data concerning premier, claims and major accounts to ensure that there is no competition between them in any corporate or group accounts. The ministry warned that any deviation from this instruction will be viewed seriously.

The ministry is also cracking down on frauds in the segment and asked these companies to share details on frauds amongst each other. "Action against the persons involved in frauds should be strict and lead to immediate cancellation of the policy. Even legal action against the insured may be considered in serious cases," the ministry said.

Know your rights as an insurance buyer Regulatory changes and court rulings have empowered customers. Find out what this means for you

Life insurance is the favourite investment option for millions of Indians but very few of them know about their rights as policyholders. A 2011 survey by NCAER shows abysmal level of awareness about policyholder's rights. Whether it's about the time in which a claim must be settled or the 15-day freelook period, the 22,164 households surveyed across India displayed an acutely low level of knowledge. 

    The good news is that the regulatory changes in the past couple of years have empowered the customer. For instance, the portability of health plans, which became operational in October 2011, has put the fear of god in insurance companies. Here are a few basic rights you should know of. 

1 You can cancel the policy within 15 days of receiving the policy 

If you are not happy with the insurance policy you have bought, you can cancel it within 15 days and get your entire money back. The insurance company can only deduct the expenses incurred on medical tests, stamp duty and the cover for 15 days. 

    Unfortunately, not many buyers are able to use this window of opportunity. An alert buyer who goes through the policy document would spot any discrepancy and cancel the plan immediately. 

    To avoid this, unscrupulous agents deliberately delay the delivery of the policy. However, it has been clarified in several orders that the 15-day freelook period starts from the time that the policy document reaches the buyer. 

    Agents have lots of dirty tricks up their sleeves. Mumbai-based Hetal Nagda was promised a bonus policy along with her policy. When the policy papers reached her, there was no mention of the bonus plan. She called up the broker, who reassured her that the bonus plan would reach her in two weeks. It never did—this was just a ploy to get past the 15-day freelook period. 

2 Insurer must provide detailed information to 

the customer 

Irda guidelines state that when a policy is sold, the insurance company or its agent must provide all relevant information about the cover to the buyer, so that he can decide whether the plan is in his best interests. If there is something you don't understand or can't find in the document, you have the right to demand that information from your insurer. It is the duty of the insurance agent to explain the policy features and exclusion clauses to the buyer at the time of sale. 

3 Insurer must respond, complete procedures within a time frame 

An insurance policy is supposed to bring financial relief in times of calamity. If this relief takes too much time to reach the beneficiary, the objective of insurance is defeated. This is why the Irda has laid down specific deadlines for various procedures and processes involving the policyholder and insurance company. Death claims and medical claims have to be settled within 30 days. If the claim is within two years of buying the policy the insurance company is given up to six months to investigate the claim. Of course, the clock starts ticking only after you have submitted the claim form, along with all the required documents. If the form is incomplete or a document is missing, the company won't be held responsible for the delay. 

    However, here too the insurer has to list out all the documents required at one go and not make the claimant go back and forth. Also, this to be conveyed to him in writing within 15 days of receiving the claim. 

Proposal: Must be processed within 15 days. If proposal is cancelled, it must be conveyed to buyer within 15 days. 

Service requests: Mistakes or changes required in the policy, or any other nonclaim related service request, should be done within 10 days. Payment of benefits: Surrender value payments, annuity payments and pension processing should be done within 10 days. Maturity sum should be paid within 15 days. Surveyor report: In case of damage, the surveyor should submit his report within 30 days. Claim settlement: All claims should be settled within 30 days of receiving all required documents. Grievances: Must be acknowledged within three days and resolved within 15 days. 4 Insurers cannot refuse to renew medical insurance 

The rise in the cost of health care has affected everyone, but senior citizens are the worst hit. But insurance companies are not very keen to give them medical insurance cover because they are riskier than other groups. However, in March 2009, the Irda declared that an insurer cannot refuse to renew a health insurance policy unless there is evidence of fraud, moral hazard or misrepresentation. However, this right to renewability of medical insurance is shackled by the rule that allows insurance companies to hike the premium as per their assessment of the risk. 

5 You can change the frequency of premium 

at the start of the year 

Finding it difficult to pay the huge premium of your insurance policy at one go? Whatever be the reason, you have the right to change the frequency of the premium payment at the beginning of a policy year. All you need to do is write to the insurer 15-20 days before the policy anniversary. You can also alter the nominee of your insurance policy. This is necessary if the policy was bought before marriage. After marriage, ideally, the spouse should be made the nominee. 

"15-day period starts after 

buyer receives the policy" 

Anupam Maiti cancelled the Ulip after he got the policy papers. But Bajaj Allianz argued the freelook period was over. Kochi ombudsman asked the insurer to prove the policy was delivered earlier. It could not do so, Maiti was refunded full premium with 9% interest. 

"Features not explained to 

buyer at the time of sale." 

Dileep Jain took a comprehensive shopkeeper's policy from the National Insurance Company. When rainwater damaged goods in his godown, the insurer said godowns are not covered. Irda ruled that buyer was not guided by agent and slapped a penalty on insurer. 

"Insurer shouldn't take over 6 months to settle claim" 

Kunti Devi complained that HDFC Standard Life had not settled claim even after 12 months. The company said it was investigating the cause of death. Irda ruled that investigation should not take more than 6 months from the date of claim. Insurer was fined 5 lakh. 

"Refusal to renew a policy amounts to unfair practice" 

United India Insurance refused to renew Biman Bose and his wife Alka's mediclaim policy. Bose said he was being victimised because of the case he had slapped on the insurer. Supreme Court ruled that the refusal to renew was arbitrary and unfair. Company was fined and asked to reinstate policy. 

HOW TO FILE A COMPLAINT 1 

Approach the grievance cell of the insurer with the complaint. 2 

The company has to acknowledge within three days and resolve it within 15 days. 3 

If not satisfied, file complaint with the Irda. You can file it online on the IGMS. 4 

You can also approach the ombudsman or a consumer forum. 5 

If still not satisfied, you can take the matter to a civil court.

How Useful are Group Health Insurance Covers

Vidyalaxmi tells you the benefits of group cover and the factors one has to keep in mind while going for one

A health policy at a reasonable rate, no medical check-up and coverage of pre-existing illness is something everybody would love. This perfect blend is available for individuals mostly up to 40 years. However, from there on, it starts getting difficult to buy or even renew a health cover at a reasonable rate. Here is where group health covers come into play. The most common type of group health insurance is the one issued by employers to employees. However, not all employers offer health covers. That is where group insurance covers, which are offered by trusts, brokerages, healthcare companies and banks, come into the picture. 

HOW THESE POLICIES WORK 

The nature of this product is very similar to the group cover issued by employers. A master policy is issued under which all individuals in the group are covered. So the set of terms and conditions, inclusions and exclusions of that particular policy is applicable to the entire group. Other finer terms and conditions are not standardised across group covers offered by insurers. "There is a lot of customisation that goes into these policies. This customisation is worked out by the intermediary (seller of the cover) and the insurance company based on the requirement of the customers and financial viability of the product," says Pankaj Mathpal, a certified financial planner. 

Echoing similar views, Arvind Laddha, CEO of Vantage Insurance Brokers, says, "Certain amount of customisation happens. The waiting period might get reduced, some deductibles get modified. All these variations are worked out as far as the brokers are able to raise a certain amount of premium." For instance, Karvy Stock Broking in association with National Insurance offered a National Health Plan. This policy covered pre-existing diseases from the first day of coverage. Another group cover offered by RB Hospitality and Health Services in association with New India Assurance also offers a policy that covers pre-existing diseases, but only after the first year. 

Similarly, the exclusions can also vary. The Karvy National Insurance Health Plan does not cover chemotherapy and radiotherapy (for treating cancer) and dialysis (for kidney). On the other hand, the Oriental Bank of Commerce (Oriental Health Plan) has a waiting period for every illness. Hypertension and diabetes are covered after two years, polycystic ovarian diseases after one year and joint replacement after three years. 

ADVANTAGES 

Lower cost 

Group insurance covers are up to 30% cheaper than individual health covers. "If a bank has two million customers, it will negotiate on the best premium to allow the insurer access to those customers. On the other hand, it also has a pull effect as the bank may be able to secure more customers by offering a medical policy at a 'reasonable' rate," says Mahavir Chopra, head (e-business and retail), Medimanage-.com. "If I have a mother who is 65 years old and I am unable to buy a health policy, I will open a bank account and buy this policy for her," he says. 

No medical check-ups 

Any individual medical policy usually requires a medical check-up for individuals 

above 45 years before the purchase of the policy. However, this condition is waived off in a group health policy. However, individuals 

may be asked to sign a declaration form if any policy has a waiting period for any specific illnesses. 

DISADVANTAGES 

Leaving the group 

A brokerage or a trust may have offered you a group health cover because of some membership. If you terminate the membership or even the intermediary and the insurer snaps the partnership, the cover will cease to exist. "It is very similar to leaving a job. If you quit the organisation, the group cover may come to an end. Similarly, the intermediary may switch to another insurer because of a better incentive. In such a case, the features of the new product may not suit your requirements and you will lose out on the insurance benefits," says Pankaj Mathpal. 

Discontinuity of product 

"If you have a group insurance policy with a bank and the policy is terminated, you will lose all the benefits you have accumulated in the product," says Meena Nair, assistant vice-president at India Insure Risk Management and Insurance Broking Services. If you do not have another health policy, you have to go through the medical checkups and the waiting period all over again in the new policy. 

FACTORS TO KEEP IN MIND 

A group cover can act as top-up plan 

A group health cover cannot replace the individual health policy in your kitty. For any individual, it shouldn't be a primary policy as the continuity of the policy is a big question. "Moreover, there is no clarity if the guidelines on portability work on such group insurance policies. Hence you may not be able to shift to another group policy sold by the bank/ or intermediary carrying over the existing benefits," says Meena Nair. 

Look at the fine print 

"There may be restrictions such as claims below certain amount may not be covered, specific type of ailments may not be covered etc.," says Arvind Laddha. 

Viability of the group 

& the product 

From an insurer's perspective, a group insurance product is financially viable only if there is some homogeneity in the group. For example, if an employer is selling a group mediclaim, there is likely to be some homogeneity in the group. The average age would be in the range of 25-40 years. But if a third-party brokerage or healthcare company forms a group, just to sell this product, this homogeneity is lost. "A 70-year old individual and 25-year old cannot be put in the same insurance policy. There is no consistency in terms of the risk profile of the individuals. 

If the policy witnesses a high claim ratio, the policy could either be discontinued or witness a severe loading at the time of renewal," says Mahavir Chopra. 

However, you cannot deny the fact that group health covers come at a throwaway cost. Hence an individual can look at group covers only and only if they don't have sufficient risk cover on their standalone policy. "Also people who have witnessed cardiac problems may not get another insurance policy. In such case they can look at group covers sold by banks," says Mahavir Chopra.