Today, product choices, social media and behavioral & life – style shifts are changing consumer mindsets. Innovation has become a key differentiator for all businesses and insurance is no exception. Health Insurance in particular offers a great platform for innovation. Innovation is nothing new. From the Industrial Revolution to the Information Age, technology, for instance, has seen numerous innovations woven into the fabric of business and society including the insurance industry. 

As far as insurance is concerned, innovation can be reckoned from the perspective of distribution, product design and efficient servicing, all enabled by technology in one way or the other. The speed of cashless facility for instance has been enabled purely by technology.

Health Insurance has been witnessing a rapid expansion and has significant growth potential for the future as well. While multiple factors drive this growth, innovation in health insurance products would be a significant factor. If one were to have a look at the innovations that have taken place in the recent past in the product area, the following would stand out – enhanced coverage; new types of coverage that include hitherto excluded expenses; coverage of incidental and ancillary expenses connected with hospitalization; pro-active health initiatives of the insured and so on.

When it comes to enhanced coverage, we find that there are increased number of critical illnesses including diseases such as Parkinson’s and Alzheimer’s that are being covered nowadays. The coverage offered towards Personal Accident also has seen an enhancement in terms of double and triple benefits for specified causes of accidents such as Accidental Burns, accident to Scheduled Carriers, etc. Covers are also being offered for waiver of Waiting Period / Survival Period / Reduction in Pre – existing Disease. Further, extended coverage is being offered for Pre and Post Hospitalization expenses.

Coverage is offered to hitherto excluded illnesses / treatments with co-pay or deductible. Expenses of organ donors are being covered. AYUSH treatment expenses are being reimbursed. There is coverage for infertility. Addons for adventure sports and cover against terrorist activities are being offered in certain cases. Cover is also being offered for non – medical expenses. Bariatric surgery which was hitherto excluded is being covered by some. Support items such as artificial limbs are also being covered under some policies. Convalescence / Recovery benefit is yet another benefit that is being covered. Several other new covers are being offered. For instance, Maternity cover which earlier used to be offered only under group policies is being offered under some Individual covers. Automatic cover is offered for new born in some cases. Cover for vaccinations is also offered as per the National Immunization Programme. Daily hospital cash has become quite a popular design where the cover is extended world-wide as well.

Today, there are specific covers for diabetes and hypertension. Outpatient Covers are being introduced in many. Coverage for air ambulance is yet another innovation. Cover for second medical opinion, cover for expenses of accompanying persons etc are also becoming common. There are covers for expenses towards domestic help for daily living in case of disablement due to accident, covers for modifications for the disabled etc. Add-ons including education benefit for children etc are also being introduced. Health covers are also available in ‘package’ and ‘combi’ forms for convenience of customers. One other noticeable innovation has been expanded geographies for coverage – quite a few covers are being offered worldwide now.

Many insurers are also offering Wellness Programme or Value Added Service in their products as an additional/optional benefit. While different insurers have different designs, the primary objective is to increase the engagement and participation of the insured to improve his/her health, so that the incidence and severity of claim can be reduced in the long run. 

Wellness benefits may include credit for undertaking wellness activities such as regular gym activity, online health risk assessment, preventive risk assessment etc. Preventive healthcare is becoming a commonly offered benefit – free health check – up for instance, irrespective of claim experience. Some of the other wellness related benefits include vaccination for children up to 12 years, disease / chronic condition management services etc.

The latest regulatory initiatives (enunciated in IRDAI Health Insurance Regulations, 2016) facilitate innovation. The regulations offer a framework for wellness and preventive aspects keeping in view the interest of policyholders. These have been supplemented with certain guidelines which form part of the Standardization Guidelines in Health Insurance, 2016. The introduction of the concept of pilot product offers scope to insurers to try their hand at innovation even while being transparent to the policyholder about the limited life of the product.

Sectors 2011-12 2012-13 2013-14 2014-15 2015-16
Public Sector General Insurers 8015 (61%) 9580 (62%) 10841 (62%) 12882 (64%) 15591 (64%)
Private Sector General Insurers 3445 (27%) 4205 (27%) 4482 (26%) 4386 (22%) 4911 (20%)
Stand-alone Health Insurers 1609 (12%) 1668 (11%) 2172 (12%) 2828 (14%) 3946 (16%)
Industry Total 13069 15453 17495 20096 24448
Annual Growth Rate (In %) 18.5% 18.2% 13.2% 14.9% 21.7%

Note: Figures in the bracket indicate the market-share in total HI premium.

Classification of Health Insurance Business:

Health insurance business can be classified into Government Sponsored Health Insurance, Group Health Insurance (Other than Government Sponsored) and Individual Health Insurance. Among these three classes of business, individual health insurance business has reported a noticeable increase in its share in total health insurance premium over the past five years, increasing from 37 percent in 2011-12 to 42 percent in 2015-16. On the other hand, the share of Government sponsored health insurance business in total health insurance premium has come down from 17 percent in 2011-12 to 10 percent in 2015-16. During the same period, the share of group health insurance business (other than Government business) remained stable at around 46 percent. As such, it can be observed that, while the share of group business remains stable, the share of government business is declining.

In terms of the actual amount of premium collected from Government business, there is no significant increase over the past five years. However, the amount of premium collected from both individual and group business (other than government) has more than doubled during the same period.

Number of policies issued & Number of persons covered under Health insurance business:

During 2015-16, the general and health insurance companies have issued around 1.18 crore health insurance policies covering 35.90 crore persons (2014-15: 28.8 crore) and registered a growth of 24.65 percent in the number of persons covered over the previous year. In terms of number of persons covered under health insurance, three-fourth of the persons were covered under government sponsored health insurance schemes and the balance one-fourth were covered by group and individual policies issued by general and health insurers.

Class of Business 2011-12 2012-13 2013-14 2014-15 2015-16
Government Sponsored Schemes including RSBY 2225 (17%) 2348 (15%) 2082 (12%) 2474 (12%) 2425 (10%)
Group Business (other than Government Business) 5948 (46%) 7186 (47%) 8058 (46%) 8899 (44%) 11621 (48%)
Individual Business 4896 (37%) 5919 (38%) 7355 (42%) 8772 (44%) 10353 (42%)
Grand Total 13069 15453 17495 20096 24448

CHART I.20 CLASSIFICATION OF HEALTH INSURANCE BUSINESS

(in terms of gross premium)

TABLE I.53

NUMBER OF PERSONS COVERED UNDER HEALTH INSURANCE

(in Lakh)

Class of Business 2011-12 2012-13 2013-14 2014-15 2015-16
Government Sponsored Schemes including RSBY 1612 (76%) 1494 (72%) 1553 (72%) 2143 (74%) 2733 (76%)
Group (other than Govt. Business) 300 (14%) 343 (17%) 337 (15%) 483 (17%) 570 (16%)
Individual Business 206 (10%) 236 (11%) 272 (13%) 254 (9%) 287 (8%)
Grand Total 2118 2073 2162 2880 3590

Trend in Net Incurred Claims Ratio

The trend of increase in Net Incurred claims ratio (Net ICR) continued in 2015-16. The net ICR was 94 percent for 2011-12 and 2012-13, 97 percent in 2013-14,101 percent in 2014-15 and 102% in 2015-16.

Among the various classes of health insurance business, the net ICR is particularly high for Group Business (Other than Government) which was more than 100 percent for each of the preceding five years, consistently increasing over the same period. On the other hand, the net ICR of individual business is showing gradual decline from 85 percent in 2011-12 to 77 percent in 2015-16. With respect to Government business, there is significant increase in net ICR as it went up from 90 percent during 2011-12 to 109 percent in 2015-16.

From the above table, we can observe that the net ICR of public sector general insurers was more than 100 percent for all the past five years. Besides, there is sharp increase in the past two years. On the other hand, during the period under analysis, the net ICR of private sector general insurers and stand-alone health insurers were in the region of 80 percent and 60 percent respectively.

CHART I. 22 NET INCURRED CLAIMS RATIO OF HEALTH INSURANCE BUSINESS

TABLE: I.55

SECTOR WISE NET INCURRED CLAIMS RATIO OF HEALTH INSURERS

Sectors 2011-12 2012-13 2013-14 2014-15 2015-16
Public Sector General Insurers 101% 103% 106% 112% 117%
Private Sector General Insurers 78% 78% 87% 84% 81%
Stand-alone Health Insurers 60% 61% 67% 63% 58%
Industry Average 93% 95% 97% 101% 102%

TABLE I.56

NUMBER OF PERSONS COVERED UNDER PERSONAL ACCIDENT INSURANCE BUSINESS

Sectors 2011-12 2012-13 2013-14 2014-15 2015-16
Public Sector General Insurers 1578 1265 753 764 3609
Private Sector General Insurers 456 698 972 2437 826
Stand-alone Health Insurers 18 21 21 30 38
Total Industry 2052 1984 1746 3231 4473

TABLE I.57

SECTOR -WISE PERSONAL ACCIDENT INSURANCE PREMIUM

(Rs. Crore)

Sectors 2011-12 2012-13 2013-14 2014-15 2015-16
Public Sector General Insurers 682 (49%) 650 (41%) 614 (36%) 708 (33%) 879 (34%)
Private Sector General Insurers 672 (49%) 919 (57%) 1060 (61%) 1351 (63%) 1561 (60%)
Stand-alone Health Insurers 34 (2%) 40 (2%) 55 (3%) 94 (4%) 170 (6%)
Grand Total 1388 1609 1729 2153 2610

Note: Figures in bracket indicate the share of different sectors in the total premium

Personal Accident Business:

During 2015-16, the Insurance industry covered a total of 44.73 crore persons under Personal Accident Insurance. It includes 25.75 crore numbers of persons covered under Pradhan Mantri  Jan-Dhan Yojana (PMJDY) Scheme by New India Assurance Company Ltd.

During the FY 2015-16, the gross premium income from Personal Accident insurance business was Rs 2610 crore, growing at the rate of 21 percent over the previous year. While private sector general insurers have contributed 60 percent of total premium, public sector general insurers contributed 34 percent of premium and the rest 6 percent was contributed by the stand-alone health insurers. The ICR for this line of business was 62.24 percent for FY 2015-16.

Overseas Travel Insurance

During 2015-16, the insurance sector has issued 22.39 lakh overseas travel insurance policies covering 39.29 lakh persons. The Gross Premium income from Overseas Travel Insurance business for FY 2015-16 was Rs. 536 crore. The same was Rs. 465 crore during the previous FY 2014-15. The Incurred Claims Ratio (ICR) for this line of business was 54.1 percent for the FY 2015-16.

In this line of business, private general insurers are major players with a market share of 87 percent in gross premium. Public sector general insurers and stand alone health insurers contributed a share of 6% and 7% respectively in total gross premium. Among the private general insurers, three companies namely Tata AIG (29 percent market share), Bajaj Allianz (21 percent) and ICICI Lombard (15 percent) contributed two-thirds of total gross premium.

OVERSEAS TRAVEL INSURANCE PREMIUM

Sectors 2011-12 2012-13 2013-14 2014-15 2015-16
Public Sector General Insurers 30 (9%) 43 (11%) 46 (10%) 41 (9%) 32 (6%)
Private Sector General Insurers 295 (86%) 325 (84%) 393 (86%) 403 (86%) 467 (87%)
Stand-alone Health Insurers 17 (5%) 19 (5%) 18 (4%) 21 (5%) 37 (7%)
Grand Total 342 387 457 465 536

Domestic Travel Insurance

The gross premium income from Domestic Travel
Insurance business was Rs. 21.80 crore during 2015-16, registering a growth of 35.77 percent over the previous year 2014-15. While none of the standalone health insurers sell domestic travel insurance policies, this line of business has been generated only by six private general insurers and one public sector insurer namely National Insurance company.

Two private insurers namely ICICI Lombard and TATA AIG hold major market share in this line of business at 64 percent and 32 percent respectively. During 2015-16, the industry has issued 21.08 lakh insurance policies covering 22.57 lakh individuals. The ICR for this line of business was 2.14 percent for FY 2015-16.

State-wise distribution of health insurance business

State-wise distribution of health insurance business has shown a much skewed distribution of health insurance business across various States & Union territories of India. While five states namely Maharashtra, Tamil Nadu, Karnataka, Delhi UT and Gujarat contributed 69 percent of the total health insurance premium, the rest 31 States/UTs contributed 31 percent of the total Health insurance premium. 

The State of Maharashtra alone contributed Rs. 7715 crore (32 percent) of total health insurance premium. On the other hand, the health insurance premium from the 8 sister States of North Eastern India (including the state of Sikkim) was only Rs. 195 crore (0.80 percent) for 2015-16.

The State of Maharashtra alone contributed Rs. 7715 crore (32 percent) of total health insurance premium. On the other hand, the health insurance premium from the 8 sister States of North Eastern India (including the state of Sikkim) was only Rs. 195 crore (0.80 percent) for 2015-16.

Sectors 2011-12 2012-13 2013-14 2014-15 2015-16
Public Sector General Insurers 0.03 0.04 0.03 0.01 0.002
Private Sector General Insurers 14.22 15.43 12.32 16.05 21.80
Stand-alone Health Insurers 0.0 0.0 0.0 0.0 0.00
Grand Total 14.25 15.47 12.35 16.06 21.80

TABLE I.60

SHARE OF TOP 5 STATES IN HEALTH INSURANCE PREMIUM FOR 2015-16

State/UT Group Business (Other than RSBY & Govt Sponsored Schemes) Government Business (Only of RSBY & Other Govt. Sponsored Schemes) Individual Business Total HI Business
Amount in Rs. Crore % Share in All-India Premium Amount in Rs. Crore % Share in All-India Premium
Maharashtra 4251 37% 756 31%
Tamil Nadu 1694 15% 555 22%
Karnataka 2064 18% 44 2%
Delhi 915 8% 0 0%
Gujarat 149 1% 35 1%
Rest of India 2548 21% 1084 44%
All India Total 11621 100% 2474 100%

Note : Ranking of states is done on the basis of Total Health Insurance premium

 CHART I.23 SHARE OF STATES IN HEALTH INSURANCE PREMIUM FY 2015-16

Channel wise distribution of Health insurance premium

Channel wise distribution of Health insurance premium

Among the various channels of distribution, individual agents continue to contribute a major share of total health insurance premium at 33 percent. Their share in individual health insurance premiums was still higher at 70 percent.

“Direct sales -other than online” is the second major channel for distribution of health insurance business. This channel contributed 28 percent of the total health insurance premium. The share of this channel was very high at 43 percent in group health insurance premiums.

Another important channel for distribution of health insurance business is Brokers, who contributed 24 percent of the total health insurance premium. Here again, the share of Brokers was high at 39 percent in group health insurance premium.

Bancassurance contributed 7 percent of total health insurance premium and online sale of health insurance policies contributed 2 percent of total health insurance premium.

TABLE I.61

SHARE OF VARIOUS CHANNELS OF DISTRIBUTION – NUMBER OF POLICIES ISSUED AND AMOUNT OF PREMIUM FOR FY 2015-16

Name of the Channel Individual Business Group Business Total (Individual + Group)
No. of Policies Issued Gross Premium No. of Policies Issued
Brokers 4% 4% 7%
Corporate Agent – Banks 13% 11% 44%
Corporate Agent – Other than Banks 3% 5% 11%
Direct Sale – Online 2% 2% 2%
Direct Sale – Other than Online 10% 8% 3%
Individual Agents 69% 70% 33%
Micro-insurance Agents 0.02% 0.00% 0.04%
Web-aggregators 0.21% 0.23% 0.00%
Others 0.01% 0.15% 0.03%
Total of all channels 100% 100% 100%

HEALTH INSURANCE CLAIMS DEVELOPMENT DURING 2015-16

Particulars Cashless Reimbursement Benefit Based Total
Number Amount (Rs. Lakh) Number Amount (Rs. Lakh)
Claims pending at the beginning of the period 2,26,249 61,678 1,34,950 81,439
New claims registered during the period 35,31,858 10,46,203 30,76,073 9,98,477
Claims settled during the period 32,25,958 8,33,360 26,21,230 7,74,190
Claims repudiated during the period 2,30,002 1,13,816 4,13,060 1,77,451
Claims pending at the end of the year 3,02,147 88,995 1,76,733 84,113

TABLE I.63

CLAIMS HANDLED DIRECTLY BY THE INSURERS

Particulars Cashless Reimbursement Benefit Based Total
Number Amount (Rs. Lakh) Number Amount (Rs. Lakh)
Claims pending at the beginning of the period 1,36,067 18,256 67,942 42,290
New claims registered during the period 16,62,818 3,14,607 9,10,272 3,83,734
Claims settled during the period 14,54,499 2,37,721 7,07,372 3,23,698
Claims repudiated during the period 1,63,951 53,381 2,26,321 79,947
Claims pending at the end of the year 1,80,435 25,647 44,521 43,863

TABLE I.64

CLAIMS HANDLED BOTH THROUGH TPAs AND IN-HOUSE

(Numbers in Actual) (Amount in Rs. Lakh)

Particulars Cashless Reimbursement Benefit Based Total
Number Amount (Rs. Lakh) Number Amount (Rs. Lakh)
Claims pending at the beginning of the period 3,62,316 79,934 2,02,892 1,23,729
New claims registered during the period 51,94,676 13,60,811 39,86,345 13,82,211
Claims settled during the period 46,80,457 10,71,080 33,28,602 10,97,888
Claims repudiated during the period 3,93,953 1,67,197 6,39,381 2,57,398
Claims pending at the end of the year 4,82,582 1,14,643 2,21,254 1,27,977

ETAILS OF CLAIMS AGING – SETTLEMENT OF CLAIMS 2015-16

TABLE I.65

CLAIMS HANDLED THROUGH TPAs

(Number in Actual) (Amount in Rs. Lakh)

Time Taken Cashless Reimbursement Benefit Based Total
Number Amount (Rs. Lakh) Number Amount (Rs. Lakh)
< 1 Month 27,05,759 6,62,435 20,21,775 5,19,587
1 to 3 months 4,35,985 1,49,349 4,04,534 1,77,382
3 to 6 months 67,117 16,943 1,39,397 49,196
6 to 12 months 14,567 3,255 46,934 16,445
1 to 2 years 2,096 632 6,734 10,514
2 years 434 746 1,856 1,066
Total 32,25,958 8,33,360 26,21,230 7,74,190

TABLE I.66

CLAIMS HANDLED BY THE INSURERS BY THE INSURERS IN-HOUSE

(Number in Actual) (Amount in Rs. Lakh)

Time Taken Cashless Reimbursement Benefit-Based Total
Number Amount (Rs. Lakh) Number Amount (Rs. Lakh)
< 1 Month 14,14,423 2,30,873 5,96,769 2,62,387
1 to 3 months 29,142 5,415 66,504 31,735
3 to 6 months 699 883 35,206 17,116
6 to 12 months 10,166 347 5,587 6,021
1 to 2 years 36 191 1,867 5,529
2 years 33 11 1,439 911
Total 14,54,499 2,37,721 7,07,372 3,23,698

TABLE I.67

CLAIMS HANDLED THROUGH BOTH TPAs AND IN-HOUSE

(Number in Actual) (Amount in Rs. Lakh)

Time Taken Cashless Reimbursement Benefit-Based Total
Number Amount (Rs. Lakh) Number Amount (Rs. Lakh)
< 1 Month 4,120,182 893,308 2,618,544 781,973
1 to 3 months 465,127 154,765 471,038 209,117
3 to 6 months 67,816 17,826 174,603 66,311
6 to 12 months 24,733 3,602 52,521 22,466
1 to 2 years 2,132 823 8,601 16,043
2 years 467 756 3,295 1,976
Total 4,680,457 1,071,080 3,328,602 1,097,888

CHART I.24 CONTRIBUTION OF VARIOUS CHANNELS IN HEALTH INSURANCE PREMIUM

Claims Development & Aging during 2015-16

The following are the observations from the analysis of tables I.62, I.63 and I.64:-

  • During the FY 2015-16, the general insurance and stand alone health insurance companies have settled 80.35 lakh health insurance claims and paid Rs.  21,759 crore towards claims.
  • In terms of the number of claims settled, 73 percent of the claims were settled through TPAs and the balance were settled through in-house.
  • In terms of mode of settlement of claims, 58 percent of the total claims were settled by cashless mode. The remaining 42 percent of the claims are settled through reimbursement mode.
  • During the year, insurers have settled 82.13 percent of claims registered and have repudiated 10.62 percent of the number of claims registered. The balance 7.25 percent were pending for settlement as at 31st March 2016.

TABLE I.68

LIST OF TPAs AS ON 31ST MARCH 2016

Sl. No. Name of TPA

1 United Healthcare Parekh TPA Pvt. Ltd.

2 Medi Assist India TPA Pvt. Ltd.

3 MD India Healthcare (TPA) Services (Pvt.) Ltd.

4 Paramount Health Services & Insurance TPA Pvt. Ltd.

5 E Meditek (TPA) Services Ltd.

6 Heritage Health TPA Pvt. Ltd.

7 Focus Health Services TPA Pvt. Ltd.

8 Medicare TPA Services (I) Pvt. Ltd.

9 Family Health Plan (TPA) Ltd.

10 Raksha TPA Pvt. Ltd.

11 idal Health TPA Private Limited

12 Anyuta TPA in Healthcare Pvt. Ltd.

13 East West Assist TPA Pvt. Ltd.

14 Med Save Health Care TPA Ltd.

15 Genins India TPA Ltd.

16 Alankit Health Care TPA Limited

17 Health India TPA Services Private Limited

18 Good Health TPA Services Ltd.

19 Vipul Med Corp TPA. Pvt. Ltd.

20 Park Mediclaim TPA Private Ltd.

21 Safeway TPA Services Pvt. Ltd

22 Anmol Medicare TPA Ltd.

23 Dedicated Healthcare Services TPA (India) Pvt. Ltd.

24 Grand Health Care TPA Services Private Limited

25 Rothshield Healthcare (TPA) Services Limited

26 Happy Insurance TPA Pvt. Ltd.

27 Ericson Insurance TPA Pvt. Ltd.

28 Health Insurance TPA of India Ltd.

TABLE I.69

LIST OF TPAs REGISTRATIONS RENEWED DURING 2015-16

Sl. No. Name of TPA

1 Good Health TPA Services Ltd.

2 Genins India TPA Ltd.

3 Dedicated Healthcare Services TPA Pvt. Ltd.

4 Health India TPA Services Private Limited

5 East West Assist TPA Pvt. Ltd.

6 Anyuta TPA in Healthcare Pvt. Ltd.

7 Grand Healthcare Services TPA Pvt. Ltd.

The following is the analysis of tables I.65, I.66 and I.67:-

While Insurers have settled 93 percent of the claims registered within one month TPAs have settled 81 percent within the same period.

Only in 0.18 percent of the cases, claims were settled with a delay of more than one year.

Functioning of TPAs

As at 01st April, 2015 there were 30 TPAs registered by IRDAI while as at 31st March, 2016 there were 28 TPAs. During the year 2015-16, no Certificate of Registration  was granted to any new TPA. The list of TPAs registered with the Authority as at 31st March 2016 is given in  Table No.1.68. The list of TPA registrations renewed by the Authority during 2015-16 are given in Table No. I.69 The Authority rejected the renewal applications of 2 TPAs and the particulars are giving in Table No. I.70 The TPAs expanded the network of the hospitals by adding new hospitals to their networks as specified at Table No. I.71.

TABLE I.70

DETAILS OF TPAs WHOSE RENEWAL

CERTIFICATE OF REGISTRATION WAS

REJECTED DURING FY 2015-16

No. Name of TPA

1 Sri Gokulam Health Services TPA (P) Ltd.

2 Spurthi Meditech TPA Solutions Pvt. Ltd.

 

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This entry is part 3 of 19 in the series May 2017

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