How IRDA’s recent health insurance reforms will benefit you

The IRDA is trying to streamline the definitions so that it becomes simpler and process wise everybody has clarity on what the claims etc are. So, number of changes that have come up; one, in terms of definition on deductibles wherein it defines how deductibles is wherein whatever is the amount of a person’s claim there is certain amount which is reduced from it. Therefore, if deductible is Rs 1,000 and claim is Rs 3,000 then he is paid out Rs 2,000. On the other hand if claim is Rs 1,000 then he is not paid anything. It also mentions how a deductible has to be claimed, what will be the amount whether it is annually or on per claim basis.

The second point is of co-payment wherein a certain percentages paid by the policyholder and there also the change that has come about is, any co-payment is excluded from the sum assured.

There is another change in terms of portability; portability is basically where one can move policy from one company to the other. It also allowed moving it between policies of the same company itself. That has been excluded.

There is a definition of hospitals being relaxed and any hospital, which is registered under the Clinical Establishment Act of 2010 is there, couple of changes in terms of maternity, it is expanded a little bit including complicated procedures etc and also today lawful terminations of pregnancies and there is another change which has come in terms new born definition also interestingly allows adopted children.

Therefore, a lot of changes are coming in and definitions are in place. It makes it easier for the customer to understand and also no misuse from the insurance company.


External administrators to service PSU insurers till in-house entity matures.

Decision on terminating services after review of new entity
Public sector general insurers are likely to continue availing themselves of the services of external third party administrators (TPAs) to settle medical insurance claims even after setting up a common in-house entity to settle such claims.

The four public sectors insurers — New India Assurance, Oriental Insurance, United India Insurance and National Insurance — are currently working on setting up a common joint venture company to settle medical claims. However, till the joint venture TPA attains efficiency, general insurers will continue their existing arrangement with external TPAs, said G. Srinivasan, Chairman and Managing Director, New India Assurance.

“External TPAs will be a competition to the in-house entity after it is set up. The performance of the in-house entity will be reviewed and then take a decision (on terminating services of external TPA),”
The proposal to set up a common administrator for the state-owned insurers, who control 70 per cent of the Rs 15,000-crore health insurance market, will enable them to reduce costs, check fraudulent claims and resolve disputes in claim settlements faster. Hence, it is likely to plug leakages and bring down losses in the health insurance segment.

The joint venture TPA entity of public sector insurers is expected to be fully operational by April next year.

A ‘premium’ relief for diabetes, hypertension

New India Assurance—India’s largest non-life insurer—has decided to stop charging additional premium for those with diabetes and hypertension under its revised health insurance policy. The state-owned insurer has also withdrawn a clause from its policy that excluded cover for ailments caused by tobacco consumption.

The move will come as a relief to a significant chunk of India’s urban population and will also eliminate disputes arising out of wrongful rejection of claims. The company has decided to include tobacco-related ailments because the exclusion was causing hardship to a lot of policyholders and also because it amounted to rejection of claims on account of lifestyle. The new health insurance policy, however, continues to exclude cirrhosis of lever caused by alcoholism.

“Under the new policy there will be no difference in rates for a standard proposal and someone with diabetes or hypertension,” said G. Srinivasan, chairman, New India Assurance. He said that one of the reasons for the decision was the high incidence of people with such conditions. However, the earlier practice of having a four-year cooling period for pre-existing conditions will continue. This means that if a diabetic buys a policy, the coverage for diabetes related hospitalisation will begin only after four years.

Health Insurance premiums set to go up Based on Zones…

Planning to renew your health insurance policy or buy a new one? Be prepared to shell out a hefty amount. Public sector insurers have raised the premium rates steeply.

New India Assurance, the country’s largest non-life insurance firm, has increased the Mediclaim premium rates by 14 to 37 per cent, depending on the sum insured and age bands.

National Insurance, another public sector insurer, too has revised premiums by 20 to 35 per cent. Oriental Insurance is working on new premium rates. United India Insurance says it is in the process of filing for a 20 per cent increase in its family floater policy premium.

Public sector insurers control nearly 60 per cent of the health insurance market. Their rate revisions come after a gap of six years. In contrast, private insurers have been increasing premiums more often.

New regulations issued in February require insurers to keep their premium rates unchanged for three years.

In New India’s revised product called Mediclaim 2012, the premium for a Rs 1 lakh cover for people in the age group of 66 to 70 years has increased by 37 per cent to Rs 6,200 compared from Rs 4,530 (in Mediclaim 2007).
The increases are lower in younger age bands. A person aged 45 years going in for a Rs 5 lakh cover will have to pay 20.4 per cent more while renewing his policy. A person aged 35 years will have to pay 18.78 per cent more on his next renewal in the revised product.

New India continues to charge premium based on the place where healthcare is taken. It has split the country into four zones, depending on the average cost of healthcare.

Zone I comprises the urban agglomeration of Mumbai.

Zone II has Delhi and NCR, Bangalore, Chennai, Hyderabad/Secunderabad, Ahmedabad, Baroda and Kolkata.

Zone III includes all states other than Zone I, II and Zone IV. Zone IV consists of Bihar, Orissa, Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim, Jharkhand, Chhattisgarh, Uttarakhand, Jammu and Kashmir.

The premiums are higher in Zone I than in other zones.

1) Up to the age of 30 years, the premium increase is 20 per cent,

2) in the 40s age group, the increase is between 25 and 30 per cent.

3) For those above 55 years, the increase is 35 per cent.

The four public sector general insurers spend more on claims than they earn from health insurance. For the four together, for every Rs 100 earned as premium, the total outgo on claims, commissions to agents, third- party administrator’s fees and administrative costs is Rs 120.