Indian Insurance market to be USD 400 BN by 2020!

A recent report by FICCI and BCG has suggested that the Indian Insurance market will grow to USD 350-400 BN by 2020, and will be the among the top three insurance markets in the heart. This sensational headline has warmed the hearts of many, and made everyone excited about the potential of the industry. It is worthwhile to bear in mind that the current market size is around Rs 3 lakh crores, which is USD 70 bn. So we are talking about a 5 times increase in the next 10 years. We feel this is too aggressive and is more a headline grabbing, stand out from the clutter, screaming for attention news item.

We would actually pay far more attention to some of the other items that the report mentions: 

1. Profitability is a huge issue for the Insurance industry in India, with the non life insurance industry having accumulated underwriting losses of Rs 30,000 crores and the life insurance industry have cumulative losses of Rs 16,000 crores

2. The agency model, the main distribution channel, is still proving to be unprofitable for the life and non life insurance sector

3.Insurance companies' obsession for topline growth has contributed to a inefficient, non sustainable operating model

4.Auto claims fraud, third party liability for motor and high level of claims for health insurance is crippling the general insurance industry in India

5. The recent tightening of charges for ULIPs has taken the wind out of the sails of the life insurance companies in India

Ways to resolve your grievances against insurance companies

Insurance companies not staying on their commitments is not a new thing for policyholders. There are examples galore on the subject. A person underwent 3 surgeries simultaneously with the total cost amounting to Rs 33K. When the claim was lodged the TPA said that though the surgeries were pertaining to 3 different body parts but were conducted at the same time, hence the eligible claim was only Rs 10K. 

Despite the person explaining that the company would have to shell out larger amount of money had the insured decided to undergo all the 3 surgeries at different times, the company still didn’t agree. Ultimately the insured approached the Insurance Ombudsman who held that the eligible claim was Rs 30K.

It’s not that the policyholder is at the mercy of the insurance companies. The IRDA has recently come up with certain regulations that protect the interests of the policyholders and has promised that the Insurance Ombudsman would be empowered further.

While regulations coming into effect may take a while, one must get acquainted with existing grievance redressal infrastructure and the procedure to be followed to make oneself heard.

Level One: For complaints registration, most insurance companies provide various channels like branches, phone call, e-mail as well as snail mail to policyholders. If the customer services department is not helping one can approach the company’s grievance redressal officer. Insurance companies are also required to maintain a well-defined procedure for receiving and resolving grievances at their branches, too.

Companies have to specify a time frame within which different types of grievances must be resolved. While they can decide the time limit, they are required to send a written acknowledgement within 3 working days of the receipt of the complaint. Any failure to do the same would make the companies liable for penalties.

The insurance company will have to inform the individual with the acknowledgement if the complaint is resolved within 3 days or else they will have to resolve it within 2 weeks of the receipt of the complaint & send a final letter of resolution. If the company decides to reject the complaint, it has to give a valid reason with information on further redressal avenues that the insured can pursue. If one does not react within eight weeks from the date of receiving the insurer’s response despite being dissatisfied with it, the company will assume that the complaint has been resolved.

Level Two: If the redressal officer didn’t help one can approach the IRDA’s Grievance Redressal Cell or the Insurance Ombudsman, depending on the nature of the complaint. The Ombudsman’s offices are authorized to mediate and award compensation to policyholders. They can handle cases involving insurance contracts upto INR20 Lakhs.

The Ombudsman makes recommendations within 1 month of the receipt of the complaint. Once one receives a copy of the recommendation, he/she has to send a written communication indicating the acceptance of the settlement within 15 days. The insurance company also has to comply with the order given by the Ombudsman. If still unsatisfied with the verdict, one can approach the civil courts or consumer forums.

The kinds of complaints that can be heard by the Ombudsman are the ones that relate to ejection (whether partial or total) of claims, in addition to disputes about premiums; policy wordings in case the disputes relate to claims; delay in settlement of claims and non-issuance of any insurance document after collecting the premium.

Irda’s Grievance Redressal Cell

Unlike the ombudsman, this redressal cell does not have the authority to pass orders but complaints addressed to the cell are taken up with the insurers which could include delay or lack of response pertaining to policies or claims and complaints about agents’ conduct.

The awareness about Ombudsman is still very low, IRDA’s campaign has been creating awareness about the recourses available to the policyholders. The toll free number widely publicized is 155255. One can approach the cell directly and he/she will be redirected to the Ombudsman under whose jurisdiction the complaint falls. One can get in touch with cell via email or snail mail as well (info is available on IRDA’s website).

One must ensure that the complaint is sent by him/herself because the ones forwarded by third parties including lawyers or agents are not entertained by the cell. The complaints with incomplete information are also not heard. Therefore, it is very important to disclose all the details in the complaints registration form available on the insurance regulator’s website.

One must be alert while dealing with insurers and follow laid down for the proper solution to the problem.

Cashless Health Insurance Claims | What is going on??

General Insurance companies have taken the battle to the hospitals. In a move that is aimed at reducing the exorbitant level of hospital claims and cost, the four public General Insurance companies (New India, National, Oriental and United India) have decided to stop/reduce the facility of cashless health insurance claims in the top hospitals of the country. About 100 of the preferred partner network hospitals (PPN) have been struck off the list from July 1, 2010. Most of the renowned, branded private hospitals have been removed from the list of hospitals where cashless health insurance claims are entertained.

What is a cashless claim: The cashless claim feature has been primarily designed for the benefit of the insured. Under this, whenever the insured person has a hospitalization claim, s/he does not have to pay the hospital bills but the bill is directly paid by the insurer to the hospital. Thus, there is no cash outflow from the patient. In theory, this is great as it eliminates the cash outflow from the patient.

But where is the problem: the problem has been that because the bill is directly settled by the health insurance company, the financial stakes of the patient has become nil under the cashless claim and s/he has stopped being bothered about how much the hospital is charging. This has been a boon to the hospital as they can charge as much as they want from a price indifferent patient. In this entire process, the fact that for a tripartite agreement to work , there has to be a stake for all the three parties has been violated. All the risk has been passed on to the insurer.

At the same time, reducing cashless will still prove to be a huge inconvenience for the genuine insured person who has cash flow issues in paying directly upfront for the exorbitant hospital costs. In this entire process of trying to do away with the cashless facility, are we throwing the baby out with the bathwater.

One good solution could be that for any cashless facility, there has to be a mandatory co-pay option. This would lead to the consumer (i.e the patient/insured) to have a financial stake as a part of the bill would need to be paid by him, and thus he would be conscious that the hospital is not overcharging.

There is another point to note here: why is it that the claims ratio (around 115%) of the public general insurance companies is far higher than that of the private general insurance companies. The basic fact is that the public companies have far lesser controls than the private players, which opens it up for potential misuse. An overall overhaul of their management practices might be more efficient in reducing the claims ratio rather than by stopping cashless claims. The danger in the path that the public health insurance companies is taking is that their customer base could move away to the private health insurance companies.

The latest noise that one is hearing is that the public health insurance companies will be extending the cashless facility on a case to case basis, whatever that means. There is also talk of a new grading system for hospitals. There has also been news that a 10.3% service tax on the cashless claim amount has to be paid by the TPA to the hospital. In effect this would mean that around 10% of the claim cost would get transferred to the insured. In the case of reimbursement (instead of cashless facility), this claim will not be there. The final word is yet to be written on this issue.