With health insurance becoming more important than ever amidst the harsh second wave of covid-19, data from states across the country suggests that only 51% of the covid-19 claims received from the beginning of the pandemic have been settled. Tamanna Inamdar breaks down how to make your health insurance policy work for you on the India Development Debate tonight with Monika Halan, Author, Let’s Talk Money, Tarun Mathur, Co-Founder, Policybazaar.com and Naval Goel, CEO & Founder, PolicyX.com
On the India Development Debate, I spoke about the fact that insurance firms are not paying covid claims in full. The problem is only half with insurance contracts and firms. The other half has to do with hospitals padding costs. @TamannaInamdar@ETNOWlive
The problem with the insurance contracts are that they are mostly one-sided with the individual having very little bargaining power. Companies can refuse to pay or deduct the payout by interpreting the policy provisions in their own way. This is market failure. When there is market failure government needs to intervene to put down road rules. Insurance regulator needs an upgrade – that’s an easier part. India needs a regulator for hospitals urgently.
It is almost as if you can see the conflict: there is the desire to do the right thing by the customer, but the DNA of an institution that does not believe in consumer rights comes in the way. The insurance regulator is torn with this dichotomy, of watching its capital market counterpart take giant strides in investor protection and disclosures, wanting to do the same, but not being able to. Insurance industry insiders say that the Insurance Regulatory and Development Authority of India (Irdai) chairman is keen to bring about change in favour of the consumer but is hampered by the tight ring of bureaucracy of a PSU monopoly mindset that thrived in a supply-starved market of the 1970s of a socialist India.
Two moves that should have brought accolades need to do much more in policyholder interest, but are good announcements of a regulator beginning to think about customers rather than agents, brokers and firms. One, the idea of a standard term life cover that can be bought off the shelf with standard features and no frills. Each insurance firm from 1 January 2021 will have to launch a standard pure term (only insurance cover, no investment) cover called Saral Jeevan Beema (read the circular here: bit.ly/37I6ii8). Great move, but it is unclear why there is a ₹25 lakh upper limit for the sum assured, and then the asterisk that firms can offer more cover if they like. It seems that firms will have to offer a cover of up to ₹25 lakh and can offer a higher one if they choose to. Pure covers have a rule of thumb of 10 times your income. So, an income of ₹2.5 lakh a year will need a ₹25 lakh cover. To me it looks like a carve out for insurance firms so that they don’t really have to offer a policy to the market that is actually buying term covers—those covers are of a much higher value— ₹50 lakh or more.
Did you know that you get different rates for the same surgery if you go as an uninsured person, or if you go with your own cover or if you go with a group cover? Rates vary across insurance firms as well. I had heard of it, but had not got proof in my hand. Last week, I bumped into a neighbour who is scheduled for a minor surgery. He went to a big south Delhi corporate hospital chain and asked for an estimate. He presented his individual policy since he was not sure his group policy was valid as he was between jobs. He got an estimate of Rs1.16 lakh. Then he found out that his office policy was valid after all. Returned a day later to ask the same question on estimate, but this time presented his group policy. The estimate was Rs 69,300. I have both the documents with me. The individual policy was from a private stand-alone health insurance company and the group policy from a public sector insurance firm.
An old-but-young-at-heart aunt struggles with her medical insurance. Single at 65, she has a basic Rs.3-lakh medical cover, but I’m scaring her silly with my stories of what it costs to even breathe in the air of the new temples of mass affluent Indians—the five-star hotel-hospitals. I’m a several surgeries battle-scarred survivor of the system, having taken assorted family members to various hospitals over the years. At my aunt’s age, a fresh cover for the next Rs.7 lakh costs a bomb, not that it is easy to get the cover. I spoke to a few planners about strategies for people on the other side of 50, who are sitting on small covers of under Rs.3 lakh and live in a mega metropolis where medical costs are sky high.