We as Indians spend about 80 per cent of all health expenditure in the country from our personal resources. Hence the importance of adequate planning for health contingencies cannot be overemphasised especially, given the steep escalation in healthcare costs, expensive health technology and pharmaceuticals.

With increasing demand, the health insurance industry has come up with innovative products to enable policyholder to plan comprehensive protection against health eventualities by combining hospitalisation indemnity products with supplementary covers or additional policies to meet specific needs of the policyholder.

There are products available that provide Daily Hospital Cash benefit in the form of fixed daily allowance which could be used to cover the incidental costs associated with hospitalisation (like travel and stay costs of an attendant). These benefits are available either on standalone basis or as optional component of a packaged health insurance policy.

Personal Accident policies, which can again be availed on standalone basis or as part of packaged product with health insurance, are also a useful supplement to the hospitalisation indemnity products. Most insurance companies offer critical illness benefit products that provide a lump sum amount on the diagnosis of specified dreaded diseases like cancer, heart attack, coma or major organ failure.

While these diseases may be quite infrequent and a one-off occurrence, their impact can be both emotionally and financially devastating on the household where such illness occurs. Critical Illness products that are available as standalone or as add-on/riders to life and non-life policies or as a component of a packaged health insurance product could supplement the indemnity product and make the health insurance cover comprehensive.

Most of the above mentioned products are now being offered by insurance companies for a period longer than a year. Many of these products have features requiring the insured to undergo regular health check ups and some of them even provide round the clock suggestive medical advice over phone and through e-mails. Some insurance companies have also created dedicated platforms which provide necessary health information to their policyholders through specifically designed web portals.

In addition to the above, there are many products based on disease management platform. These products are primarily targeted at persons who may be already suffering from chronic diseases like Diabetes. Such products include cover for medicines and laboratory tests on OPD basis, in addition to other covers under the product. This category of products may develop further in the days to come as a useful supplement to the hospitalisation indemnity coverage for a person who is affected with such a chronic ailment.

There are also riders now available that, for a fixed upfront premium, allow free dental or OPD consultations from the provider network of the insurance company and thus cover dental treatment or OPD treatment in a limited way. Although no medicines or investigations are covered in this rider, it is one step towards coverage of OPD costs.

 

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Another option now available is the top-up or high-deductible cover for individuals (and families) who are already covered by their existing insurance companies or employers with a sum insured limit (deductible). Such individuals can buy the top-up covers that provide them coverage beyond the deductible chosen.

All the above products, with the exception of Personal Accident products, only provide coverage within India. When travelling out of India, yet another tier available for protection against health contingencies is Overseas Medical Insurance policies, which are sometimes packaged as Overseas Travel plans by including other components like loss of passport, loss of baggage, etc. In days to come, industry may witness products offering medical coverage targeted to international travellers with coverage extending beyond travel and not limited /restricted to medical emergencies and accidents.

In fact the insurance companies are deliberating on products targeted to international travellers sans travel components. Though most of the health policies offered now are annually renewable, insurance companies are innovating ways to establish long term arrangements with the policyholder by offering long term policies

or by incentivising timely renewals, free health check-ups, loyalty vouchers for OPD covers, etc.

In the days to come, the market may also see innovative health products covering alternative medical treatments like AYUSH, since the government has been emphasising the need for the insurance sector to extend the coverage to indigenous systems of medicine. Also foreseeable in near future is incorporation of savings element in the health indemnity covers for younger policyholders who can avail tax advantages now and can build up health protection for old age.

The innovative spirit of the health insurance industry has blurred the lines between life and non-life covers. Recently, the Authority has received proposals to consider offering pure term life insurance products along with health insurance products under the umbrella of a single product. The Authority has allowed the same as a product class within a broader policy framework of ensuring an informed choice and effective policy service to the policyholders.

 

It is envisaged that the combi-products could enhance the penetration of personal lines of insurance business with a wider product choice to policyholders. While IRDA adopts a business facilitative approach, it is expected that all insurance companies would put in place prudent market conduct practices and operational procedures for protecting the interests of policyholders.

A few insurance companies are also designing niche products with the concept of covering “nonadmissible expenses”, which generally form part of standard exclusion in indemnity hospitalisation policies. There are no limits to insurance companies experimenting with innovative product designs.

However, below poverty line (BPL) families and low income, small town population, are yet to be targeted/tapped significantly by the insurance industry to provide coverage to those who are in dire need of health insurance. In fact, these segments could actually be used to increase insurance penetration in the country. As a measure to reinstate the Authority’s agenda of improving insurance coverage to weaker sections of the society, IRDA has conceptualised a composite standard product to provide a comprehensive package of insurance covers to persons belonging to economically weaker sections in rural and urban areas.

 

The standard product could become the primary instrument for fulfilment of the rural and social obligations of insurance companies under the Insurance Act, 1938. It is envisaged that the product will have defined options and levels to provide choice and flexibility to customers to cater to individual needs.

( Courtesy IRDA Annual Report 2009-10)