General Insurance gets two more Companies in India

The general insurance sector of the Insurance industry grew more competitive as two new players have formally launched their operations. These new players are Religare Health, an initiative of Religare Enterprises Limited, Union Bank of India and Corporation bank, and Magma HDI General Insurance, a joint venture between non-banking financial company Magma Fincorp and HDI Gerling, a leading German Insurer. 

Religare Health had launched their operations in July 2012. In the last 3 months, it has an impressive performance of collecting around 14 crore premium, operating in 134 centers and servicing more than 34,000 customers. Although currently they have only one insurance product named “Care”, they have ambitious plans on board to launch products for critical illness, overseas student travel medical insurance and also policies for HIV patients.  Currently their health insurance product “Care” comes with certain salient features outlined below

•           It offers a sum assured upto 60 lakhs to suit the customized requirements of every consumer.
•       It has the option of availing specialized treatment anywhere in the world of sum assured over 50 lakhs
•      It offers annual health check up facility, automatic recharge of sum insured in case the claims exhaust and no claim-based loading on premiums.
•      It offers lifelong renewability and daily allowance to cover incidental expenses during hospitalization
•       It has tie up with around 1800 hospitals across India.

Magma HDI General Insurance (MHDI) would target offering a comprehensive end to end solution to customers by financing vehicles and offering insurance to the assets purchased. Magma Fincorp (one of the partners in the JV) are mostly present in semi urban and rural areas which are relatively unpenetrated markets for insurance products. Thus they aim to explore these markets and chalk out a strategy to survive in the already competitive market of insurance. They plan to launch operations in 39 locations with work strength of around 500 people.

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IRDA to step in over cancellation of cashless cover by PSU Insurers.

On July 1st, 2011 four PSU firms for General Insurance viz. National Insurance, New India Assurance, Oriental Insurance and United India Assurance had stopped their cashless hospitalization facility. The reason was overcharging by the hospitals and non standardization of the treatment charges. Insurance companies have a network of hospitals, known as PPN, which offers health insurance services under cashless facility. The network hospitals are decided through the agreement between the Third Party Administrators (TPAs) and the hospitals and the list is amended from time to time. Insurance Companies have claimed that the cost to claim ratio was around 140 percent of the premium received under the health portfolio as on June 2012. Some 150 hospitals were scrapped from cashless hospitalization scheme. While the insurance companies complain of overcharging, the private hospital authorities maintain that they cannot conduct treatment at Central Government Health Scheme (CGHS) rates.

Initially Insurance Regulatory Development Authority (IRDA) took a rain check when their intervention was sought. They felt that the insurance companies and the hospitals need to work out an amicable solution themselves. Now with the policyholders stranded for no fault they have decided to step in. In August this year IRDA came up with a circular stating that policyholders would continue to get cashless hospitalization facility even if the hospital were delisted from cashless cover by the Insurance Companies. They are now in the process of standardizing the treatment costs as well as look into the issue of overcharging

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Sanlam Group invests in Shriram Capital

Shriram Group has entered into a joint venture with Sanlam Group of South Africa. This deal involves a Rs 2000 crore investment by Sanlam Group in Shiram Capital which is the financial wing of Shriram Group. This would also result in a 26% stake transfer. Though these two companies have been involved in insurance joint ventures before, this is the largest still now. It is for the second time that an outside company will hold stake from Shriram Group. Till a few months back the whole equity is owned by the Shriram Ownership trust until TRG picked 15% stake by investing around Rs 700 crore.

This deal also gives Sanlam Group access to the Indian market. From Shriram Group’s perspective it is a strategic venture which is meant to expand their financial arm. Sanlam’s investment would provide for up-streaming life and general insurance and would also include a cash component. In this way, Shriram Capital would still hold 100% equity which Sanlam Group would indirectly own 26% holding in the insurance venture by virtue of its 26% stake in Shriram Capital. The deal would take six to nine months as they await approvals from IRDA and Sebi

Delhi High Court questions HIV/AIDS exclusions from Health Insurance

In response to a petition filed, the Delhi High Court has questioned IRDA and the Health Ministry as to why Health Insurance policies have an exclusion for HIV/ AIDS. Most insurance contracts have a clause in the health insurance policy documents which states that the policy does not cover treatment for HIV/AIDS even if the policyholder might have contracted it at a far later stage than when he (s) got admitted into the policy. In the view of the court, this tantamounts to a discrimination in a country which has the third largest number (24 lakhs) of HIV infected people in the world. If the insurance companies need to cover HIV/AIDS as a part of the standard list of ailments that are covered, one might see a little increase in health insurance premiums. One however tends to agree that there is no basis to discriminate against HIV/AIDS patients and not provide them an insurance cover.

Health Insurance: A growing market

Health Insurance penetration in India is only 3% in India as compared to 10%+ in countries such as US, Korea, UK etc. Insurance per capita in India is an abysmal USD 1 whereas in the US , it is more than USD 2000. It is estimated that only about 3% of Indians are covered by any private insurance plan.

The current market for health insurance in India is about Rs 8000 crores and it is expected to increase at a CAGR of 20-25% over next 10 years. Some of the key drivers for the growth of this industry is as follows:

1. Increased healthcare costs in India, forcing people to take up health insurance
2. Rising affluence of the Indian middle class and thus being able to afford health insurance
3. Increasing trend of lifestyle related diseases such as diabetes, heart ailments forcing
4. Rise in number of people visiting India for medical treatment
5. Continued tax benefits for health insurance related premiums
6. Government initiatives to increase health insurance awareness
7. Specialised health insurance companies entering and growing the market

Over the next few years, we expect some hardening of rates for health insurance premiums as the current claims ratios (especially of the public general insurance companies) is way too high and they are making underwriting losses. We also expect the processes to get streamlined with captive TPAs being set up, standardization of rates for different procedures carried out by the hospitals and a greater degree of co-pay.

Inclusion of Ayurveda, Unani & Siddha in Health Insurance : A Possibility

Domestic Healthcare systems such as Ayurveda, Unani & Siddha might very soon be treated on par with Allopathy when it comes to medical insurance. This might be recommended by a committee formed by the insurance council. The Department of Ayurveda has asked the General Insurance Council to look into the possibility of including the non-allopathic means treatment for accepting claims under health insurance. A presentation has been made to the council members, who in turn, have formed a 3 member committee to look into the matter.

The committee comprises of CEOs from Star Health, Max BUPA and Apollo. This committee would examine the merits & demerits of the proposal and would then recommend processes to implement if it is convinced about the inclusion of such medicines under health insurance. The IRDA will take a call on the matter. A majority of India’s population resort to alternative means of treatment which is recognized by the Indian Government but not by the insurance industry. Most of the insurers who operate under a joint venture with a global company say that there is no established way to verify such claims and no data to rely upon as well.

In allopathic treatments there are scientific studies and they know how long a treatment will take and how much would it cost. But under alternative means such as Ayurvedic they do not have enough data to cover them. Curing an ailment under alternative medicine means mostly takes a long time (in some cases years) and they do not have a structured way of looking at the data. But under allopathy, it’s more immediate and easily manageable.Practitioners under alternative means have no registrations and there’s no one body that recognizes hospitals/institutes that treats such patients.

The Health and Family Welfare ministry has been pushing such alternative means so hard because these are affordable and a majority of people make use of domestic expertise in these areas. Allopathic medicines are quite expensive even for people living in the urban areas.

The Department of Indian Systems of Medicine and Homeopathy was created in March 1995 and re-named as Department of Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy, or Ayush, in November 2003 to develop education and research in those fields. In conclusion the inclusion of Ayurveda, Unani & Siddha in Health Insurance is a Possibility.