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Here’s why you need to make full disclosure to health insurer

Jan 09, 2019

We are seeing steep escalation of medical costs making it unaffordable for many to opt for quality treatments. Health insurance plays a critical role in case of any unforeseen medical exigency. To have an appropriate and uninterrupted health cover, it is vital for you to make proper disclosure to your insurance company.

Here are the stages during which you need to make proper declaration to your health insurer.

Purchase of health insurance

An honest proposal from your end is quite important for the insurance company. The declarations made by you on your health status in the proposal form is the basis on which your insurance company will underwrite your policy, that is, gauge the risk and calculate the premium to cover that risk. Hence, while buying your health insurance policy, it’s important for you to make full disclosures, especially about your health and not just in the present, but also in the past.

How healthy you are or were in the past is a determining factor for the insurance company. For instance, if you had any ailments, say around three to four years before buying the policy, it is considered a pre-existing ailment. Insurers usually apply waiting period or choose to load premium for the pre-existing ailment. Concealing any such facts will amount to misrepresentation or non-disclosure of material facts. Such act may mean that insurer may reject your claim and you will be left with no cover when you need the most.

At the time of claim

There are two ways in which you can make health insurance claim—cashless claim or reimbursement. In case of cashless claim, the insurer and hospitals are connected through a seamless network where the hospital shares all the medical reports and bills with insurer. The policyholder has very little role to play here. However, in case of reimbursement, the policyholder needs to fill the claim form and disclose all the details about the medical treatment.

Necessary original documents like diagnosis report, medical bills, health check-up reports, treatment details, etc., need to be shared with the insurer based on which the claim will be paid. Before lodging the claim, it is essential to be aware of what is covered under your policy terms and conditions. Especially, whether or not your medical condition is related to pre-existing ailment, which may have a certain waiting period for it to be covered or may be excluded for coverage by the insurer.

At the time of renewal

It is always advisable to increase your sum insured and revisit your coverage at the time of renewal keeping in mind medical inflation and your medical needs. If you wish to do so, the insurance company will review your claims history. Be honest about the medical details furnished at the time of renewal to avoid any hassle when you need to make a claim in future.

It is also your responsibility to disclose any health history of the past one year during which you held the policy with the insurer and for which you may not have claimed. Such history is important for the underwriter to decide the increase in sum insured and change your coverage.

It is always advisable to be safe and disclose the facts about your medical history, than be sorry when the policy will be cancelled due to non-disclosure of material facts. Read policy terms and conditions carefully, make full disclosure so that when you or your loved ones are unwell you can focus on nurturing yourself or your loved one back to proper health rather than being worried about paying out of your pocket for any non-disclosure to your insurance company.

Source: Financial Express



Private equity firm True North in talks to buy Max Bupa stake

Dec 18, 2018

Indian private equity firm True North is in talks to buy a majority stake in Max Bupa Health Insurance for INR15bn ($210m).

True North, a mid-market buyout investor, will acquire the entire ownership of Max Group and also a part of Bupa’s holding in the health insurer, reported The Times of India citing people directly aware of the matter.

Analjit Singh-led Max Group is selling its stake as part of a business portfolio reorganisation which would see it focus on the life insurance market through Max Life.

Max Bupa's promoter — Max Group — owns 51% of the company, while Bupa holds 49%, the maximum permissible for foreign investors.

India's health insurance is estimated at around INR380bn in terms of premiums annually.

True North would acquire a majority stake in the health insurer. However, different news organisations carry varying reports that said that the stake would be 51% or 80%, with Bupa retaining 49% or 20% in the respective outcomes.

The domestic insurance industry, especially health insurance, has seen consolidation deals in the past one year. Safecrop Holdings — a consortium of West-Bridge AIF, Rakesh Jhunjhunwala and Madison Capital — bought Star Health & Allied Insurance Company for INR65bn in August. HDFC Ergo was in talks to buy Apollo Munich in another M&A transaction.

Source: Asia Insurance Review



Foreign reinsurers' branches can now compete along with domestic rivals

Dec 14, 2018

Foreign reinsurers' branches (FRBs) in India will, in a breakthrough move, now be able to bid for reinsurance contracts along with Indian reinsurers. At present, GIC Re is the only active Indian reinsurer.

The much-awaited IRDAI (Reinsurance) Regulations, 2018 issued by IRDAI on 12 December 2018 allow GIC Re to retain the right of first refusal. However, in instances where FRBs offer rates lower than GIC Re and GIC Re cannot match those rates or GIC Re does not exercise its right, FRBs can win those reinsurance contracts.

The new reinsurance regulations come into effect on 1 January 2019 and will lead Indian reinsurers and FRBs to compete for business on equal terms.

A clause in the regulations reads, “Every cedant, shall be free to obtain best terms for its reinsurance protection of domestic risks, subject to the following:

“Cedants shall seek terms at least from all Indian reinsurers, who have been transacting reinsurance business (other th an emanating from obligatory cession) during the immediate past three continuous years and at least from four FRBs.” Under the existing reinsurance regulations, reinsurance contracts could be offered to the FRBs only if GIC Re did not exercise its right and refused the business.

According to the new regulations, the reinsurance renewals will have to be executed at the beginning of every financial year. Also, insurers cannot seek quotes from any Indian insurer not registered with the IRDAI to transact reinsurance business. Focus on maximising retention within the country

The new regulations lay down the following objectives for the reinsurance programme of every Indian insurer.

1. Maximise retention within the country, subject to proper and adequate diversification of risks;

2. Develop adequate technical capability and financial capacity;

3. Secure the best possible reinsurance coverage required to protect the interest of policyholders and (retro)cedants at a reasonable cost;

4. Simplify the administration of business.

The new regulations also stipulate that all Indian insurers are to maintain the maximum possible retention commensurate with their financial strength, the quality of risks and volume of business.

In life insurance, IRDAI has said the insurers should retain at least 25% of sum assured under pure protection and 50% for other categories of products.

India’s reinsurance market is estimated to be worth around INR50,000 crore ($7bn) and most of it is catered by the state-owned Indian reinsurer GIC Re. It is expected that keeping in view the current rate of growth of the Indian insurance industry, the country’s reinsurance market will double within next 10 years. Currently, 10 global reinsurance entities operate in the Indian reinsurance market through their branches. These include Munich Re, Swiss Re, SCOR, Hannover Re, RGA Life Reinsurance Company of Canada, XL Insurance Company, Gen Re, AXA France Vie, Allianz Global Corporate & Specialty, and Lloyd's of London.

Source: Asia Insurance Review



Regulator could liberalise mandatory auto insurance pricing in 2020

Dec 13, 2018

The insurance regulator has indicated that it would stop setting tariffs for compulsory motor third party liability (MPTL) insurance with effect from the fiscal year starting 1 April 2020.

MPTL is the only business line for which the IRDAI currently sets tariffs. IRDAI's decision would pave the way for insurance companies to set all their own pricing, reported Times of India. The rates could fall because of stiff competition.

Officials told the Times of India that stopping the fixing of MTPL tariffs came up for discussion last week when the Prime Minister’s Office held a meeting to discuss the demands of truckers who called on the government to roll back a steep increase of nearly 28% in their premium in the current fiscal year. Mr Piyush Goyal, who acted as finance minister from 14 May to 22 August, had assured truckers’ organisations that the premium hike would be lowered to 15%, but action is still pending on this.

Source: Asia Insurance Review



Regulator moves to ensure continuity of benefits for policyholders who switch insurers

Dec 10, 2018

A panel on innovations in insurance and insurance technology and related regulatory aspects, formed by the IRDAI, has recommended portability of customer data when a policyholder moves from one insurer to another.

This will come in handy in the case of short-term products in non-life and health insurance. From a customer’s point of view, this ensures the continuity of benefits,which are based on data, such as no-claim bonus, disease or medical history.

An agency such as the Insurance Information Bureau of India could create the required mechanism for a repository to capture industry data related to insurance customers/policies, reports Hindu Business Line.

The committee has also suggested that insurers may be allowed to capture data as per their product requirements, and they should mention all data elements they wish to capture as part of their product filing procedure with the regulator.

However, to ensure standardisation of data capture across insurers for the creation of a repository of generic data to benefit all, the basic standard data elements could be worked upon by the General and Life Insurance Councils, it added. Stating that technology “could disrupt insurance business model and the insurer landscape”, the working group said big technology firms, with their technological and analytical advantage, will squeeze out traditional insurers.

The regulator, too, needs to reassess the existing guidelines to ensure that customers are adequately protected. “As the risk profile changes, it would be necessary to ensure that regulatory framework continues to adequately capture it,” the committee said.

The IRDAI is currently examining these recommendations, and is likely to issue its decisions soon.

Source: Asia Insurance Review



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