Health insurance, insures a person from the expenses caused by any change in their health. It is a contract in which insurance companies pay medical expenses to a hospital on a sick person. It also reimburses expenses related to hospitalization, treatment, surgery, organ transplant etc.
Health insurance is a way of distributing the
financial risk associated with the variation of an individual's health care
expenses by aggregating the costs over time.
History of Insurance Industry - Growth and Development
The Indian Life Insurance Companies Act, 1912 was the
first act to regulate insurance companies in India. Later in 1938, a new
Insurance Act was passed to bring both life and non-life insurance companies
under one act.
The Act has been amended from time to time, but it
remains at the core of insurance laws for the country.
The life insurance industry was nationalized in 1956,
in which a life insurance corporation (LIC) was formed by merging private
insurance companies.
Similarly, the private non-life insurance industry was
nationalized in 1973 as a general insurance corporation.
However, the insurance sector was opened to new
players in August 2000, private insurance companies are allowed in the business
of insurance with a maximum of 26% foreign holding.
Despite the impressive growth of health insurance, it
still remains a small percentage of the non-life insurer's overall insurance
business,
Health Insurance Products in India
Due to the increasing awareness of this protective
role of health insurance and the renewed focus on marketing of health insurance
products.
The health insurance portfolio is now the fastest
growing market for the non-life insurance industry. Health insurance is
currently offered by non-life insurance companies, specialized health insurance.
1. Hospitalization Compensation Products
Mediclaim was the first standardized health insurance
product launched in the Indian market to provide coverage for hospitalization
expenses up to a pre-determined annual limit of compensation. These products
protect individuals from the costs of hospitalization.
2. Personal Accident
Personal accident policies are offered both on a
standalone basis and as a packaged product along with other health insurance
covers. This policy protects the insured from any type of disability due to
accidental death and accident.
It provides facilities such as lump sum benefit
payment and weekly compensation for temporary disability in the event of death
or permanent disability.
3. Critical illness
Critical illness products have been introduced to
cover high expenses related to insurance and their treatment against such
diseases such as cancer, heart attack, coma or major organ failure.
Critical Illness Benefit products offer the insured a
lump sum upon diagnosis of a specific critical illness or undergoing certain
procedures.
4. Senior Citizen Products
Some specific products that cater to the needs of
senior citizens have been made available by public and private insurance
companies.
These products allow entry to older age (even up to 80
years in some products) and continuously renew until the age of 80 or 90.
These products include cost-sharing facilities such as
co-payment and sub-limits to track claims as medical claims are comparatively
much more likely at this age.
5. Micro Insurance Products
Micro-insurance products are specifically designed to
protect low-income people from rural and informal sectors. Low-income people
are a large part of our population and usually do not have any health cover.
Therefore, this low-value product, with an affordable
premium and benefit package, has been introduced to help these people overcome
and overcome common risks.
6. International Coverage Products
Overseas medical insurance plans are a short-term
option available for protection from health contingencies that occur during
international travel. The cost of unexpected medical treatment during a foreign
trip can be very high.
Overseas medical insurance covers such unforeseen
health contingencies and protects the insured from the high medical costs while
traveling outside India.
7. Short term health insurance product
As per recent development during the Corona pandemic The
Regulatory Development Authority of India (IRDAI) announced guidelines for two
standard COVID-19 health insurance policies offering 'Corona Kavach’ and
'Cornoa Rakshak’ to insurance companies with similar characteristics, terms and
conditions.
It is mandatory for general and health insurers to
supply the reimbursement-based standard COVID-19 product, while offering a
benefit-based product is optional for all insurers.
Regulatory and reforms in insurance
The 'Malhotra Committee' (1994) submitted a report on
the reforms undertaken to establish the insurance regulator. Later, the
Statutory Authority, Insurance Regulatory and Development Authority (IRDA) was
established in 2000.
As health insurance in India is in its early stage,
the role of IRDA in preventing adverse consequences of health insurance for
cost of care, equity, consumer satisfaction, fraud and ethical standards is
also very important.
Role of Insurance Regulatory and Development Authority (IRDA)
- Policyholder's safety regulation and grievance redressal.
- Access to health insurance for senior citizens and rural / informal sector workers.
- Role of IRDA in standardization initiative
- Licensing and registration, Consumer Protection
- Product and Price and Financial Regulation
- Enforcement of regulations and offsite onsite monitoring
- Product Terms and Conditions and prevention of miss-selling
How Health Insurance Works
An insurance policy promises to pay a 'claim' if an
insured event occurs according to the terms of the policy.
A 'claim' also refers to the documents and process by
which the insured seeks an acceptable sum of money from the insurance company.
An insurance company either pays directly to the
hospital (cashless facility) and reimburses the illness-related expenses to the
policyholder or distributes a certain benefit when the disease occurs on the
basis of the product.
What is cashless claim facility
Cashless hospitalization is a service provided by an
insurer in which the insured is not required to settle the expenses of
hospitalization while discharged from the hospital to the extent covered by the
policy.
Settlement is done directly by the insurance company.
However, prior permission is necessary before the patient is admitted to the
hospital.
Type of Cashless Claims
1. Planned- Where the insured is aware of the hospitalization
two- three days in advance.
2. Emergency-Where the insured or any depended covered
member meet with sudden incident or accident or suffering with medical
emergency illness which required immediate hospitalization.
Cashless facility is provided only in network
hospitals.
What is Reimbursement claim facility
In this process the insured must pay all his medical
bills and other costs involved in hospitalization and treatment to the extent
covered by the policy at the time of discharge from the hospital.
To avail the reimbursement claim, you will have to
provide the necessary documents including the original bill to the insurance
provider.
An insurance company settles a claim through its own
claims processing department ('in-house') or forms a relationship with a Third-Party Administrator (TPA) who pledges to do so on behalf of the insurance
company.
Network & Non-networked hospitals
A hospital, which has an agreement with a TPA /
insurer to provide cashless treatment is called a 'network hospital'.
Non-networked hospitals are those that have no
agreement with the TPA and any policyholder seeking treatment in these
hospitals will have to pay for the treatment and subsequently claim according
to the reimbursement procedure.
Grievance Redressal and Protection of Policyholders
When a policyholder has to make a complaint, he should
first approach the grievance or consumer grievance cell of the insurer. In case
of no response or no satisfactory response, the policyholder may write to the
Grievance Redressal Cell of IRDA,
As per the regulation, each insurer should have a
grievance redressal system to address the grievances of the policyholders.
IRDA has a Grievance Redressal Cell, which plays a
facilitative role by raising complaints against the insurers along with the
companies concerned for speedy resolution.
Apart from this, a person can approach the Insurance
Ombudsman for complaints related to personal insurance claims up to Rs 20 lakh.
The policyholder can also approach other channels such as Consumer Courts and
Civil Courts.
Future of Health Insurance industries
In order to encourage foreign insurance companies to
enter the Indian market, the government recently proposed to limit FDI in
insurance to 74%.
The insurance industry is the fastest growing segment
in the non-life insurance sector in India. The market saw a strong double-digit
growth of 24% in FY17, with a market share of 24% across the entire non-life
insurance sector.
It has been the fastest growing market share,
registering a CAGR of 23% for the last 10 years. The credit for this
unprecedented growth can be attributed to the liberalization of the economy and
the increasing general awareness among the public on healthcare.
The Rastriya Swasthya Suraksha Yojana under Ayushman
Bharat was launched in September 2018, with a provision to provide coverage of
up to INR 500,000 (7,723) to over 100 million vulnerable families, thereby
increasing the penetration of insurance in India.
The Indian insurance industry is predicted to reach a
market size of Rs 19,56,920 crore ($ 280 billion) by FY 2020.
Conclusion
The increasing prosperity of Indian families is
increasing the demand for high quality medical aid as the amount of government
spending on health care and health insurance is so limited.
So, the natural focus of the private sector is to
develop innovative solutions that encourage more Indians to get insurance. Insurance
is an emerging important financial tool to meet the healthcare needs of the
people of India.