Health Insurance continues to be one of the most dynamic and fast evolving sectors of the Indian insurance industry. Gross written premiums by insurance companies has increased from Rs.17565 cr in FY’ 2005 to Rs.59898 cr in FY’2012 showing a very healthy 19% CAGR growth. The industry has shown significant improvement in operational parameters even as claims ratios continue to remain high. However, the growth is fraught with numerous challenges including efficiency, affordability and accessibility of health insurance. The efficiency in the health insurance system is also plagued by mistrust between providers and insurers due to non-standardized practices and formats in an evolving industry. Standardization therefore is critical to enhance quality delivery of health insurance, encourage innovation and greater penetration of health insurance in the country.

Health Insurance Guidelines 2013

The IRDA recently notified the health insurance guidelines 2013 to standardize health insurance in the country. The regulator has mentioned that the guidelines are meant to reduce ambiguity and enable all stakeholders to provide better services and enable customers to interact more effectively with insurers, third-party administrators and providers. The guidelines includes various facets of standardization including definitions of critical illnesses, definitions of commonly used insurance terms, list of excluded items in hospitalization indemnity policies, billing formats, discharge summary and standard contracts between TPA, insurers and hospitals. Undoubtedly, this represents a very important milestone in ushering standardization in the health insurance sector. Let’s dwell on each of these facets to appreciate the importance of this initiative.

The Guidelines aim to reduce the existing ambiguity between the insurer/reinsurer, provider and consumer due to varied critical illnesses definitions. The differences in the definitions of Critical Illnesses adopted by the different insurers have created confusion in the minds of consumers wherein products are difficult to compare and the industry especially at the time when insurers and re-insurers have to arrive at a point where lump sum payment is made. The availability of standard definitions would now ensure better comparability and uniformity in the understanding of critical illness definitions.

Another grey area that has been addressed is the list of excluded items.  As there is has been no detailed listing of such excluded expenses, and the interpretation of these exclusions is highly varied across different payers in the industry, many a times various items under the claims filed by hospital providers or individual policyholders are repudiated by the insurers but are disputed by the claimants. This is, thus, one major cause of acrimony between Insurance Companies and healthcare providers and also puts the consumer in inconvenience as out of pocket expenses goes up. The excluded items list driven by a  consensus between all the stakeholders of the industry and a uniform understanding of such ‘exclusions’ would be the key for better understanding of policy conditions by the policyholders and hospitals, which would in turn facilitate speedier roll out of health insurance in the country.

Standardizing billing formats would enable mapping of hospital information systems to specific data requirements of the Insurance companies for faster claim processing and enhanced analysis of data.

This would also facilitate electronic transmission of provider bills to the payers for processing and payment. The standardized format would now be part of the standard contract between insurers/TPA and the providers. Similarly, varied Discharge Summary format specific to payers often leads to delay in processing claims as requests have to be sent to providers to provide additional information. The standardized discharge summary would now be used across providers for benefit of all stakeholders and facilitate processing of claims at the payer end. The relevant information would integrate seamlessly with standard claim form and provider bills.

The guidelines also specify the minimum standard clauses of the service level agreement entered between the Insurer and the TPA as well as agreement between the healthcare provider and the Insurer/TPA. A skeletal framework for the contract would bring uniformity, more clarity about the service standards and minimize the chances of disputes over interpretation. The document would be instrumental in streamlining other standard processes and documents like pre-authorization form, discharge summary form, bill formats, etc.

The release of the health insurance guidelines also marks a new journey for the FICCI health insurance advisory group which would now look at new domain areas in health insurance including combating health insurance fraud, product innovation, data analytics and promoting quality in healthcare through health insurance. The group would continue to work towards realizing an ideal universe of health insurance business with satisfied customer at its core, greater penetration of health insurance products and affordable quality healthcare for the masses.

There are other facets of standardization in the IRDA guidelines including the Standard Insurance Terms and Standard Pre-authorization and Claim form. Insurance terms continue to remain jargons for the laymen. Terms notified in the guidelines would reduce ambiguity, enable all stakeholders to provide better services and enable customers to interact more effectively with insurers, TPAs and providers.  A common industry wide pre-authorization and claim form will significantly streamline processes at all stages. This will also enhance the ability of providers to obtain a timely prior authorization. By implementing it in an optical character recognition (OCR) format, the ability to transfer data from a handwritten paper based form to IT systems has been enhanced thus reducing the data entry issues for TPAs and insurers. Every company shall attach set of claim forms along with policy terms and conditions to the policyholder.

IRDA allows banks to act as insurance brokers

Insurance Regulatory and Development Authority (IRDA) has allowed banks to act as brokers and sell products of more than one insurer so as to increase the penetration of the sector across the country.

There is no capital requirement for insurance broking business carried out by banks, according to IRDA (Licensing of Banks as Insurance Brokers) Regulations, 2013.

To qualify for the license, each bank will have to have the principal officer, an officer of general manager or equivalent category, who is appointed exclusively to carry out the functions of an insurance broker.

The license, once issued, will be valid for three years from the date of issue, it said, adding that the renewal of license can be applied 30 days before its expiry.

Every insurance broker will, before the commencement of the business, deposit and keep deposits with any scheduled bank as sum of Rs 50 lakh, it said.

The business of the insurance broker will have to be carried out in the such a manner that not more than 50 percent of the premium emanates from any one client.

“Not more than 25 per cent of insurance handled by the insurance broker in any financial year is placed with the insurance company within the promoter group, separately for life and general insurance business” IRDA said.

It also said the calculation of non-Indian interest in the applicant company shall be as per the limits applicable to the banking sector as decided from time to time by the government or the Reserve Bank.

While The Reserve Bank of India’s (RBI) approval is required for banks to become brokers, IRDA is of the opinion that in case of any dispute arising out of insurance transactions, its jurisdiction should prevail. It added that the laws applicable to insurance contracts shall be enforced and information in this regard shall be furnished to the RBI.


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.

Irda Amends Norms on Health Insurance

Just a couple of days after standardisation guidelines for the health insurance  sector became effective, the Insurance Regulatory and Development Authority announced some amendments on 3 July 2013.

Of the 46 standardised terminologies for health insurance, the regulator has revised 19. Some changes just rectify typographical or grammatical errors.

For instance, the original definition of ‘unproven/experimental treatment’ missed a ‘not’, changing the scope of the rule. The revised definition now reads: “Treatment including drug experimental therapy which is not based on established medical practice in India, is treatment experimental or unproven.”

The amended guidelines also have a few major additions and omissions. The definition of ‘dependent child’ has been deleted from the list of standardised terminologies. So, insurers are now free to interpret this in their own way.

Under the new norms, an establishment registered with the local authorities does not have any minimum in-patient bed requirement. The requirement of having at least 10 in-patient beds in towns (with a population less than 10 lakh) and 15 inpatient beds in other places is mandatory for unregistered hospitals only.

The definition of ‘medical practitioners’ has been expanded to include people registered under the Central Council of Indian Medicine or the Central Council of Homoeopathy or any similar council set up by the government. Portability has also been redefined to exclude switching of plans with the same insurer.

Relaxations have been made for maternity expenses or treatment. Maternity expenses would now mean any medical treatment or expense traceable to childbirth, including caesarean sections during hospitalisation and lawful abortions during the policy period. Earlier, the benefit was restricted to two deliveries or abortions either during the policy term or lifetime of the insured.

On the flip side, expenses incurred before or after deliveries as well as abortions have been excluded from maternity expenses. The term ‘newborn baby’ now includes adopted children.





Despite its immense potential in India, health insurance is in an anaemic state.

India is already boldly taking its place as one of the leading healthcare markets in the world, forecasted to be one of the top 10 pharmaceutical markets by 2017, with a projected market size of $25 billion, and a CAGR between 11-13 per cent for the period 2012-17.

A sustainable health insurance system is absolutely critical.

Fortunately, this process is underway. As of 2010, over 300 million people (25 per cent of the population) had some form of health insurance – an astonishing 445 per cent increase from 2004.

Even more astonishing are World Bank estimates that by 2015, 50 per cent of the population (or approximately 630 million people) will be able to access a health insurance programme.

But India’s nascent and fragmented insurance market is facing serious issues that require thoughtful solutions.


Priority 1: Responding to competition with innovation: The arrival of new entrants, coupled with an increasingly aware consumer population has placed a burden on companies to manage – and differentiate – their portfolio.

The growth of India’s health insurance industry has brought forth some compelling business models and significant opportunities.

But, as patients across India will attest, though there is a myriad of options in insurers, there is almost no variation across offerings.

Success will require a proactive approach to capturing new customers.

Priority 2: Building an appropriate pricing structure: Across all levels of the population, people are beginning to understand that insurance is a necessary step to ensuring the affordability of better standards of care. This has resulted in a relatively high “willingness to pay”. The onus, then, is on health insurance companies to build relevant, appropriate pricing models.

Priority 3: Stabilising and legitimising the claims process: Health insurance companies today (across all segments) are burdened with inconsistent relationships with unregulated stakeholders — from providers to patients.

The Secretary-General of the General Insurance Council estimates that 15 per cent of insurance claims processed in India are fraudulent (patient fraud, inflated medical bills, underwriting lapses, process gaps, and so on). Even more shocking is the estimate that around Rs 800 crore is lost on inaccurate or falsified claims – every year.


Both, existing and new players need to acknowledge that there is huge gap between the objective of universal health insurance in India and the current state.

Without doubt, the industry needs a careful balance of stabilisation and innovation across the board as well as a continued focus on managing public perception. Efforts are also needed to consolidate data across stakeholders and transform it into accurate, actionable information and customer-focused products.

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.