The Insurance Regulatory Authority of India (IRDA) has called for more clarity in policy documents in non-life insurance schemes, pointing particularly to health insurance. This accounts for a third of consumer complaints, although in terms of clients its base is small even in the non-life insurance sector.
”If one-third of complaints are from the health side, I will conclude that the nature of communication on health insurance policies and the understanding of the policy by the consumer are areas of concern. Probably, the lack of clarity is reflected in the increasing number of complaints,” IRDA chairman J Harinarayan said in Hyderabad on Thursday.
Speaking at the first meeting of the newly-formed Health Insurance Forum, Harinarayan said IRDA had received 92,898 complaints in the non-life sector to date, of which 38,891 or 37.48 per cent were with regard to health insurance.
Harinarayan said the language used in policy documents is often opaque. ”Probably the lack of clarity in communication is reflected in the form of an increasing number of complaints. Good communication is the responsibility of the insurance company and not of the policy holder. An insurance policy, as a contingent contract, has to be specific and unambiguous,” he said.
Among other things, he pointed to the Contract Act of 1872 under the British Raj, which specifies consensus between parties of a given contract and is categorical that the understanding of the terms needs to be balanced.
”Even in England, they have changed the structure of the language. What we use here has little resemblance to the language used in the UK.
”We need to think what is going wrong with our communication. We should look at the question of language … whether the usage of a local language will help, or the nature of the language, including its construction, needs to be changed,” he said.
He emphasised the onus lay with the sender and not the receiver of the communication on policy schemes. ”If the policy holder is not able to understand something in the policy, it is the fault of the insurer and needs to be addressed. Or it lies with the hospital or with the third-party administrators,” he said.
He said insurance companies should treat the complaints as consumer feedback.
Replying to a query on the health insurance portability introduced by IRDA last year, the regulator said consumers are not really making use of this facility. ”All companies are equally good or bad. There is not much to choose. This is what the customer feels,” he quipped.
Social security needed
Harinarayan also made a pitch for government-supported health schemes. “Why not have a state-backed health insurance coverage for people when practically all the governments in the world have such coverage for their citizens,” he said, in the backdrop of a meeting of experts in the Planning Commission on a new government-backed health insurance scheme.
Stating the cover could be on the lines of the Rashtriya Swasthya Bima Yojana, he said IRDA needed to see the contours of the scheme before it could make a pronouncement on it.
A government-backed health scheme involves risks too, he admitted. “One could be that the pricing may go up,” he said.
According to the IRDA data cited by the chairman, government-sponsored health insurance schemes provide cover to 189 million people, while the private sector covers 22 million people under group schemes. Seven million people are covered under individual policies. Per capita pricing of these policies stands at Rs110 in government schemes, Rs219 in group health insurance schemes and Rs5,500 in individual policies.
Though the per capita price is lower in government schemes, they are more efficient in terms of loss ratio, especially those underwritten by public sector health insurance companies. The health insurance sector in the country is growing at 45 per cent annually, and would soon touch Rs 35,000 crore in business this year, Narayan added.
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