Part of claim amount is borne by the employee; this results in lower premium outgo for India Inc

Faced with rising outgo on account of health insurance premiums, India Inc is increasingly shifting to the co-payment model, whereby up to 25 per cent of the claim amount will have to be borne by the employee. The insurance company will pay the balance.

Co-payment provides tangible benefits to companies in terms of reduced insurance premium.

Typically, the co-payment ratio for the employee ranges from 10-25 per cent. So, for every claim of Rs 1 lakh the policyholder has to shell out Rs 10,000 from his/her pocket, before the insurer pays up the remaining Rs 90,000.

According to Sanjay Datta, head of underwriting and claims, ICICI Lombard General Insurance, “Employers are increasingly resorting to co-payment to ensure optimal utilisation of benefits by policyholders. For example, the insured may not go in for a deluxe room when he is footing a part of the claim.”

Most general insurers feel co-payment in health insurance policies will also ensure that hospitals don’t jack up the prices for the insured.

For New India Assurance, the country’s largest insurer, almost 20 per cent of their group health insurance policies have a co-payment clause, said general manager Segar Sampathkumar.

According to a recent report by ICICI Lombard General Insurance, the preference for co-pay has increased to 18 per cent of all group health insurance policies in fiscal 2012-13 from 16 per cent in the year-ago period.

However, other cost containment measures, such as applying sub-limits on the claim amount on common illnesses, such as cataract or kidney stone have fallen to 10 per cent in FY13 from 34 per cent during the previous fiscal.

Interestingly, industry experts say, many insurance companies have started introducing co-pay clause for individual health insurance policies sold to senior citizens. For instance, New India Assurance has a co-payment clause for new policies sold to individuals over the age of 55

IRDA Guidelines: Key consumer centric points.

IRDA came out with numerous initiatives last year including draft health insurance guidelines. While these will help to confine the role of TPA to claims processing and not settlement, there are other vital issues that has to be addressed.

• Senior citizens disallowed increase in Sum Insured (SI) – Survivors of critical illness like cancer are also not given any increase in SI by the insurance company.

Action required – There should be mandatory allowance for inflation-linked increase in sum insured irrespective of past claims history.

• Need to cover prosthetics and artificial limbs for disabled – All insurance providers to be mandated by regulations to offer mediclaim and accident cover policies to cover the cost of provision of prosthesis/artificial limbs to the insured person, up to the sum insured and without any artificial cap. At the moment, not all insurance companies cover the cost of prosthetics.

Action required – need for mediclaim to cover prosthesis.

• 24 hour hospitalisation mandatory to approve claims – Today technological advancement does not necessitate hospitals to keep the insured for more than 24 hours in many cases.

Action required – More day-care procedures need to be added to mediclaim. IRDA should make insurance companies’ needs realistic rather than mechanical

• Cashless facility is restricted to preferred-provider-network (PPN) which does not include majority of high-end hospitals for government insurers. This issue is only for retail and not for corporate mediclaim policies.

Action required – If cashless is offered for corporate mediclaim, the same insurance company cannot disallow retail mediclam policies from getting same benefit. Just because individuals have less bargaining power, insurance companies can get away with it. Cashless facility must be re-started for retail consumers, at all Quality Council of India (QCI) accredited hospitals and nursing homes.

IRDA relaxes health insurance norms

IRDA has made a few key amendments in health insurance norms. It has eased criteria for hospitals to qualify for tie-ups with insurance companies.

The new amendment allows a hospital which is registered with the local authorities under Clinical Establishments (Registration and Regulation) Act, 2010 to tie-up with insurance companies. In addition, any hospital meeting these minimum criteria will also qualify:

- at least 10 in-patients beds in towns having population of less than 10 lakh and15 in-patients beds in other places,

- maintain the daily record of patients,

- facility of qualified nursing staff facility and medical practitioner in-charge round the clock and

- fully equipped operation theatre.

Nisreen Mamaji of Moneyworks Financial Advisers says“Allowing hospitals registered with the local authority to tie-up with insurance companies will help cut down the claim settlement time and also provide cashless benefits to policyholders. Earlier, policyholders had to pay cash at the time of treatment and later submit necessary documents to settle their claims which often took 3 to 4 weeks.”

However, Nilesh Shah, a Coimbatore based Financial Adviser, is skeptical about this amendment. He says health insurance penetration could only be increased if uniform tariff card is applied for all hospitals across the nation.

The insurance regulator has recognised registered homeopathic practitioners as medical practitioners.

IRDA has made changes in some standard definition of commonly used terminology of health insurance regulation. Now, the definition of portability is called ‘switching from one insurer to another’. However, switching from one plan to another of the same insurer has been omitted in the new definition.

Nisreen said “Switching facility from one plan to another plan is already available. Hence, excluding it from new definition doesn’t create any difference in the health insurance segment.”

Now IRDA has allowed any number of lawful terminations of pregnancy throughout the policy life. Earlier only two lawful terminations were allowed. Pre-natal and post-natal care have been excluded from the new definition of Maternity Expenses. Nisreen observes that exclusion of pre-natal and post-natal care from the new definition would be a setback as it may prove expensive for policyholders.

IRDA has added adopted children under its ‘new born baby’ definition. The regulator has also added full recovery clause in the new definition of acute condition. Acute condition is a disease, illness or injury in which medical treatment is immediately needed.

Deductible, which is cost-sharing requirement under a health insurance policy, has been left to insurers to decide whether the deductible is applicable per year, per life or per event.

Health Insurance Companies in India are fuming nonetheless as new changes proposed by IRDA could hurt their profitability

With the stressful modern day lives that we lead today, health is increasingly becoming a cause of concern.

To avoid hassles of huge medical expenses in case of an unforeseen illness, having an adequate health insurance cover is recommended time and again by financial planners.

But if past experiences are anything to go by, health insurance policy holders have had to run from pillar to post at the time of settlement of claims. Settlement would take forever and even when you did receive a settlement cheque, only a part of your medical expenses used to be covered without any plausible explanation as to why only a certain part of your claims was covered and the other part was rejected.

In order to address these longstanding grouses that insurers had against insurance companies, the insurance regulatory authority of India, Insurance Regulatory and Development Authority of India (IRDA) is making an attempt to “clean up” the grey areas and present the Indian citizens with better health insurance policies.

IRDA released new draft regulations for health insurance, which have currently been put up for public review. Here is a closer look at the main changes that have been proposed by IRDA.

Henceforth, all insurance policies are proposed to be renewable for life. This means that senior citizens who are most likely to need health insurance in advancing years to take care of their medical expenses are not left out of the ambit of the health insurance policies.

Unlike the current scheme of things where claiming settlement can take up to as much as six months and can be very frustrating for the claimants to say the least, the new regulations propose that claims need to be settled within a time frame of a maximum of 30 days after all the required documents have been submitted.

If the claimant does not receive his claim within 30 days, he can question his insurer. Interestingly, this clause was present in the original draft of the health insurance regulations in India, but was never implemented by health insurance companies.

IRDA has proposed that all payments be made directly to hospitals in order to make the payment process smooth and hassle free. So far, settlement-claiming cheques used to come from the end of third party administrators, which used to delay the payment process greatly. Besides, it was impossible for a customer to find out whether the entire amount that had been sanctioned by the insurer had been passed on to the claimant or not.



Currently there is a lot of ambiguity about the various illnesses that are critical and those that have been permanently excluded from the purview of health insurance policies.

In order to rectify this, the IRDA has suggested that all health insurance companies be provided with standard definitions of terms that need to be understood by customers before they make a prudent choice. This is an important change and is expected to go a long way in altering the way health insurance policies are sold in the country.

In case a health insurance company is rejecting a claim, it has to explain in writing the reasons why the claim is being rejected. This is as opposed to the current practice of rejecting claims on grounds that are utterly flimsy or worse still, rejecting claims without any explanation at all.

Until now, if a claim was made on two policies, it used to be split between the two health insurers in the ratio of the sum that was insured.

The new regulations, however, propose that the claimant will get to choose between the two policies that he holds. This will be particularly beneficial for those who get an insurance policy as part of their employee benefits and also take individual policies.

As long as they are in service of the company that is providing such benefits, they can claim from that policy, but when the service period is over, they can make a claim from their individual policies.

IRDA has proposed that insurers provide complete clarity about no claim of bonus. In case a claim has not been made in a particular year, the no claim bonus will have to be rolled back at the rate at which it was offered or has to be made a part of the total sum insured after the premium has been charged to this additional cover.

Customers will no longer be in for a nasty surprise when the time arrives for the renewal of their policies. IRDA has said that insurers can only hike premiums if they can justify it to the IRDA on the basis of the preceding years of claim experience (at least three years). They will also have to explain the rationale behind the hike in prices as well.


The most radical change that IRDA suggests is the free 15 day look in period, wherein it provides an aspiring customer to keep the policy and study it for 15 days absolutely free of cost. If he is not convinced about the benefits of the policy, he will have the liberty to return the policy to the insurer after a period of 15 days.

HC directs IRDA to issue guidelines on medical insurance claims

August 2, 2013 

The Bombay High court on Friday directed the Insurance Regulator and Development Authority (IRDA) to issue guidelines to Insurance companies to come out with a pre-packaged compensation for 42 ailments covered under medical insurance on the basis of the sum insured and on the type of the hospital.

A bench of Chief Justice Mohit Shah and Justice M. S. Sancklecha gave the direction to IRDA to include such guidelines in the regulations framed by it four months ago.

The court observed “IRDA has only given powers to the insurance companies to settle claims.”

The Court asked IRDA to come out with such guidelines within four weeks. Besides, these guidelines have to be put up on the insurance company website so that the insured and the Third party Administrator (TPA) would get a fair idea of how much they are entitled for, the bench said.

These directions were given during the hearing of a PIL filed by social worker Gaurang Damani detailing hardships faced by Mediclaim policy holders.

Petitioner Gaurang Damani submitted that “there have been instances where patients, who have undergone the same kind of treatment at the same hospital, have been disbursed different insurance amounts. If pre-packaging is made available, then the insured can also choose the kind of hospital in which he wants to be treated,” he contended.

The court has also directed IRDA to include in the guidelines a clear message that TPAs can only recommend a claim amount but cannot settle it.

“It is the insurance company who is to settle the claim and for that a detailed guideline should be issued in the regulations which have been issued by the IRDA four months back governing the insurance companies while settling claims.

Mr. Damani said that as per the IRDA affidavit filed last year, there were six lakh health insurance claims pending which amounted to around Rs. 1,200 crore. He added this is because the TPAs were doing the settlement and not the insurance companies.

The court has adjourned the hearing to next month.