Saturday, April 13, 2013

Do you trust your health insurer?

Many still do not, due to the prevailing high claim rejection rates in the industry. For a greater benefit, it’s high time insurers wake up to the fact and overcome the shortcomings present in their own processes.

When a medical insurance policyholder (the insured) enters into a contract with an insurer, it is primarily with an anticipation that eventually when the moment of truth (settlement of claims) comes, s/he would not be constrained by any problem; at least, not regarding the medical bills. This, in simple terms, explains the very concept of Uberrimae fidei or utmost good faith – the guiding principle of the contracts in insurance. But does this really happen?

Well, consider the following cases. Laxmi Subramanyam (based out of Mumbai) had carcinoma of her left breast; she got treated. She and her husband took a Mediclaim policy with New India Assurance. The policy excluded carcinoma of left breast, because it was pre-existing. Later, she was diagnosed with carcinoma of the right breast, which was not a recurrence according to the doctors but a new case. Despite that, when Subramnyam submitted her claim of Rs.80,000 to the Third Party Administrator (TPA) of New India Assurance Co. Ltd. (Raksha TPA Private Ltd.), they rejected the claim on the grounds that this was not included in the policy. Finally, Subramanyam had to take the help of a consumer forum to contest the claim.

Reshma Trivedi (Ahmedabad) had taken a Mediclaim policy of United India Insurance Company (UIIC). She had undergone a hernia operation for the second time, for which she filed a claim of Rs.27,500. But the insurer rejected the claim reasoning that Reshma had undergone caesarean hysterectomy, due to which she suffered from hernia for the first time, and subsequently for the second time too. The hernia, for which she was operated, apparently was existing while she took the Mediclaim and she had not specified the information under the pre-existing clause. However, hearing Reshma’s petition, the Consumer Disputes Redressal Forum, Ahmedabad (Rural), contended that the occurrence of hernia had no relation with her caesarean hysterectomy. The forum ordered the company to pay her Rs.30,000 towards her policy with 9% compound interest from the date of the complaint till realisation and Rs.5,000 towards cost.

Interestingly, these names are real, and so are the cases mentioned. Such cases are not rare occurrences and happen by the hundreds. There is no doubt that India – where barely 5% of the population have some sort of medical insurance, and where 80% of all health expenditure is from personal sources – offers huge potential to the providers of health insurance and allows them to grow at a mind boggling rate of 21% per annum (from Rs.66.25 billion in 2008-09 to Rs.80 billion 2009-10 in terms of premium collected). But keeping pace with the growth, cases of claim rejection and repudiation are also increasing causing higher grievances. As the IRDA annual report for 2009-10 reveals, while there were 4,525 grievances reported in FY 2009-10 (both life and non-life), the number of cases witnessed in Q1 FY2010-11 was 1,600. And going by settlement of claims, the most important factor for customer satisfaction, well, it’s a despicable sorrow state of affairs. While the best, LIC, is pegged at 96.54%, the same for the best private player, HDFC Standard Life, is only 91.14%. The situation for insurers like Canara HSBC and Future Generali, is as pathetic as possible, with only 38.71% and 38.85% of claims being settled respectively.
 

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
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