Mydigitalfc, October 12, 2013
New guidelines standardise 46 definitions and 11 critical illnesses in health insurance policies
The need for health insurance is no longer a debatable topic, given the ever-increasing cost of healthcare and rising incidence of lifestyle related ailments today. Recent statistics reveal that spending on healthcare is expected to double in a couple of years, and unfortunately, people cannot use their internal financial resources to meet such expenses. With rising inflation, personal financial resources are being strained more than ever before. In this scenario, health insurance is clearly a long-term solution for mitigating ever-rising medical costs.
Although the need for adopting health insurance is apparent and the benefits are clear to all, people are still hesitant to purchase health insurance policies, because of the confusion they harbour. There are many products available in the marketplace today that vary in terms of benefits offered, exclusions, waiting periods and inclusions.
The terminology associated with such clauses has been a cause of concern, due to the slight variations offered on every health insurance product.
In order to remove the confusion amongst customers and create an even-playing field, the insurance regulator Irda has created the health insurance standardisation guidelines that all health insurance providers must follow. The Irda’s guidelines have standardised the 46 most commonly used definitions/terms/conditions in health insurance policies. The guidelines also include definitions of 11 common critical illnesses covered under various health insurance policies in India, to ensure there is no ambiguity amongst products and for customers to make more informed decisions while choosing a health insurance policy.
The creation of the standardised guidelines is a step in the right direction and is expected to bring in a number of spinoff benefits. I expect the service standards to improve. Henceforth, insurance companies may not be able to indulge in price war, as the guidelines will ensure a basic product structure. The claims ratio across insurers will then gradually stabilise.
Customers are expected to be the largest beneficiaries of the standardisation guidelines as policy terminology will now be clearly defined and an insurance company’s processes will be more transparent.
I always believed that the incidence of dissatisfaction would be the lowest if we can ensure our customers know what to expect. Clear mention of which costs can and cannot be included in medical expenses, covered procedures, etc., are certainly going to make the claims process much simpler and hassle-free. Defining pre-existing diseases has been a pain point of the industry at large. Now, with a clear definition of pre-existing diseases, there should be a sense of relief among customers and we should expect an improved customer experience.
Health insurance is a facilitator for best-in-class treatment and the chain is incomplete without the healthcare providers being in line with the standardised guidelines. I surmise the industry will face a challenge in implementing the guidelines suggested for the healthcare providers, as they are not mandated to follow the Irda regulations.
Their processes bind them and each healthcare provider has its own format for paperwork.
Differential process and documents inevitably causes delay in cashless claim approvals and pre-authorisation. With the standard guidelines, such variations may get reduced. With one format across all service providers, the claims process will move faster with greater efficiency. But the dependency the healthcare providers have on insurance companies is far too low at this point in time. We need to work closely with them to build confidence and capacity with larger insurance penetration.
We believe that in order to create sustained businesses, product innovation and customisation are key factors. Innovative products and customised features will play a big role in shaping the future of the health insurance segment and will aid in growth of GWP for all.
Insurance companies must quickly work towards developing products that cater to the future needs of customers, keeping in mind the health status of the nation today. Preventive care is the need of the hour, and insurance companies must develop products that not only help to counter future illnesses, and the ensuing related costs, but also ensure maintenance of positive health conditions at present.
To ensure long-term growth, the stakeholders of this segment — insurance companies, healthcare providers, TPAs and the regulatory body must work as a cohesive unit. Healthcare providers have an important role to play in delivering efficient and cost effective services to customers, while TPAs ensure timely assistance and claims settlement. Insurance companies must be able to bring all these parties together to ensure that customers benefit the most and are able to handle medical emergencies without any hassles.