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New India Assurance Raised Health Premium Rate

Posted on May 2, 2013 by Akanksha

The Insurance Regulatory and Development Authority (IRDA) has cleared a hike in health insurance rates for policies issued by New India Assurance, country’s largest non-life insurer. The new rates are on an average 20% higher than the old ones which were in force from 2007 and will come into effect from next month.

The rate hike could trigger similar revisions among other state-owned non-life insurers since New India Assurance, being the largest, sets the benchmark for rates.

New India Assurance has said that their rates have not been revised since 2007. The revision in premium rates will result in an average increase of around 20% but it will vary from segment to segment.

For renewal policies, the new rates will take a bit longer to be applicable as the insurer will have to provide a three-month notice.

At present, for an individual aged up to 35 years in Mumbai, the cost of a 5 lakh health insurance cover is Rs 5,410, which goes up to Rs 6,078 after factoring in service tax. The cost could go up to Rs 7,300 after the hike. But this would vary according to the individual’s health profile and location. Premium varies with location because of variation in cost of treatment.

Insurers have been complaining that losses in health insurance have been over 120%. Besides raising rates, the state-owned non-life insurance companies are trying to reduce losses in health insurance by floating their own Third Party Administrator (TPA) – a separate entity that will manage the health insurance business and network with hospitals.

The in-house TPA for PSU general insurers would be operational by first January 2014.

This common TPA concept was mooted last September, and is expected to have National Insurance, New India Assurance, Oriental Insurance, United India Insurance and General Insurance Corporation of India (GIC Re) as stakeholders.

The companies are putting in IT mechanism and recruiting personnel for the new entity.

The common TPA has been proposed to prohibit large scale leakages while settling insurance claims in the health segment. It is expected to speed up the claim settlement process as well as claims ratio of insurance companies.

This move is also expected to reduce costs for these insurance players, who pay a commission of approximately 6% of premiums to TPAs to settle claims.

Categories: News | Tags: Health Insurance, Loss Ratio, New India Assurance, Premium Rate, PSU General Insurers, Third Party Administrator, TPA

4 PSU General Insurers and GIC Re Plans to Launch TPA in September

Posted on April 30, 2013 by Akanksha

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Four PSU General Insurers – Oriental insurance, New India Assurance, National Insurance and United India Insurance and country’s only re-insurer, General Insurance Corporation of India (GIC Re) are planning to join hands to float a new Third Party Administrator (TPA) claims processing outfit. The joint venture is expected to start operations by September and the total project outlay is estimated at Rs 200 crores.

The four primary insurers will hold 23.75% stake each and GIC Re will hold 5% stake in the joint venture.

Companies are in the process of finalizing the name for the TPA. Once that is firmed up, they will apply to the Insurance Regulatory and Development Authority (IRDA) for a license.

Once the joint venture gets operational, insurers will transfer the business from the current service providers to the joint venture in a phased manner.

At present, four PSU general insurers together earn a premium of around Rs 9,000 crores under their health insurance portfolio and pay service fee of about 5% to the TPAs.

According to the insurers, while they sell policies and meet the claims out of their pocket, the TPAs earn the goodwill for settling the claims and blame the insurers for any delays.

With in-house claims processing, insurers will be in a position to leverage the combined strength to negotiate better rates with the hospitals and it will also bring down the claim ratio.

The companies will not move their middle or lower management level people to the new company.

Categories: News | Tags: General Insurance, GIC Re, Health Insurance, PSU General Insurers, Third Party Administrator, TPA

United India Insurance Net Profit Up 36% In FY’13

Posted on April 30, 2013 by Akanksha

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United India Insurance has posted a 36% rise in its net profit at Rs 527 crores in 2012-13 as against Rs 387 crores in 2011-12.

Gross premium income grew to Rs 9,266 crores in FY’13, compared with Rs 8,179 crores in the previous year, posting a growth of 13.29% with an accretion of Rs 1,087 crores.
Net premium income grew by 10.47% at Rs 7,489 crores as against Rs 6,780 crores.
Net earned premium income grew by 12% at Rs 7,251 crores, compared with Rs 6,087 crores.
Claim ratio stood at 84.61% for FY’13 compared to 88.50% in FY’12, an improvement of 3.89% due to better underwriting practices and claim control measures.
The investment income up from Rs 1,600 crores in FY’12 to Rs 1,777.41 crores in FY’13
Dividend of 70% is proposed for the year.
The net worth grew to 9% at Rs 4,952 crores as on 31 March 2013.
The company is targeting a premium income of Rs 11,000 crores for the current financial year.
Company has made a provisioning of Rs 431 crores towards pension and gratuity liabilities.

The company said that proposed formation of a Third Party Administrator (TPA) for PSU general insurers will help the company to improve the claims processes gradually. At present, the company is working with 12 TPAs and it will continue to use them.

The company is also in the process of appointing a consultant to chart the strategy for bringing out transformation and growth in it’s across verticals.

Despite growth in premium income and profit, the company reported a marginal fall in its market share. Company’s market share fell to 13.46% in FY’13 from 14.93% in FY’12.

Categories: News | Tags: Car Insurance, Claims Ratio, Gross Premium, Motor Insurance, Net Earned Premium, PSU General Insurers, Third Party Administrator, TPA, Underwriting, United India Insurance

IRDA Asks Insurers To Review Agreements With TPAs

Posted on April 16, 2013 by Akanksha

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Insurance Regulatory and Development Authority (IRDA) has asked all insurance companies to review the existing agreements with Third Party Administrator (TPA) for providing health service.

This is in order to ensure compliance with the new regulations on health insurance.

IRDA has asked all life, general, standalone health insurers and TPAs to not only review the active agreements, but also file the copies of revised agreements with IRDA on or before 31 July 2013.

Categories: News | Tags: Health Insurance, IRDA, Third Party Administrator, TPA

Impact of Health Insurance Regulations

Posted on April 6, 2013 by PolicyMantra Team

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The Insurance Regulatory and Development Authority (IRDA) revamped the health insurance regulations last month. The new regulations have tried to plug in the various loopholes to ensure speedy and fair settlement of claims for customers and also bring in legal clarity among the relationship between the stakeholders, that are customers, insurance companies, third party administrators (TPAs) and hospitals.

Impact on hospitals: The new regulations have clearly mentioned a list of 199 exclusions besides stating the expenses that will not be paid by the insurer. Therefore, hospitals will now have more clarity on what expenses will be paid and what will not be paid.

Also, regulations state that the insurers will have to enter into direct agreements with hospitals or could enter into a tripartite agreement, that is, insurer, hospital and TPA. Inflating medical bills could thus be arrested as the regulations mandate that the hospitals agree on charges with insurers.

The new regulations are also likely to revive the sagging interest of top hospitals in getting insured patients as insurers will now have to settle claims within seven days. Hospitals will also have to change their software/systems as the billing will be standardized. Currently, many top hospitals that do not depend on insurance patients for their revenue, do not want to offer cashless hospitalization, as it takes 45 days to settle claims. Now, with insurers being asked to settle claims within seven days, many hospitals may be interested in taking insured patients for cashless treatment.

Impact on insurers: They have already begun mammoth exercise of revising their existing products on the lines of the new regulations. More than 50-60% of the existing products will require changes in their features and premium rates in line with the new regulations.

All retail products that do not comply with these regulations have to be withdrawn by first October 2013, while deadline for group health insurance products is first July 2013.

The new regulations also ask insurers to improve their communication with customers. For instance, insurers will have to put up their policy wording and rate structures on their website. There are many companies that do not have all their policy wordings on their website.

Any change in premium or terms will have to be informed to customers three months in advance.

Also, insurance companies cannot change their premium for three years after it has been approved.

Impact on TPAs: At present, claim processing, claim settlement/rejection is the job of a TPA. However, the new regulations put the onus of claim acceptance and rejection on the insurance company. TPAs will only admit and process claim.

While most private insurance companies already have central claim processing hub to settle claim directly, the public sector insurers do not have such a system.

The TPA has to coordinate with the policy issuing office of a public sector insurer for every claim. Since, every psu insurer has more than 2,000 offices across the country; the TPA role will not get marginalized so soon.

TPAs will now not have to worry about court cases as the job of the claim rejection will be with the insurer. Its role will increase in medical management that is giving the right treatment of choice to the customer.

Impact on customers: The regulations state that insurers will have to renew health insurance policies life long. And insurer cannot increase your premium every year just because you claimed. The entry age limit has to be minimum 65 years.

If claims fall between two policy periods, the customer will get advantage of both years’ sum insured. Claim will be paid, deducting the second year’s premium from the claim amount.

Also, insurers will not be allowed to reduce the no-claim bonus to zero if you claimed, will have to reduce no-claim bonus at the same level it increases when there are no claims.

A customer will have a 30 day grace period beyond the expiry date of the policy to renew his policy.

As in the case of life insurance policies, all health insurance policies too will now have to offer a free-look period of 15 days from the date documents are received by the customer.

To ensure that customers get a better grasp of the product, IRDA has also standardized the customer information summery. The one-pager summery of benefits, terms and conditions will have to be issued for each product by insurer.

Any change in terms or premiums will have to be informed to customers three months in advance which will help you opt for portability, if you find better plan with better pricing.

Categories: News | Tags: Health Insurance Regulations, Hospitalization, Portability, Standardization, TPA

IRDA Gazette New Norms on Various Segments

Posted on March 11, 2013 by Akanksha

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The Insurance Regulatory and Development Authority (IRDA) has finalized and gazetted various new rules for the segment.

These cover Initial Public Offering (IPOs) by general insurers, amalgamations between life insurers, one on Third Party Administrators (TPAs) in the health insurance segment and for health insurance coverage – entry can’t be denied up to the age of 65 years and renewal can’t be denied due to age, except in foreign travel, among other things.

On IPOs by general insurers, IRDA said that only those in operations for at least ten years would be allowed to do so. IRDA also said that this grant of approval would be valid for only a year, within which the company would have to file the draft red herring prospectus with the Securities and Exchange Board of India (SEBI) under the issue of capital and disclosure regulations.

Among the other guidelines gazette, the IRDA (scheme of amalgamation and transfer of life insurance business) regulations say companies in this segment would have to give a two-month notice of an intention to implement the scheme. And, this should be prior to applying.

IRDA said that it might direct such companies to send a copy of this application to every Indian who is a policyholder. After in-principle approval, the life insurer would need to take approval from other relevant authorities such as the Foreign Investment Promotion Board, SEBI, Reserve Bank of India (RBI) and Competition Commission of India. After getting these approvals, a final nod will be needed from IRDA.

As for TPAs, they must take prior IRDA approval to change their shareholding when exceeding 5% of paid-up share capital.

The health insurance guidelines specify that entry age for a policy can be up to 65 years. Guidelines also say that renewal can’t be denied on the ground of age, except in travel insurance.

The guidelines have allowed non-allopathic treatment to be provided coverage, provided treatment has been taken in a government or government-authorized institution. An option to migrate to another suitable health insurance policy has been given to a consumer.

Categories: News | Tags: IPO, IRDA, SEBI, TPA

TPAs Can’t Reject Claims

Posted on January 23, 2013 by Akanksha

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Third Party Administrators (TPAs) of insurance companies have been under fire for sometime. For several years, there has been significant number of complaints against them for, either delaying the process or rejecting claims.

Insurance Regulatory and Development Authority (IRDA) is not comfortable with this fact hence, in latest draft guidelines for standardization IRDA has said that TPAs should only process the claim to facilitate the insurer to take decision on claim settlement or claims rejection, as applicable. In other words only the insurer would have the right to settle or repudiate a claim.

Experts say that the main issue is that TPAs sometimes even question the treatment administered by the hospitals and the tests the insured is asked to undergo. Clearly, they can’t be allowed to interfere so much.

In fact, Gaurang Damani filed a Public Interest Litigation (PIL) in Bombay High Court last year against TPAs where he sought clarification on the roll of TPAs.

In the PIL he said that while the roll of a TPA is only to process claims, in practice, the insurers offer incentives to them depending on the amount of claim reduced. A TPA may also decline or dispute a claim over the treatment being taken by the insured.

Insurers give the authority of settling (accepting/rejecting) a claim to the TPA, usually where the claim value is low and the case doesn’t involve too much assessment. The TPAs settles such claims without involving the insurer in this process.

However, IRDA in its draft guidelines has clearly mentioned that hereafter TPAs will have to convey the repudiation of a claim to the insured, only after they have been advised to do so by the insurer.

Defining the roll of a TPA IRDA said that while they can process, assess and evaluate a claim, they will not be allowed to go beyond that.

Currently, around 50% of the private general insurance industry’s claims are settled by TPAs.

New insurers usually outsource the claim settlement process through TPAs because settling claims in-house requires expertise and manpower, which the company doesn’t have in its initial years.

However, TPAs defends their position by saying that they reject claims based on the policy features. They further add that claims are processed faster through them than insurers as they have required expertise and manpower.

But insurers feel that if these draft guidelines are imposed, the time taken to address claims would be reduced by at least 30-35%. This is because TPAs have been asked to process claims within two working days in the draft called for standardizing billing formats.

Categories: News | Tags: Claims Rejection, IRDA, Third Party Administrator, TPA

IRDA Came Out with Framework for Monitoring Insurance Frauds

Posted on January 23, 2013 by Akanksha

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Insurance Regulatory and Development Authority (IRDA) has come out with a framework for monitoring frauds in the insurance sector and asked insurers to carry out due diligence on their staff, including agents.

IRDA said that frauds reduces consumer and shareholder confidence and can affect the reputation of individual insurers and insurance sector as a whole. And hence, it has asked insurers to lay down procedures for monitoring and early detection of frauds.

IRDA has asked insurers to lay down procedures to carry out the due diligence on the personnel (management/staff)/ insurance agent/ corporate agent/ intermediaries/ Third Party Administrators (TPAs) before appointing them.

The insurers have to submit a compliance report with IRDA by 30 June 2013.

IRDA said that it is required that insurers understand the nature of frauds and take steps to minimize the vulnerability of their operations to fraud.

IRDA also asked insurance companies that their risk management function should be organized in such a way that it is able to monitor all the risk and takes steps to address them.

The IRDA classified frauds in the insurance sector under three heads –claim fraud or policyholder fraud, intermediary fraud and internal fraud.

IRDA also asked insurers to frame anti-fraud policy and said that the company’s boards should review the policy on an annual basis.

IRDA also said that insurance companies would have to inform both potential and existing clients about their anti-fraud policies.

Categories: News | Tags: Insurance Frauds, Insurance Regulatory and Development Authority, IRDA, Policyholders, Third Party Administrators, TPA

Cost of Insurance Claims per Employee Rose by 92%: Marsh

Posted on January 16, 2013 by Akanksha

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Employers have witnessed a steep rise in the claim cost per employee by 92% over the past five years, as per a report released by Marsh India, a subsidiary of Marsh, a global player in insurance broking and risk management services.

The study highlighted that employers are curbing costs by changing product coverage. Employers are also asking for restriction on maximum allowance for room rent and provision for co-payment by employee in the total bill amount.

Marsh India said that organizations need to understand the controllable and uncontrollable cost drivers that affect their plan if they have to maximize their cost savings and improve the sustainability of their benefit plans.

The study is based on inputs given by 301 organizations during October-December 2012 and compared with 188 respondents last year. Around 5 lakh employees were considered with total number of beneficiaries going well above 15 lakh lives. The study covered all major industry segments.

Insurers say that health insurance segment has been reporting similar healthcare inflation in the past. And, these costs can be managed better if insurers have good tie-ups and better claims management systems.

The study also revealed that around 55% respondents expressed dissatisfaction with the inability of Third Party Administrators (TPAs) and insurers to tackle the huge variations in the hospital tariffs.

Around 88% companies are concerned about the price varies among various hospitals. And 95% respondents feel that increasing treatment costs is the biggest challenge.

Historically, the group segment had been under priced mainly due to public sector insurers having the capability to price their cover at a lower price.

However, this has changed in last few years and coupled with rising health care inflation it is showing its impact. Insurers say that it might still take some time for prices to match the actual risk that is being undertaken by insurer.

The study also highlighted certain failures on behalf of TPAs, which includes tariff arrangements not being checked, and reports that could determine the need for hospitalization not being asked for. Investigation and other charges that are not related and/or without indications are paid.

Categories: News | Tags: Claims, Third Party Administrators, TPA

Health Insurance Plans