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Health insurance market maintained double digit growth last fiscal year

Jan 28, 2016

The health insurance segment in the country continues to witness steady growth on the back of growing healthcare costs and increasing penetration levels with total premium collection growing 15 per cent in 2014-15 year-on-year. During 2014-15, the gross health insurance premium collected by non-life insurance companies was Rs.20,096 crore compared with Rs.17,495 crore in 2013-14, recording an increase of 14.87 per cent, according to the latest annual report of IRDAI (Insurance Regulatory & Development Authority of India).

The four public sector general insurance companies – New India, United India, Oriental and National – accounted for a major share of health insurance premium at 64 per cent of total health segment. Stand-alone health insurers contributed 14 per cent. While there is a marginal increase in the share of public sector and stand-alone health insurers, there is a drop in the share of private non-life insurers whose market share has come down from 26 per cent in 2013-14 to 22 per cent in 2014-15.

Over the past five years, there is a marked increase in the share of individual health insurance premium in total health insurance premium collected- increasing from 35 per cent in 2010-11 to 44 per cent in 2014-15.

The share of group health insurance business (other than government business) in total health insurance premium has remained static at around 45 per cent. . About 24 per cent of India’s total population has been covered under one of the health insurance policies in 2014-15.

Source: The Hindu

Insurance costs to go up 20-25% as more cars become Bharat Stage VI compliant

Jan 27, 2016

Insurance premiums might go up by as much as 20-25% as automakers start bringing out greener, more fuel-efficient cars that are Bharat Stage VI emission norms compliant, says industry experts. The Union government has directed auto manufacturers that all four wheelers in India should be Bharat Stage-VI compliant by 2020. Automakers have said that the average cost of producing a car, which uses fuel compliant with the European regulator's emission standards, will go up by 1-2.5 lakh.

"Its a fairly simple formula. If manufacturing costs go up then so will the price of the car and the sum insured. If the sum insured goes up then you will have to pay higher premiums," says Tapan Singhel, CEO, Bajaj Allianz General Insurance.

The auto industry has been lobbying for pushing the deadline on implementation of Bharat Stage VI to 2023 as the move requires heavy investments in infrastructure and resources. Automakers will have to invest significantly in new technology that could increase the cost of a diesel car by as much as Rs 65,000 to Rs 1 lakh and the cost of petrol engines from Rs 7,000 to Rs 11,000, according to sources.

With more sophisticated technology like diesel particle filters (DPF) and selective catalytic reduction (SCR) involved, small diesel vehicles could become prohibitively expensive, which will have a cascading effect on vehicle insurance.

"It is similar to what we saw with CNG vehicles. Insurance costs did go up with the introduction of CNG buses and cars; because these vehicles on average cost more than their less environment friendly counterparts," says the head of underwriting at a general insurance company.

As to the premise that the spike in insurance premiums could see a little moderation from the safety features installed in cars, industry sources say the idea is a little "far-fetched."

"Third-party premiums are fixed by the Insurance Regulatory and Development Authority of India (IRDA). And owned-damage (OD) premium rates though fixed by general insurers again are subject to IRDA clearance. So if cars in future have more safety features - and say accident rates go down - again keeping in mind that its human error more than technical glitches in cars that account for most road accidents - then there is a slight possibility in the distant future that actuaries could factor that in ... But its really quite far-fetched," says the underwriting head.

There is also the view that the IRDA will need to gradually increase rates to make it more acceptable to purchasers of vehicle insurance. "They'll have to stagger the possible rate hike. If it's brought in over a period of time it will be more acceptable," says Vinod Sahgal, managing director, Bajaj Capital Insurance Broking Ltd.

Source: The Times of India

Yoga powers its way into health insurance wellness packages of ICICI Lombard, Bajaj Allianz and others

Jan 27, 2016

The buzz around Yoga seems to have struck a chord with health insurers. The growing popularity of this ancient form of exercise has prompted general insurers such as ICICI Lombard, Bajaj Allianz and Royal Sundaram to incorporate it in their wellness and preventive healthcare benefit packages.

While the trend is more prevalent in the employees' group health insurance schemes, some insurers are now planning to extend it to their retail health policies too. "We are planning to introduce such programmes for our retail customers," said Nikhil Apte, chief product officer, product factory (health insurance), Royal Sundaram. The company plans to offer online Yoga coaching sessions or DVDs to its retail policyholders.

ICICI Lombard has already recognised Yoga as an eligible preventive healthcare tool by making it part of an add-on cover attached to its regular health policy. "Policyholders who buy our add-on cover that offers preventive healthcare and wellness benefits can file a claim for reimbursement of expenses incurred on enrolling for Yoga sessions," says Sanjay Datta, chief, underwriting and claims, ICICI Lombard General Insurance. The customers have to produce receipts of fees paid to Yoga institutes to claim the benefit. The sum insured under this add-on plan ranges from Rs 2,500 to Rs 10,000 a year, depending on the cover amount chosen.

While the demand has been rising steadily, the success of the International Yoga Day last year has spurred insurers to act. "We had tie-ups with the leading Yoga centres in the past but after seeing the success of International Yoga Day last year we decided to revive it and bring it under the ambit of our value added services portfolio," said Suresh Sugathan, head, health administration team, Bajaj Allianz General Insurance. The insurer is planning to offer discounts and incentives as part of its range of value-added offerings. "We are in talks with some Yoga centres and institutes for a tie-up. Policyholders who sign up for Yoga sessions at these institutes will be eligible for discounts on programme fees," he added.

In the employees' group health insurance space, Yoga is being seen as a cost-containment measure, along with other preventive healthcare programmes. Insurance officials and brokers cite its ability to manage stress, one of the primary causes of heart ailments, diabetes and other lifestyle diseases that affect employees' health, as the core benefit. "Since Yoga helps control stress levels, the claims filed by employees could go down, helping the corporate clients keep their subsequent year's premium under check, as premiums are linked to previous year's claim ratio," said Sanjay Kedia, CEO, Marsh Insurance Brokers.

The cost-benefit trade-off works in insurers' favour, say officials. "For instance, organising five Yoga sessions in a year (for corporate clients) could cost around Rs 50,000, but it could reduce the scope for ailments triggered by stress and hypothetically cut down insurers' claims payout by say Rs 5 lakh," said Apte.

Source: The Economic Times

Millennials more aware of own damage, TP insurance: Survey

Jan 21, 2016

A large number of millenials have availed own damage (OD) and third party (TP) insurance policies for their cars and bikes, a survey said today.

The survey was conducted by ICICI Lombard General Insurance among 1,073 millennials, comprising both car and two-wheeler owners, spread over Mumbai, Delhi, Pune, Bengaluru, Ahmedabad and Kolkata.

Even as 76 per cent of people surveyed were aware of car insurance policy in OD and TP, 41 per cent had availed of it, the survey report, released here, said.

In case of third party motor insurance, 78 per cent of people surveyed were aware of the insurance policy and 23 per cent among them had already availed of the same.

When it comes to OD and TP bike insurance, 80 per cent respondents were aware of bike insurance policy and 38 per cent among them had already availed of the same.

In case of third party bike insurance, 73 per cent of people surveyed were aware of it, while 23 per cent among them had already availed of the policy, the report said.

The study says that around a quarter of millennial vehicle owners have made claims, whereas bike owners display low familiarity with the claims process.

"The survey reveals that the Indian millennial is concerned about maintaining his/her vehicle through regular servicing.

"However, when it comes to adopting the right safety approach in terms of insuring vehicles and being aware of the processes, for example claims, not many seem to be in the know how," ICICI Lombard Chief - Underwriting, Claims and Reinsurance, Sanjay Datta said.

"It is important that multiple stakeholders including insurers work towards increasing awareness," he said.

Millennials from Kolkata emerged as the least inclined to sharing their car with others (at 71 per cent), followed by Pune (54 per cent), while Mumbai showed the highest inclination to car pool, as per the report. Among bike owners, Delhi emerged as the least inclined to

In matters of road safety, almost 40 per cent of car/bike owners claimed they never drove rashly, but when they did, it was only due to a medical emergency.

Some common road safety violations among car owners as per the survey were 'playing loud music' (39 per cent), 'overtaking' (46 per cent) and 'talking on mobile while driving' (39 per cent).

Among bike owners, 'not wearing helmet' (41 per cent), 'lane crossing' (40 per cent), 'jumping signals' (39 per cent) and 'talking on mobile while riding' (39 per cent) were the common causes.

A total of 60 per cent of millennial vehicle owners initiate a claim only when there is a major damage to the vehicle, but more car/bike owners in Kolkata (69 per cent) stated that they would initiate a claim even if there is a minor damage.

Source: Business Standard

Why insurance claims get rejected

Jan 21, 2016

We buy insurance expecting claims to be paid and feel bitter when that does not happen. In an ideal world, insurers would communicate terms in easy-to-follow language; buyers would take the time to read about what they are buying; documents to file a claim would be simple; and helpful customer service executives would ask for bank details to transfer the claim payment. Nothing is further from reality.

I recently watched Steven Spielberg’s Bridge of Spies, a film set during the Cold War, about a first-rate insurance lawyer who used his negotiating skills to strike superb deals for the US with Russia and Cuba. How I wish we had such insurance settlement lawyers represent our own buyers. Claim rejection is high and until there is a better grievance handling system, we would do well to understand why. There is little public information on this subject and I draw from experience with hundreds of claims to list out the main reasons for rejection. Watch out for these in your own insurances.

Health insurance claims are denied because hospitalisation was due to a pre-existing disease not disclosed. The fact that a disease is pre-existing gets found out from the doctor’s case history. When insurers smell a rat, they ask for the daily hospital and surgical notes as well. These, almost always, bring out the truth because the patient’s medical background is captured accurately for all the medical staff to refer to. The diseases that are hidden most often are hypertension (good medication can prevent this from being diagnosed), diabetes (medicine comes to the rescue again), internal cysts and neurological diseases such as epilepsy. When a claim is rejected patients get indignant but, often, the subterfuge was deliberate. Where insurers go overboard is in their messianic zeal to classify everything as pre-existing. There are situations where an innocuous comment by the doctor, for example, in listing out a possible differential diagnosis such as “sugar?” has resulted in rejection. In many cases the root cause of hospitalisation is subjective. For example, was the sharp drop in haemoglobin because of pre-existing piles or newly-discovered ulcers? Once the insurer takes a position on this, generally in its own favour, it is hard to convince it otherwise. Life insurance and overseas travel claims are also rejected primarily due to non-disclosure of pre-existing medical problems.

In motor insurance, claims are often rejected because of negligence. Did you leave the keys in the car? Start the engine when it was flooded? Drove with an expired licence? Were you drinking and driving? Recently, on Quora, a question-and-answer website, someone asked me the implication of leaving a note on his car saying “Steal Me!” and it gets stolen. Although provocation is not excluded, I doubt if that specific claim will be paid. Insurers look for signs of negligence in police or medico-legal reports. Your description of the accident needs to be consistent to the insurer, surveyor, investigator and anyone else who calls. Another reason for rejections is that the vehicle is in commercial use but the insurance is for personal.

Home insurance claims don’t get paid because of specific exclusions relating to normal wear and tear, seepage and short circuits. Fires caused by short circuits, wall damage due to seepage are common rejections. The other issue in home insurance is that they are incorrectly placed. For example a basement, which is a material risk for insurers, is not declared. Or the fact that the house has been unoccupied is not mentioned. Or that there is commercial activity such as paying guests or small offices being run on the premises are not described. A problem that I recently encountered is that the person who bought the insurance does not have an insurable interest in the home. For example, a tenant buys building insurance or the facilities management company in a high-rise buys home insurance rather than the home owners themselves.

Burglary claims are rejected because the buyer didn’t inform the insurer that the house would be unoccupied for an extended period of time. The second most common issue is that insurance covers burglary, as in a forced break-in, but not theft, which is an inside job. Many claims go unreported as it is undisclosed cash or gold that is filched. Severe underinsurance, when the value of goods is understated to keep premiums low, also results in rejection.

Marine insurance covers goods in transit, when you relocate or send material elsewhere. These claims are rejected because standard insurance covers accidents whereas claims often relate to pilferage or damages without an accident. Someone I know was transferring a valuable figurine in a truck. En route the statue disintegrated. The claim was rejected because there was no evidence of an accident. The customer’s vivid make-believe portrayal of how the truck driver had to swerve to avoid a collision struck no chord.

Professionals such as doctors, chartered accountants and architects often buy liability insurances to cover negligence related litigation. The number of claims filed in these liability insurances is still low and it will be interesting to see how often claims get paid in the future. The contracts are stringent and there will be ample opportunity to reject claims. The key here is to describe the scale and nature of your business accurately in the proposal form.

Small businesses buy insurance to cover losses to computers and phones. These claims are denied mainly because the damage was caused by negligence. Laptops are most prone to such denials. Generally, laptops get spoilt due to rough use, which is not claimable.

Most of us buy insurances with a single-minded focus on price. Claim rejections can be prevented if we had a single-minded focus on product features instead, such as mediclaim with low waiting periods, home insurance with an accurate description of structure and contents, marine insurance that covers all-risks rather than just accidents. These cost more but make the insurance meaningful.

My focus here has been on rejected claims. There is equally valuable information embedded in paid claims. For example, in 2015, a leading cause of claimed children’s injuries was the trampoline. In Delhi these “bouncys” are ubiquitous at birthday parties. Now, finally, I have a scientific reason to forbid my children from clambering on to them. More on this and other risks next time.


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