Insurance Regulatory and Development Authority’s (Irda) proposal on standardisation in health insurance would lead to quicker settlement of claims and reduce claim- and policy-related issues, said insurers. According to insurance companies, the time taken to address claims would reduce by at least 30-35 per cent once the norms are finalised.
Through its Exposure Draft on Standardisation in Health Insurance released last week, Irda attempted to bring in uniformity in health coverage practices, including the exclusion of decease conditions and charges across the policies. It proposed a standard nomenclature for critical illnesses for both hospitals and insurers to follow. It also put out a list of standard list of exclusions in hospitalisation indemnity-based policies.
Shreeraj Deshpande, head (health insurance), Future Generali India Insurance, said, “Transparency will be ensured in policies, once the new rules are implemented in health insurance for standardisation. With this, the turnaround time for cash-flows and claims would be quicker and easier.” He added the new norms would lead to non-standardised healthcare sector to become standardised. Further, with definitions of critical illnesses being clearly mentioned, he explained that interpretations of such nomenclature would become easier. Customers often face problems while hospitalisation, since they are not aware of the expenses excluded in such indemnity policies. Insurers said this anomaly would be reduced by this proposed norm.
The regulator, however, has allowed the companies to include the excluded items of payment based on product design or as part of hospital expenses. This means that a company can choose to offer such facilities at an additional premium and must clearly mention this in their policy plan and policy document.
Further, the draft called for standardising billing formats and enabling mapping of hospital information systems to specific data requirements of the insurance companies for faster claim processing and enhanced analysis of data.
Sanjay Datta, head of claims and underwriting at ICICI Lombard General Insurance, said since there would be standard definitions of products and services in health insurance, the number of disputes in the segment related to policies will go down significantly. Insurance players said the ambiguity of the insurance contract, in terms of health insurance, would be removed with the new norms.
The CEO of a non-life insurance company said, “In some policies, insured was asked to pay 20 per cent of the amount and only a partial amount of his balance sum assured would be credited to him or her. With new standardised norms on the anvil, the balance amount would be fully credited to an insured after availing a health facility.”
According to experts, hospitals would also find it easier to recover dues in cases of cashless policies. A senior official of a non-life insurer said that in some cases, since exclusions in hospitalisation is not clear, hospitals are not able to make such deductions in cashless plans availed by individuals. He added that it would now be clear that certain facilities are excluded from the medical expenses and insured would have to pay up for these services, over and above the cashless facility.
The incurred claims ratio for health stood at approximately 94 per cent for non-life insurers for 2011-12, according to Irda data. The total underwritten premium for health insurance stood at Rs 13,092 crore in 2011-12, reporting growth of 14.05 per cent over the premium of Rs 11,480 crore underwritten in 2010-11.