Managing risk in health care and health insurance plays a seminal role in protecting the interest of policyholder, distribution and of course companies itself.
People cannot predict the timing and health care expenses required during treatment and hospitalisation including cost of operation for which they buy health policy preferably cashless health policy which is meant for saviour to them during the time of crisis.
Major risk is borne by of course the company where they undertake the risk of payment to the policyholder in case of any eventualities happens in rare case they repudiate the claim on the ground of pre-existing disease, suppression of facts or any other clauses which is duly mentioned in the policy schedule as exclusion clause.
It is imperative that in the health care or health insurance organisation it should have qualified risk managers to identify, assess, develop, implement and monitor the risk management process within the well-defined spectrum of minimizing the risk exposure keeping in mind safety, patient care and mostly management of finance and image of the company since goodwill of the health insurance, its business and presence in the market depends how fast they settle the claim within the stipulated time frame. Market is fiercely competitive and every health insurance company is vying each other to take away other’s pie and share of market so companies are highly concentrating on claim management which involves legal tangle also since people are becoming more and more knowledgeable and they know how to get the claim through Ombudsman, Consumer Court, IRDAI and other legal accessories which companies are usually averse of getting into. It has direct bearing on market goodwill and certainly sales get affected.
The Role of Risk Managers
- Identify risk in system or potential risk
- Analyse and evaluate risk in systematic manner
- Develop a well defined approach of risk management
- Implement the system in place
- Monitor the system ineffective manner
- Compare, be suggestive and receptive to any new innovative ideas
- Involve the employee, salespeople, even agents, experts to reduce and balancing risk
- Assimilate and integrate different departments to develop a full proof mechanism.
- Integrate the sales management process and the managers involve with the claim management process
- Educate and train the people time to time the whole gamut of system so that every people rather all the department run in tandem and align every one into one objective that is reduction of cost and better profitability not harming the patient’s interest and maintaining goodwill.
Importance of Risk Pooling in Health Insurance
We all know the importance of pooling in insurance, be it life, health or other general insurance category, where people pay premia to create well spread out composite diverse risk profile to cross-subsidize the risk management that is low-risk people to pay high-risk people’s medical expenses. Research reveals that top 5% people engulfs 50% of health expense. Rather claim fund .this is a pure uneven distribution and unhealthy skewed forms of Risk pooling though it is not ideal but pragmatic and practical in nature and that exactly the way all companies manages the risk exposure so that no bad blood creeps into the system to bleed the system in future.
Role of Enterprise Risk Management (ERM)
Enterprise Risk Management (ERM) is considered as most comprehensive proactive, integrated, composed, holistic approach across the organisation irrespective of the departments or operations which takes all the core functions into account in the broader spectrum of corporate governance and correlates all the major activities into a collaborative approach which optimises the risk exposure and unwanted hazards to enhance the productivity and profitability.
A Robust ERM framework enables the insurer to identify measure, analyse, control, report monitor and suggest all material risks in better way to align health companies’ corporate culture and objective with the strategic goals into a single realm.
ERM Entails and Encompasses the Following Areas
# Scope and level of coverage including the chance of options and guarantees
# Acceptance of risk exposure in relation to the established risk strategies
# Ascertain the proper pricing mechanism including the implied nature of risk
# Suitability of channels of distributions
# Robustness of underwriting guidelines and criteria’s taken all possible angle of
risks into account and remedies to counter the existing as well as potential
risk.
# Availability of reinsurance option depends on the gravity of risk involve.
# Projection of solvency and profitability under different scenario
# Adequacy of existing system vis-à-vis the available resource to administer.
# Feasibility of investment strategy
# Tailor-made customised innovative products suits and balance both company and
customer
# Need strong coordination among all the departments and work in tandem.
How Risk Manager Optimises Claim in the Indian Health Insurance Company —Current Scenario
Broadly the role of risk manager and the health insurance companies are operating in India can be construed as harbinger always to mitigate the risk so that claim comes very rare though practically it does not happen, the reputation gets enhanced due to the proper claim management of the company. Company encourages zero claim paying the no claim bonus (NCB), there are end number of exclusions in the policy that ensures management of undue risk within a certain magnitude and unnecessary infiltration of claims.
The actual tenet on which health insurance companies operate is paying genuine claim but repudiate the ingenuine, fraud cases which escalates unwanted burden of the company and inflates the cost which is undue. If company smells any malpractice in the claim process would raise numerous questions and sometimes it turns into rejection of claim or rejection of cashless claim or ends up into a legal battle, consumer court, ombudsman which is not desirable in eye of relationship, now due to the advent of portability in the health insurance 50% of the existing policy is getting ported to different companies not getting proper treatment from the companies. In the meantime, premium has increased manifold more or less in all the health insurance companies over the last five years. People are also becoming aware about the charges, premium rate, claim Ratio of all the companies hence prior to taking any health policy nowadays people are all comparing themselves or through Policy bazaar. Actually, companies are playing with the features, if some companies are giving refill benefits other company paying ‘no co-pay’ option, maybe a other company is paying benefits for maximum relationship eighteen nineteen, other company resorting to no age bar feature or hospitalisation without any room rent limit, some other giving top-up facility hence it is the spectrum of benefits ultimately benefits reaching to the customers at a very competitive rate with faster claim process.
Authored By:
Bilwa Banerjee
Sr. Manager
Reliance Nippon life insurance
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