Health Insurance Regulation in India
ABSTRACT
Insurance in India started in the year 1818, with the starting of Oriental Life Insurance Company by Anita Bhavsar in Kolkata to cater to the needs of European community. In the pre-independence times Indians had to face discrimination and were charged with higher premiums. In 1870, first life insurer was stated up in Indian by name Bombay Mutual life Assurance Society.
At the dawn of the twentieth century, many insurance companies were founded. The Life Insurance Companies Act came into force in the year 1912, and also the Provident Fund Act in the same year to regulate the insurance business. The oldest existing insurance company in India is the National Insurance Company , was founded in 1906 and it is still doing business. In 1956, Life Insurance was nationalized and General Insurance followed suit and was nationalized in 1973.
In the current article, we tried to limit our focus to one of the fastest growing segment of Non-life insurance sector i.e. Health Insurance. We try to point out how health insurance has evolved in the unregulated market and how it picked up momentum after the coming up of IRDA. Some lights have been thrown on how IRDA has improved the awareness level and benefited the customers through its various guidelines. The market development after the regulation phase and the future problems that need to be tackled are also discussed.
KEYWORDS –
Insurance, IRDA, Health Insurance, Market Regulations, Guidelines, Customer, Grievances,
PRE REGULATION MARKET
The Indian Parliament passed The General Insurance Business (Nationalization) Act in the year 1972 and consequently, General Insurance business was nationalized with effect from 1 January 1973. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. In the year 1972 , the General Insurance Corporation of India was incorporated and it commenced business on 1 January 1973.
IMPORTAMT DATE MARKS IN IN HEALTH INSURANCE SECTOR
Mediclaim – The scheme was launched in the year 1986. At the time of introduction of this scheme the minimum and maximum age limits were 5 and 70 years respectively. Under this scheme a person between 3 months to 80 years of age can purchase Mediclaim Policy. The total insurance sum can be up to Rs. 5 lakhs against accidental and sickness hospitalizations during the policy period. Launched in 1986, the health insurance industry has grown significantly mainly due to liberalization of economy and general awareness. There are standalone health insurers along with government sponsored health insurance providers.
In 2001-02, health insurance premium from all companies amounted to only Rs 675 crore.The market share before regulation of the market was totally shared by four PSU’s and because of lack of competition and lack of variety of products, the health insurance with basic features were only offered to the people. The era was marked with:
REFERENCES –
1912 – Health Insurance introduced when the first insurance act was passed. 1947 – The Bhore Committee Report make recommendations for the improvement of health care services India. 1948 – The central government introduced the employees State Insurance Scheme (ESIS) for blue collar workers employed in the private sector. 1954 – The Central Government Health Scheme (CGHS) for central government employees and for their families. 1986 – Mediclaim was Introduced. Started by government insurance companies in 1986. 1999- Marked the beginning of a new era for health insurance in the Indian context. The setting up of IRDA led to opening of the insurance sector for private and foreign participation. |
- Poor product design
- Poor penetration
- Lack of Technological feature
- Inefficiency
- The duties, powers and functions of IRDA are laid down in section 14 of IRDA Act, 1999 as: To regulate, promote and ensure orderly growth of the insurance business and re-insurance business.
- IRDA issue to the applicants a certificate of registration and also provides services like renewal, modification, withdrawal, suspension or cancellation of such registration.
- It provides protection of the interests of the policy holders in matters concerning assigning of policy, , settlement of insurance claim, nomination by policy holders, insurable interest ,surrender value of policy and other terms and conditions of contracts of insurance.
- It specifies requisite qualifications, practical training for intermediary or insurance intermediaries and agents, and also specifies the code of conduct for surveyors and loss assessors.
- IRDA controls and regulates the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938)
- It regulates the investment of funds by insurance companies, maintenance of margin of solvency, adjudication of disputes between insurers and intermediaries or insurance intermediaries
- It specifies the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organizations. It also specifies the percentage of life insurance business and general insurance business that is to be undertaken by the insurer in the rural or social sector.
- IRDA Third Party Administrators- Health Services Regulations, 2002
- IRDA Protection of policyholders interests, 2002
- Maintaining solvency margins
- Clear disclosure of benefits, terms and conditions
- IRDA Advertisements and Disclosures Regulations, 2002
- Free-Look Period –
- This applies only to Life insurance policies and
- To Health insurance policy that are for a term of at least 3 years
- One can exercise this option within 15 days of receiving the policy document with a communication to the company in writing
- The premium refund will be adjusted for proportionate risk premium for the period on cover expenses incurred by the insurer on medical examination and stamp duty charges.
- Renewability of Health Insurance –
- Fraud or dishonesty
- Moral hazard (Taking an insurance policy to make a false claim)
- Misrepresentation
- Portability of Health Insurance –
- Insured gets the credit relating to waiting period for pre-existing conditions from the new insurer that he has gained with the old insurer.
- The new insurer has to insure him at least up to the sum insured under the old policy
- The two insurers should complete the porting procedures as per the timelines prescribed in the IRDA (Protection of Policyholders’ Interests) Regulations and guidelines.
- Porting is allowed only at the juncture of renewal. That is, the new insurance period will be with the new insurance company.
- Leaving the waiting period credit, the new insurance company is free to decide about other terms of the new policy including the premium.
- At least 45 days before the renewal is due one has to
- Write to his old insurance company requesting a shift to another insurer.
- Specify company to which he wants to shift the policy to.
- Renew the policy without a break ( 30 day grace period, if porting is under process)
- File and Use Procedure for health insurance products
- Dependent Child –
- Hospitals –
- Medical Practitioner –
- Maternity Expense – Relaxations have been made for maternity expenses or treatment. Maternity expenses now mean any medical treatment or expense traceable to childbirth, including caesarean sections during hospitalization and lawful abortions during the policy period.
- Entry age limits – Based on the latest regulations in health insurance sector, it has become mandatory that the maximum entry age for a standard health insurance policy offered by General (or non-life) Insurance Companies across India should be at least 65 years.
- New born baby –
- Deductibles –
- Health Plus Life Combi Products –
- Customer Grievance Mechanism – With the initiative of IRDA, insurers have placed customer
- Health Insurance for deprived class – UHIS and RSBY schemes came into effect after IRDA started regulating the market. IRDA allowed the entry of private players in the health sector but it was necessary to cover economically challenged people also. So the Government took the initiative to cover below poverty line people with these schemes.
- UHIS – The Universal Health Insurance Scheme (UHIS) was launched by the government in the year 2003. Standard Mediclaim product with an annual cover of Rs 30000 for a family. Scheme marketed by the public sector insurance companies and was targeted at the BPL Population. Now superseded by RSBY
- RSBY – is a project under the Ministry of Labour and Employment. Started in April, 2008 and has been implemented in 25 states. Total sum insured of Rs 30000 per BPL family on a family floater basis. Every ‘ below poverty line’ family holding a yellow ration card pays Rs 30 registration fee to get a biometric-enabled smart card containing their fingerprints and photographs. It covers preexisting diseases from Day 1. It gives coverage of health services related to OPD and hospitalization. It provides cashless coverage in public as well as private hospitals. There is a provision of Smart Card and also the provision for transport allowance (actual with limit of Rs 100 per visit ) but subject to an annual ceiling of Rs 1000.
- Micro insurance –
- Rampant malpractices:
- Frauds –
- Policyholder Fraud and /or Claims Fraud – Fraud against the insurer in the purchase and/or execution of an insurance product, including fraud at the time of making a claim.
- Intermediary Fraud – Fraud perpetuated by an intermediary against the insurer and/or policyholders.
- Internal Fraud – Fraud / miss-appropriation against the insurer by a staff member.
- PENETRATION & AWARENESS – IRDA has a challenge in increasing the awareness of insurance in the country. Although Penetration of Insurance in India is significant when compared with South Asian Countries but in comparison to Singapore, South Korea and Japan it is very low. However, in the life insurance sector, India’s penetration at 4.6 per cent is above world average of 4.0 per cent and is comparable with some developed countries. In the non-life insurance sector, India has a penetration of 0.6 per cent, while that of the world, it is 3.0 per cent. (Source: Swiss Re as given in IRDA,2009–10). There are many factors that are responsible for the low levels of insurance penetration in the country. These include untapped rural markets, low consumer preference, and constrained distribution channels. Health insurance penetration is also lower. In India about 15% of the population is covered by some form of insurance but needless to say that low income group because of income constraint and lack of awareness are mostly out of the health insurance bracket.
- SOCIAL ASPECT
Author
First – Ashish Kumar, Research Scholar, BIM Trichy
Second – Dr.V.P.Sriraman, Faculty BIM ( Trichy )
REFERENCES –
- Role of insurance regulatory and development authority of India in Indian Insurance sector – by Dr HH Bharadi
- Prelaunch survey of Insurance awareness campaign sponsored by IRDA (2009-10)
- http://businesstoday.intoday.in/story/irda-amends-health-insurance-standardisation-norms/1/197200.html
- Health Insurance for Senior Citizens in India – General
- Guidelineshttp://www.medindia.net/patients/insurance/health-insurance-for-senior-citizens-irda-guidelines.html
- http://www.business-standard.com/article/finance/irda-revises-health-insurance-standardisation-rules-113070400031_1.html
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