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The importance of network hospitals in health insurance

Dec 2, 2020

India’s COVID-19 count continues to rise with the total number rising above 9 million. The deadly virus has till now claimed over 1.3 lakh lives throughout the country, and the toll rises with each passing day. Considering the ongoing pandemic situation, it is imperative to have a comprehensive health insurance policy that can help you avail the best treatment possible at a hospital of your choice, without burning a hole in your pocket. Your comprehensive health insurance policy will not only provide you adequate coverage against the novel coronavirus (COVID-19), but will also cover you for all other illnesses and ailments such as cancer, stroke and diabetes. With your health insurance policy, you can not only avail quality healthcare, but also have the benefit of availing cashless treatment at your choice of network hospital. What this essentially means for the customer is that during hospitalisation, you can avail cashless treatment – without paying anything to the hospital – at your choice of network hospital.

What is a network hospital?

When you buy a comprehensive health insurance policy from your choice of insurer, you get a list of hospitals under the name of Network Hospitals. Apart from the policy documents, you can find this list on the website of the insurer as well. All hospitals mentioned in this list allow policyholders to avail cashless treatment at their centre. This means, the policyholder does not have to pay anything at the hospital for taking treatment, apart from nominal file charges. The biggest benefit of availing treatment at a network hospital is that the insured does has to run to different places in order to make financial arrangements and all expenses are borne by the insurer. The insurer directly settles the bill with the hospital without you paying any amount, provided the treatment is taken as per the policy terms and conditions.

Making a cashless claim in a network hospital

When you file for a cashless claim at a network hospital, there are usually three major entities involved – the insurance company, the hospital and the insured person. You can file an insurance claim under two categories – Planned Hospitalisation and Unplanned Hospitalisation (Emergency). In a planned hospitalisation, both the insurer and the network hospital are informed about the hospitalisation of the insured beforehand. As a process, before availing the treatment, the insured or the family members need to fill a pre-authorization form to get the person admitted. You can download the pre-authorization form from the insurer’s website; it may even be available at the hospital’s TPA counter. A TPA counter is a dedicated kiosk at the hospital premises where all the insurance-related queries and processes of the insurers are addressed.

Once the pre-authorisation form is submitted, the TPA desk will verify the submitted details and will inform your insurer regarding the claim. Once the insurer approves your claim request, an authorization letter is sent by the insurer/TPA to the hospital, stating the amount approved for the treatment. This amount is directly paid to the hospital by the insurance provider. The approximate Turn Around Time (TAT) for pre-authorized claims in the case of network hospitals is approximately 30 minutes to 2 hours. However, one must know that TAT varies from insurer to insurer.


Monthly health plan premiums a positive, but there’s a flip side

Dec 1, 2020

More and more first-time buyers in the younger age brackets are opting for the monthly premium option when going for health insurance policies, the recent buying pattern on, an online marketplace for insurance, shows.

The monthly premium option was introduced by the Insurance Regulatory and Development Authority of India (Irdai) in April to provide relief from steep one-time premium payouts after covid-19 struck. The regulator asked all health insurers to introduce the instalment facility immediately either on a permanent basis or as a temporary relief for a period of 12 months till 31 March 2021. The idea was first floated by Irdai in September 2019, when it asked insurers to file revamped policies, with the instalment option, from 1 October 2020.

Policyholders now have the option of paying premiums in monthly, quarterly or half-yearly instalments. However, only a few insurers are offering this facility as of now. Among the ones that are, most are sticking to the monthly option. “Instalment premium option is a good mechanism to help increase penetration of health insurance and encourage more people to get themselves insured, especially where affordability is a big challenge," said Prasun Sikdar, managing director and chief executive officer of ManipalCigna Health Insurance Co. Ltd.

As per the analysis done by, around 40% of individuals in the age group of 25-30 years bought health insurance through the monthly payment option against 30% for the annual payment mode from September to November. “Individuals in the top cities have much better adoption rate compared with people in tier-II or tier-III cities. It is an expected trend that younger people and those living in tier-I cities would be using this option, as they are most exposed to EMIs and personal loans," said Amit Chhabra, health, business head,

The instalment option has given a boost to mediclaim policies this year, he added.

However, the instalment facility has certain fallouts. We tell you what these are and why all insurers are not offering it as of now.

Pricing: While the benefits are identical in the instalment option to the yearly payment mode, the pricing can vary from company to company.

According to Abhishek Bondia, managing director and principal officer,, an insurance broker, the premiums under the instalment option can be marginally higher to account for the time value of money, which indicates that the value of money goes down over time.

Risk of lapsation and lack of coverage: Monthly option is convenient if you are in a cash crunch but remember to put a standing instruction in place for automatic periodic deductions. According to the Irdai circular in 2019, missing the instalment may result in lapsation of policy. In the case of monthly premium option, the grace period is around seven to 15 days against one month for the annual option, said Chhabra.

Moreover, late payment may mean absence of coverage for that period. During the grace period, the coverage of the policy will not be available from the due date of payment till the date of receipt of premium by the company, according to the Irdai circular.

The insurers also have the option to cancel the policy, in case the instalment is not received within the grace period.

Claims process: The instalment option may also impact the claims process. In the event of a claim, an insurer may deduct all the subsequent premium instalments from the claim amount, Irdai’s 2019 circular had said. For example, suppose the policy premium is ₹12,000, and you are paying ₹1,000 a month. If the claim is of ₹50,000 and you have paid just two EMIs, and ₹10,000 is pending. Then, the remaining premium amount of ₹10,000 will get deducted, and you will get a claim payment of only ₹40,000.

Still in the works

According to experts, not all companies have started rolling out this facility as they are still working on the technology part. Some of the large insurance companies that have rolled out this option are Star Health & Allied Insurance Co. Ltd, Care Health Insurance Ltd, HDFC ERGO General Insurance Co. and Cholamandalam MS General Insurance Co. Ltd.

“Monthly payment has been associated with lower persistency. So, insurers prefer annual payment modes to ensure high customer retention. Apart from the opportunity cost of investment income, insurer’s operating expenditure may go up, including changes in IT infrastructure, operational processes to track payments and accommodate change requests," said Bondia.

Health insurance has increasingly become a necessity, but it’s becoming unaffordable for some, given the rising premiums and the prevailing cash crunch situation. The instalment options thus works for a lot of people. The added advantage is that the policy benefits are the same. “Generally, for policies with the instalment premium payment option, the benefits do not vary. Only the premium frequency can be selected. Thus, it is an affordable option," said Sikdar.

However, keep in mind the fallouts of the instalment option. Moreover, it is not available for renewal of policies as of now.


FDI in non-life insurance sector slips marginally to Rs 509 cr in FY20

Dec 1, 2020

Since the opening up of the insurance market in 2000, the non-life sector attracted a total FDI of Rs 4,721.68 crore as on March 2020. It was Rs 4,212.61 crore at the end of March 2019.

Foreign direct investment (FDI) in the general insurance sector slipped marginally to Rs 509.07 crore in FY 2019-20 from the previous year, latest data by the General Insurance Council (GIC) showed.

In FY2018-19, FDI in the non-life insurance space was recorded at Rs 516.61 crore.

Since the opening up of the insurance market in 2000, the non-life sector attracted a total FDI of Rs 4,721.68 crore as on March 2020. It was Rs 4,212.61 crore at the end of March 2019.

There are 33 general insurance players, including four public sector insurers, six standalone health insurers and two state-owned specialised companies — Export Credit Guarantee Corporation of India and Agriculture Insurance Company of India Limited (AIC).

It is to be noted that FDI limit in the insurance sector has been hiked to 49 per cent from earlier level of 26 per cent.

The insurance sector was opened for private players in August 2000 with the invitation for application for registrations. Foreign companies were allowed ownership of up to 26 per cent.

New India Assurance and GIC Re were listed on stock exchanges while ICICI Lombard from the private sector went public in 2017.

The sector has also seen consolidation in the last few years. The latest being the merger of Bharti AXA General with ICICI Lombard. The proposed deal got in-principle approval from the Insurance Regulatory and Development Authority of India (Irdai) last week.


New motor vehicle rules to come into effect from October 1

Oct 1, 2020

As per the official release of amendment notifications in the Central Motor Vehicle Rules 1989, the IT services and electronic monitoring will lead to improved implementation of traffic rules in the country. The notifications were released by the Union Ministry of Road Transport & Highways (MoRTH) on Saturday and they will be put to implementation on October 1, 2020 as a part of the Motor Vehicle Act.

The Motor Vehicle Act was implemented a year ago to revamp transportation rules in the country and to improve the steps of penalties such as traffic rule violations and technology up-gradation to curb corruption in the department.

Here are key things to know about the changes in motor vehicle rules:

As per the PTI, mobile phones can be used only for route navigation, in such a way that drivers don't lose their concentration while driving.

Vehicular documents that are validated electronically shall not be demanded in physical form anymore. Including cases in which the offense made out necessitating seizure of any such documents, the notification stated.

The details of license disqualification shall be updated chronologically on the portal. The record shall be updated on the portal regularly.

Not only would driver records be maintained electronically, but their behavior would be thoroughly monitored as well.

The records on the portal would be updated every time they are inspected. The identity of the police officer or any other stakeholder would be noted on the official portal. Drivers are permitted to maintain their vehicular documents on the central governments' online portal like Digilocker or m-parivahan.

As per the official release, the government said these amendments would better enforcement and monitor traffic rules, leading to decreased driver harassment and improved road safety.


Insurers receive Covid-19 claims of over Rs 4,880 crore

Oct 1, 2020

The trend of claims arising from the novel coronavirus has kept its upward momentum. Senior officials of the general insurance industry said insurers have received around 3.18 lakh claims amounting to over Rs 4,880 crore as on September 29. Market participants say a lot of the claims are now coming from semi-urban and rural areas.

“We have seen claims now coming from across the country. A few weeks ago, we were getting claims only from metro cities. I think incurred claims ratio in the health segment for the general insurance companies will be more than 100% in the second quarter of this fiscal,” said the product head of a leading private insurance company.

Incurred claim ratio is a ratio of the total value of claims paid or settled to the total premium collected in any given year. If the incurred claims ratio is more than 100%, it indicates that insurers have paid more money as claims than it has collected as premium.

Insurance companies have settled over 1.97 lakh claims amounting to Rs 1,964 crore as on September 29. They have have received over 1.35 lakh claims amounting to Rs 1,710 crore from Maharashtra alone. Tamil Nadu and Gujarat have seen 32,830 and 27,913 claims, respectively.

According to the Ministry of Health and Family Welfare, there were 9.40 lakh active cases of novel Coronavirus in India as on September 30. While 51.87 lakh persons were discharged, 97,497 deaths occurred due to the ongoing pandemic.

Recently, ICICI Securities in its report said if one assumed that Covid claims maintain a run rate of $150 million per month (Rs 1,105 crore) from September, the total FY21 Covid claim amount would be around $1.4bn (Rs 10,500 crore).

Health portfolios of the general insurance companies would further get impacted as claims normalise for non-Covid treatment, said market participants. Data from the Insurance Regulatory and Development Authority of India show that health insurance have seen premiums of Rs 22,903.44 crore in this fiscal till August, compared to Rs 20,274.09 crore in the year-ago period, a growth of 12.97%.


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