Get complete information on the Prospects of Health Insurance in India

The prospects of health insurance are very bright in future as the cost of medical treatment is escalating although it is not gaining at present. The underwriting practices have to be tightened.

The health care utilisation increases with affluence of society. The socio-economic development in India is increasing firstly and need of insurance is realised gradually.

Low premium is not always good because the coverage may be small. The medical inflation index provides the guidance for designing the product and pricing reasonably. In absence of medical inflation index, consumer price index is used for the purpose.

In India, medical claims and losses occur but they are not reported to any organisation. People suffer and get totally secret medicines inherent getting any receipts of purchases. Such types of activities are not useful for managing health insurance. Insurers have to anticipate such claims and manage in their total claims.

It is observed that unhealthy lives would remain with insurer causes like in claims losses. They do not go to other insurers because they have to pay higher premium for new health policy.

The insurer has to classify the healthy and unhealthy lives for proper insurance management and portfolio management. Information and data should be updated for future planning and product designing.

Health insurance is personal insurance that provides coverage for the cost of hospital and medical expenses arising from illness or injury. Benefits are paid as a fixed lump sum or as a proportion of actual treatment costs. It includes individually hospital cash, critical illness and disability benefits.

Indemnity mediclaim has covered only inpatient facility and professional claims along with some of the pre-admission and post admission expenses. Covering all outpatient expenses in addition to inpatient expenses would be a huge broadening of the scope of policy benefits and would represent a major shift in the philosophy of health insurance in India.

Those companies in India that have experimented with such policy broadening have experienced huge increased in claim volumes and the associated administrative expenses.

To this point, the focus has been on offering policies which protect the policyholder from costly care that might threaten a person’s financial security. This has been done with an indemnity policy that has a sum insured cop on the insurer’s ability.

Hospital Cash :

In the case of hospital cash benefits, the actuary will need to tailor the pricing assumptions to the target populations being insured. Variables such as age, gender, geographic location, occupation and income level are known to correlate with hospital utilization and hence will be important considerations in pricing this benefit.

The cash benefit usually makes a payment to a person that is hospitalized at some scheduled amount, typically on a per day basis and usually is limited to 60-90 days of cover per hospitalization. Certain types of hospitalization stays are excluded for specific surgeries and hospitalizations that commerce within 30 days of policy issuance.

As with all medical insurance policies, careful benefit design is crucial. Moral hazard is a concern.

For example, an insurer will not want to offer hospital cash benefit that covered more than the expected patient out-of-pocket expenses during a hospital stay; otherwise the patient would stay to gain financially by being in the hospital! The key here is not to create in incentive to such a degree that it encourages hospital admissions.

Critical Illness :

Critical illness benefits are most commonly sold by life insurers as riders to life policies. They are usually structured in a way which pays a defined percentage of the policy amount in the event a policyholder is diagnosed with one of several designated critical illnesses. Some insurers are offering these policies on a standalone basis.

A variation on the critical illness rider offers coverage for the treatment of the disease conditions as opposed to a cash payout if the diagnosis is present. Payment is made under the terms of these policies only to indemnify the insured for the cost of treatments.

As with the Critical Illness benefit, adverse selection is always of great concern under these policies, and so offering these benefits requires skillful and expert underwriting.

Just as in the Critical Illness benefit, it is important to have some sense of the prevalence and incidence of the covered diseases. The Indian incidence rates, for these diseases, are not well known, particularly in an insured population.

Public health officials have made estimates for the overall population of the prevalence of critical illness. Incidence of disease and the related treatment are of utmost interest to insurers.

The mere existence of a disease in a population does not necessarily translate into incidence of treatment at any given point in time, given some people are asymptomatic and go from day to day without using the healthcare system.

Disability Benefits :

Health Insurance products in India narrowly cover hospitalization benefits with a sum-assured limit.

India’s private health insurance sector could cover a number of secondary and tertiary preventive measures such as screening for cancer or diabetes, and preventive health checkups as well as disease management programs for specific conditions, which would be beneficial for insured and insurers alike.