VANTAGE POINT

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Supreme court stays IRDAI circular on genetic disorder claims

Sept 12, 2018

IRDAI has put on hold its circular on genetic disorder claims following a stay order by the Supreme Court of India.

On 27 August 2018, the Supreme Court, while hearing a special leave petition (civil), granted a stay on the operation of a Delhi High Court judgement that held that the exclusionary clause related to 'genetic disorders' in insurance policies is too broad, ambiguous and discriminatory and in violation of Article 14 of the Constitution dealing with right to equality.

The IRDAI, following the Delhi High Court judgement in February this year, had issued a circular on 19 March to all insurers with regards to rejection of claims related to 'genetic disorder'.

A fresh circular issued by IRDAI on 5 September 2018 states that, "In view of...stay granted by the Hon'ble Supreme Court of India, Circular (of March 19, 2018) stands abated until further orders."

The Delhi High Court had directed IRDAI to have a re-look at the exclusion clauses in the insurance contracts to ensure that claims are not rejected on the basis of exclusions relating to genetic disorders like cardiac conditions, high blood pressure and diabetes. Following the order of the Delhi High Court, the regulator directed insurers ‘not to include’ genetic disorders as one of the exclusions in new health insurance policies issued in respect of all their existing health insurance products and also in the new products.

Source: Asia Insurance Review



Postal service to set up insurance company in 2 years' time

Sept 11, 2018

India Post, the department of postal services, is working to set up an insurance company. India’s federal communications minister Manoj Sinha told Press Trust of India, "Department of Posts is now reincarnating itself. After diversifying its business with a parcel directorate and a payments bank, the department has decided to set up an insurance firm as a special business unit in two years."

"The request for a proposal to appoint a consultant for setting up an insurance unit will be floated in the coming week," he said.

If the proposal of India Post to set up an insurance company is realised, it could transform India’s insurance scene because of the trust and credibility India Post enjoys in the country especially in rural areas. The Department's manpower and vast reach would be other advantages.

India Post has an army of 300,000 postmen and 'Grameen Dak Sewaks' (rural postal employees) who, aided by digital technology, are delivering financial services for the India Post Payments Bank (IPPB) which was inaugurated by Prime Minister Narendra Modi on 1 September 2018.

IPPB, which will be available through 650 branches and 3,250 access points immediately, will be available at all 155,000 post offices by December 2018.

Insurance will not be a new area of business for the India Post. It currently offers one of the oldest life insurance schemes in India for the benefit of government and semi-government employees—Postal Life Insurance (PLI) which was introduced in 1884. In addition, Rural Postal Life Insurance (RPLI), introduced in March 1995, provides insurance cover to people residing in rural areas.

As at 31 March 2017, there were 4.68m PLI and 14.68m RPLI policies across the country.

Mr Sinha early this year also announced the opening of PLI to professionals as well, which has led to a surge in PLI revenue. "The entire postal department is transforming now," he said.

Source: Asia Insurance Review



Govt's plan to provide universal health coverage to offer opportunities to insurers

Sept 07, 2018

The launch of universal health coverage is credit positive for India's insurers because it will help grow health premiums and provide insurers with cross-selling and servicing opportunities, according to Moody's Investors Service.

An article in yesterday's edition of Moody’s Credit Outlook notes that on 15 August, Indian Prime Minister Narendra Modi announced that the Ayushman Bharat, or National Health Protection Mission (ABNHBM), will launch on 25 September 2018. The AB-NHBM aims to provide more than 100m families up to INR500,000 ($7,100) of health insurance coverage each year and total INR50trn of coverage in aggregate.

However, 23 of India's 29 states have chosen to run the scheme as a trust model, which will diminish insurers' growth prospects.

Trust models entail government funds being allocated to a trust fund rather than to insurance premiums, and the trust fund making disbursements for claims, rather than insurers disbursing claims. When the trust fund is depleted, the government will need to provide additional funds. This differs from the insurance model, under which the premiums paid would be the maximum limit of exposure for the government and insurers take on all of the coverage risk.

States can chose a hybrid model wherein there is insurance protection purchased for claims in excess of particular limits. “As a result, we expect that health insurance premiums will increase, albeit by only INR100bn for the additional coverage of 100m families (approximately 500m people). This is much lower than the current INR304bn of coverage for 440m.

Health insurance contributes around 23% of general insurance premiums and is one of the main drivers of growth for insurers. Health premiums have grown at a compound annual growth rate of 18% during the 2012-17 fiscal years. The fiscal year in India ends on 31 March.

“When the Indian government first announced AB-NHBM as part of the 2018 budget as a move towards universal health, we had expected that premium growth would accelerate as the government sought to expand healthcare coverage to India's 1.32 billion population. As of fiscal 2017, only 440m people were covered, and we expect that AB-NHBM will increase that number by 500m,” the report said.

Under the insurance model ,the increased coverage would have resulted in significant growth opportunities for insurers over the next two to three years, particularly for large healthcare and general insurers. Large insurers would have been able to benefit from their scale, resulting from superior claims management, strong provider networks and capacity to cross-sell other products.

“Although providing the health coverage as a trust model will diminish insurers' growth prospects, we still expect that insurers with scale advantages and track records of managing large insurance schemes will benefit from the health programme. Additionally, the programme will provide these insurers with opportunities to cross-sell other products and services to this new customer base,” the report added.

The writers of the report were Mr Mohammed Ali Londe, AVP-Analyst, Mr Antonello Aquino, Associate Managing Director, and Ms Sally Yim, Associate Managing Director, all three from the Financial Institutions Group of Moody's Investors Service.

Source: Asia Insurance Review



Government health insurance scheme to get an allocation of US$1.7bn for 2019-20

Sept 07, 2018

Pradhan Mantri Jan Arogya Yojana, the mammoth Indian public health insurance scheme to be formally launched on 25 September, would be allocated INR120bn ($1.67bn) for the next financial year beginning on 1 April 2019 (FY2020). This would be the first complete year of operation of the ambitious health insurance scheme of the government of India.



Centre to share 60% of the expenses

Financial daily Business Standard, quoting Indian Finance Ministry officials, has reported that for the current FY2019, the Health Ministry has projected a total expenditure of INR60bn, of which 60% will come from the central government and 40% from the states.

This compares to INR20bn allocated for FY2019 in the federal budget by the Centre. The states had no budgeted amount for this scheme. Business Standard reports that the Health Ministry has sought an additional amount of INR20bn for the current year from the Finance Ministry.

“We need at least INR60bn combined from the Centre and states to fund the scheme for five months this year. For next year, the total requirement will be INR120bn, of which 60% will be paid by the central government.”

According to the report, the government had felt that it would be able to pay its share with inflow from the education and health cess over and above the budgetary support. Now, however, the Health Ministry feels that it needs more funds to pay the Centre’s share in the mega scheme.



Scheme to operate on insurance and trust models

This scheme will operate on two models: insurance model and trust model. Under the insurance model, insurance companies are empanelled to operate as part of the scheme and they bid to provide insurance cover to those eligible under the scheme. Under the trust model, a state sets up a trust and allocates funds to it. The money is then transferred from the trust to the hospitals directly.



Most states opt for trust model

Cigna TTK Health Insurance Company COO and customer officer, Ms Jyoti Punja speaking to Asia Insurance Review said, “A high number of state governments have opted for the trust model. The scheme being on a large scale, every insurer is compelled to quote a viable price in order to avoid getting hurt. Business needs to be done right even in the health scheme.”

“On a broader perspective, however, the entire scheme will spread greater awareness and long-term inclusion for the insurance industry. It will expand medical services and allied facilities to rural areas as more people will opt for cashless insurance policies and additional health cover,” added Ms Punja.

This health insurance scheme plans to bring 100 million families or around 40% of India’s population under its coverage and will provide tertiary care to all those who feature in the social economic cast census of 2011. They can avail themselves of medical treatment benefits of up to INR500,000 under this scheme.

Source: Asia Insurance Review



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

Sept 05, 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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