News Blog

Health cover estimate: States may have to pay Rs 4,330 crore a year

Fri, Feb 9, 2018General Insurance

Preliminary calculations have pegged the premium at Rs 1,082 per family per year for each health cover of Rs 5 lakh. Of this, Rs 433 has been earmarked as the state share of the premium with the balance to be paid by the Centre. State governments may have to shell out approximately Rs 4,330 crore annually for the rollout of the ambitious National Health Protection Scheme (NHPS) for 10 crore households announced in the Budget, according to preliminary calculations undertaken by the government. These calculations, arrived at after informal discussions with actuaries, have pegged the premium at Rs 1,082 per family per year for each health cover of Rs 5 lakh. Of this, Rs 433 has been earmarked as the state share of the premium with the balance to be paid by the Centre. In this context, sources said, these estimates are based on the assumption that “entire 10 crore families will be covered in one go”. Going by this state share, the financial burden on states for 10 crore families will be to the tune of Rs 4,330 crore....

The Indian Express

Budget 2018 analysis: Insurance industry sees growth opportunities in proposals

Wed, Feb 7, 2018General Insurance

Budget 2018: The insurance cover of Rs 5 lakh could provide citizens a taste of how insurance products can protect their earnings and could lead them to reduce risks to safeguard other assets such as home and vehicle. It was heartening to see the finance minister announce a slew of measures in the Union Budget in the direction of making India a healthier and secure nation. The measures undertaken and proposed to be undertaken by the government sounded like music to the ears of millions of beneficiary citizens and was a delight for the health insurance industry that has been seeing gross under-penetration. National Health Protection Scheme: The flagship scheme of National Health Protection Scheme that will bring 10 crore families under the umbrella of a Rs 5-lakh health cover is slated to be the biggest initiative by any government. The insurance cover of Rs 5 lakh could provide citizens a taste of how insurance products can protect their earnings and could lead them to reduce risks to safeguard other assets such as home and vehicle. However, the success of the scheme would depend on efficient management of logistics, including hassle-free claims administration. A commitment of funds from the government in the future would ensure continuity of cover for billions of individuals in the country. The deduction under Section 80D, which includes amount paid towards health insurance premium for covering senior citizens has been increased from Rs 30,000 to Rs 50,000 which would help increase penetration of health insurance.

Financial Express

United India raises Rs 900 crore via NCDs

Wed, Feb 7, 2018General Insurance

MUMBAI: Chennai-based United India Insurance has raised Rs 900 crore through subordinated debt to boost solvency capital, which is below the mandated regulatory capital requirement. The insurer has raised funds at 8.25 per cent for a 10-year period with a call option after five years, which will help the insurance company shore up solvency ratio to 1.40, against the necessary 1.5. "We have raised alternate capital in the form of non-convertible debenture at 8.25 per cent, with a call option after 5 years with a tenor of 10 years," said MN Sarma, the managing director of United India Insurance. "This will help in improving the solvency. This, along with quota share treaty, underwriting discipline, we are likely to touch 1.7 times." Last year, National Insurance Company had raised debt to improve its solvency margin to 1.9 from 1.26. Union India Insurance has reported a loss of Rs 914 crore in 2016-17 due to reverses in group health and third party motor policies. In this year's Budget, the government has announced the merger of three state-owned insurers — United India Insurance, National Insurance and Oriental Insurance — and subsequently listing of the merged insurer.

The Economic Times

For the insurance sector, this is a landmark Budget

Sat, Feb 3, 2018General Insurance

The budget presentation by Finance Minister Arun Jaitley was widely in line with the expectations that he would tackle rural distress head on. On that count, the Budget is indeed the muchneeded fillip for the flagging rural economy, targeting doubling of farmer income by 2022. Initiatives such as increasing the minimum support price of all crops to at least 1.5 times the production cost, setting up a corpus of Rs 2,000 crore for developing agricultural markets, raising institutional credit for agriculture to Rs 11 trillion for 2018-19 and connecting 470 APMCs to the eNAM network will increase the income of our vast agricultural base and stir growth in 'Bharat'. Additionally, budgetary allocations towards rural infrastructure, including the building of roads, houses and toilets, apart from further electrification of villages, are steps taken towards bridging the gap between urban and rural India.

The Economic Times

SC Elucidates Principles Of ‘Under Insurance’ And “Averaging Out”

Sun, Jan 14, 2018General Insurance

The insurance company must at the time of accepting the premium advice the policy holder properly, the court said.

Religare to exit Religare Health Insurance for Rs 1,040 crore

Sun, Apr 9, 2017General Insurance

Religare Enterprises will sell its entire 80 per cent stake in Religare Health Insurance to a consortium of investors led by private equity fund True North Managers for an estimated Rs 1,040 crore. "The company has entered into definitive agreements with a consortium of investors led by True North Managers, an India based private equity fund, to divest its entire stake in Religare Health Insurance Company Ltd (RHI)," Religare Enterprises Ltd (REL) said in a BSE filing today. "This transaction values Religare Health Insurance at Rs 1,300 crore and Religare Enterprises currently has 80 per cent shareholding on a fully diluted basis in the company," it said further. Union Bank of India and Corporation Bank also hold 5 per cent stake each in RHI. The consortium of buyers includes domestic investors such as Gaurav Dalmia and Faering Capital. Religare Enterprises said the transaction marks the single largest nvestment in a standalone health iinsurance company in India.

The Economic Times

Insurers repudiated an unacceptable Rs 701 cr in life insurance claims; Parliament must step in

Wed, Oct 12, 2016Life Insurance

The Insurance Regulatory and Development Authority’s (IRDA) Annual Report for 2014-15, states that R701.69 crore life insurance claims were repudiated by insurers. The report further highlights that “during the year, insurers have repudiated 8% of the number of claims handled … claims repudiation was high for benefit-based policies at 22%.” This is a disturbing trend as 22% repudiation of claims is unacceptably high for such simple products. In a developing economy like India, where one has flagship schemes of the Modi government focussing on crop, life and health insurance for the downtrodden on the one hand and “Make in India” on the other, it is vital to have an insurance regulator absolutely committed to policy holders’ rights. Had there been a parliamentary oversight in insurance matters, our MPs would have found the amount of claims repudiated unacceptably high in products like life insurance. Even, IRDA in its report does not mention the steps being taken to reduce the repudiation ratio. This is startling, since they are tasked primarily to protect the interest of policyholders. Individual health insurance: General insurers aggressively sell travel health policies. If the intention is to cover emergency medical expenses incurred by Indian citizens travelling abroad on a holiday or business, the IRDA has defeated this objective by allowing insurers to exclude pre-existing diseases. Imagine the plight of an Indian resident travelling abroad on a holiday, requiring emergency hospitalisation because of a heart attack, being denied the claim because he had a history of heart disease. The medical costs abroad would bankrupt most middle class citizens. Ideally, a travel health policy should reimburse expenses incurred for emergency medical treatment to stabilise the condition of the policy holder so that he is fit to return home for further treatment. Instead of underwriting risks, insurers use travel agents and travel portals to push sales to healthy people, but deny coverage (even after selling the policy) as they tend to exclude anyone who has a history of heart ailment or diabetes or any other pre-existing condition. This again needs Parliament’s immediate attention. Corporate commercial lines of insurance: Coming now to the commercial general insurance (covering fire, marine, engineering and miscellaneous classes of business), IRDA does not report the statistics of claims repudiated in fire, engineering, marine or miscellaneous insurances with a detailed analysis of claims. The raison d’être of the insurance industry is to make good insured economic losses. It then becomes imperative that IRDA reports facts relating to claims reported, paid, outstanding and repudiated in greater detail. Repudiation of claims is a serious issue. While individuals can approach the ombudsman’s office for Redressal of grievances, the IRDA has failed to ensure a viable mechanism for commercial entities. There is no mechanism for speedy resolution of disputes, such as Alternate Dispute Redressal. Mechanisms, such as mediation and arbitration, should form part of the policy conditions. With courts clogged with pending cases, ADR is the way forward. We need a regulator who is more forward looking than is presently the case. IRDA, in its annual report, categorically states that they do not interfere in claims disputes. While that is so, the IRDA should recognise that they must institutionalise a mechanism for speedy dispute resolution. The system should be such that a policy holder should not be required to borrow money from a bank to restart his business. The insurers must meet their liability as quickly and definitely within a fixed time. IRDA had a ‘File & Use’ system, now modified to ‘Use and File’, whereby each insurance company has to file the full policy wordings to the regulator for approval. However, does IRDA have a mechanism to see whether products approved by them for marketing, respond to genuine claims of the insured? The answer is in the negative—again a pointer towards a very passive regulator. Whereas contract certainty is an article of faith for insurance regulators the world over, in India the regulators think their role is over once the guidelines are issued. Some of the regulations are baffling to say the least. For instance, those concerning the surveyors. Contrary to international best practice, the IRDA requires surveyors in marine insurance claims (an important class of general insurance) to not only comment on the proximate cause of the loss and the extent of the claim, but also interpret policy terms and conditions. This has virtually killed the remarkable expertise the four PSU insurance companies had in the past. With the exception of a diligent few, most officers now conveniently pay or reject claims on the basis of the surveyors’ comments thereby minimising for themselves any adverse audit reports. Honest officers who take decisions suffer. Those who do not take any decisions over-ruling surveyors avoid an audit or vigilance enquiries against themselves, thereby enhancing their chances of promotion! The time taken to enforce contracts in court, unfortunately, creates a situation where very few policyholders resort to litigation. Therefore, survey reports do not face the critical scrutiny that they deserve from the courts. Interestingly, IRDA has not taken action, even where the courts pointedly commented on surveyors’ failure to maintain impartiality. IRDA does not keep track of decisions of the High Courts, Supreme Court and the National Commission. Unless IRDA institutionalises such a mechanism, they will fail to take corrective measures, including forcing insurers to change policy wordings to keep pace with judicial pronouncements. This oversight must also include adverse observations of courts on the conduct of surveyors. There is a need for the IRDA annual reports to focus on data collected from insurers and surveyors to objectively gauge the efficacy of regulations, particularly in the area of policyholder protection. This will ensure a greater focus on policyholder protection. Till then there is a very strong case for greater parliamentary oversight of IRDA.

The Financial Express

Bariatric surgery to save life isn’t cosmetic, insurer must pay: Forum

Wed, Sep 14, 2016General Insurance

Observing that bariatric surgery performed to save a life doesn't come under the category of cosmetic surgeries, a consumer forum directed ICICI Lombard General Insurance Company to pay a customer Rs 5 lakh spent on surgery for his wife who was diagnosed as morbidly obese. "The evidence produced by the complainant (woman's husband) is sufficient to show that it was life threatening. Therefore, surgery was conducted to save her life. Surgery to save life is not excluded in the policy," the forum said.

The Times of India

Soon, get baggage, mobile insurance on trains

Tue, Sep 13, 2016General Insurance

With 40 lakh people opting for passenger insurance since its launch early this month, Railways is now planning to roll out baggage insurance which also includes mobile and laptop in the insurance cover. There are also plans to expand the existing passenger insurance from trains and include station and ticketing areas so that passengers get the cover in case of any untoward incident on station premises. According to IRCTC, there is immense potential to expand the insurance cover and this is also likely to bring down the premium amount. IRCTC along with three private companies provide the insurance cover. “As of now the insurance covers passenger from boarding to alighting from train. We are planning to extend it on station and ticketing areas also. There is potential to extend it to baggage and other valuables like mobile and laptop,” said IRCTC CMD A K Manocha. He said the response to passenger insurance is massive and modalities to extending the insurance cover needs to be worked out. The IRCTC is also planning to extend the service to unreserved passenger category and is changing option in booking website so that medical insurance automatically gets added to the ticket and a passenger has to opt out in case of not interested in getting the cover. At present, it has to be checked in. Passengers booking tickets online from September 1 have an option to get an insurance cover of upto Rs 10 lakh by paying 92 paise premium. It is available in untoward incidents, including terrorist attack, dacoity, rioting, shootout or arson, occurs. “Number of people opting for new insurance scheme crossed 4 million mark. Scheme a great success and it is one among many passenger friendly initiatives,” Railway Minister Suresh Prabhu tweeted Tuesday. The scheme offers travellers/nominees/legal heirs a compensation of Rs 10 lakh in the event of death or total disabilty, Rs 7.5 lakh for partial disability, upto Rs 2 lakh for hospitalisation expenses and Rs 10,000 for transportation of mortal remains from the place of a train accident. Three companies -- ICICI Lombard General Insurance, Royal Sundaram General Insurance and Shriram General Insurance provide the insurance. The three selected insurance companies will get to issue the insurance policy on a rotational basis through an automated system. They have been engaged for one year with the provision of extending the contract on a performance basis.

The New Indian Express

Bitter truths on the insurance front

Sun, Sep 11, 2016General Insurance

In a severe indictment of malpractices prevailing in the insurance sector, P.K. Vijayakumar, the outgoing Insurance Ombudsman for Kerala, has said that the mandatory medical check-ups for mediclaim insurance policies have become a big farce and that doctors acting in collusion are guilty of professional misconduct. In an interview to The Hindu , Mr. Vijayakumar, who is set to demit office on September 13, singled out a section of insurance agents bent upon furthering their means as the principal instigators behind the unhealthy practice, giving the entire insurance sector a bad name. “They discourage policyholders from disclosing their actual health status at the time of buying the policy by dangling the carrot of lower premium. But the policyholders realise their folly only after their claim is denied and the policy is cancelled by the insurance company on charge of suppressing information,” Mr. Vijayakumar said. Clinical evidence Insurance companies establish through clinical evidence that the policyholder had the illness at the time of buying the policy, which he had not disclosed then. Mr. Vijayakumar said the agents arrange for medical reports from pliable doctors who give clean medical reports without even seeing the policyholder. There was even an instance in which even the height of the policyholder was wrongly entered in the report by a doctor. Porting of policies Such suppression of information is also rampant in the porting of insurance policies from one insurance company to another, especially in the case of mediclaim policies and vehicle policies when false disclosure of no claim bonus benefit land policyholders in trouble. Mis-selling of insurance policies based on half truths was rampant, which amount to cheating. There are also instances in which anti-customer provisions are surreptitiously included in the policy documents. For instance, a mediclaim is sold to a senior citizen promising coverage of all diseases without disclosing the fact that degenerative diseases common to people of their age would not be covered. Mr. Vijayakumar said that insurance companies challenging the ombudsman’s orders through writ petitions in the High Court, which was rare previously, has assumed disturbing levels of frequency of late. “This goes against the sprit of creation of insurance ombudsman,” he said.

The Hindu