Optima Insurance Brokers Pvt. Ltd.

Medical tourism from India to the West, a preserve of the affluent for years, is now accessible to the affluent middle-class, thanks to new high value covers designed by health insurers. For a premium ranging from Rs five lakh to Rs 13 lakh, an individual can get health insurance cover for as high as Rs 25 crore which covers treatment overseas. What’s more, companies are willing to tailor this according to the paying capacity, while buyers can get a cover of Rs 25 crore. While recent trend has seen an increase in the number of foreign nationals coming to India for lower cost treatment, there are some procedures in which healthcare in the West still have an edge due to technolgical advancements.

“Such policies are extremely useful for mass affluent and high networth Indians who have to be frequently out of the country on work or business related matters. They have access to global health care in Indian currency,” Rahul Aggarwal, chief executive officer of insurance advisory, Optima Insurance Brokers said. Max Bupa’s new heartbeat health insurance plan, offers Rs 1 crore cover for cashless treatment abroad of nine critical illnesses including cancer, heart attack, organ transplant, stroke, brain surgery . Claimants can access Bupa International’s network of hospitals across 190 countries. “In case of a medical emergency abroad, Bupa International will provide medical evacuation assistance ,” Manasije Mishra, chief executive officer, Max Bupa said.

“People who can afford are willing to travel to a global centre of excellence to access the latest medical technology,” said Sandeep Patel, md & CEO, Cigna TTK Health Insurance . Cigna TTK covers 30 critical illnesses under its global cover with the sum insured ranging from one lakh to Rs 25 crore. The in-build overseas cover has some advantages over an overseas travel policy.”An overseas travel health care plan entails filling up proposal forms again and elements like pre existing illness and the associated waiting period come into play when such policies are issued.,” said Dr Renuka Kanvinde, associate vice president, health insurance, Bajaj Allianz General Insurance.

She added that many senior level executives and HNIs who travel frequently now opt for a seamless health cover. The company is currently working on an offering for the uber rich. Public sector New India Assurance too is mulling a global health cover targeting the HNI segment. “We will be launching a global health cover for the HNI segment within the next four to six months. The product will be designed as a stand alone offering as well as an add on to existing health plans,” G Srinivasan, CMD New India Assurance said.

Although common insurers have been lobbying for benefits for property insurance underneath the Revenue Tax Act in the run up to the budget, the residence insurance coverage industry in India nonetheless continues to be hugely below-penetrated at much less than 2%. “A advantage for residence insurance coverage under the Income Tax Act would give fillip to the house insurance company just like wellness insurance with Segment 80 D,” Milind Kharat, chairman and managing director, United India Insurance coverage, mentioned.

Segment 80 D offers for deduction from the total taxable income for the payment (by any mode other than money) of medical insurance coverage premium paid by an person or HUF (Hindu undivided family members). This tax deduction is accessible above and over the deduction of Rs 1 lakh under Part 80 C. Even though standard insurance businesses have a house insurance coverage providing, insurers are rapid to point out that such covers only cover insured perils, i.e., losses due to terrorism and normal calamities like earthquake. This kind of covers would not come into force in the situation of man-made disasters, which contain substandard top quality of construction. Yet another purpose hampering the growth of the home insurance coverage enterprise are valuation troubles with many homeowners unwilling to quantify the variety and price tag of valuables at house.

In addition, there is a lack of push for such goods from insurance agents and distributors on account of the lower commissions attached to the solution. The policy dimension in residence insurance is calculated on the value of building of the residence. “When it comes to property insurance in India, the most thorough cover continues to be fire as that covers all damages due to normal leads to as properly as other social hazards this kind of as riots,” Rahul Aggarwal, chief executive officer, insurance coverage advisory, Optima Insurance Advisors, said.

Nevertheless, insurers are hunting to push home insurance coverage. Bajaj Allianz not too long ago launched an all-danger residence insurance cover that covers apartments on an agreed worth basis. Six distinct strategies are accessible below this policy along with 8 include on covers. Similarly, Tata AIG also has covers for fire and allied perils, covers for burglary and theft, a policy for breakdown of electronic items and an all-threat cover for jewellery and other transportable products. United India Insurance coverage too has a householder insurance coverage policy exactly where the constructing is covered for loss due to earthquake, fire and storm and contents in the household are covered for burglary.

Medical costs are going through the roof, as is apparent with medical inflation hovering in double digit (18%). To insure themselves against the expenses in medical emergencies, more people are going for higher mediclaim covers when their policies are up for renewal. Also, many customers are utilizing their NCB (no claim bonus, a benefit for those who have not claimed insurance during the preceding year) to enhance health cover limits.

“We are seeing cases wherein customers are opting for higher sum insured at the time of renewal. This is especially more pronounced when the customer hits a certain age bracket (35, 45 or 50). The additional premium towards the enhanced coverage either comes out of the non claim bonus or from the insured’s own pocket,” CMD of New India Assurance, G Srinivasan, said. The medical insurance segment accounts for 27% of the company’s gross written premiums.

In the case of United India Insurance, the benefit for not claiming anything the previous year is passed on in the form of higher sum insured in the second year, the premium remaining the same. “Depending on the bonus, the sum insured can increase by 5% in the second year and 10% in the third year,” CMD of United India Insurance, Milind Kharatsaid. Around 27% of United India’s premiums come from the health segment.

Insurers also state that the need for enhanced coverage is more pronounced in those categories where customers have opted for the basic cover (Rs 1.5 to 2 lakh) and want to move into the next bracket. “There continues to be a rise in cost of medical procedures across the board. Customers who have a basic cover are on the lookout for an enhanced cover at the time of renewal,” Dr Renuka Kanvinde, assistant vice-president, health insurance, Bajaj Allianz General Insurance said.

“While longevity is on the rise, every passing year also bring in some additional health risks and increasingly, customers are very open towards higher coverage limits at the time of renewal,” CEO of insurance advisory firm Optima Insurance Brokers, Rahul Aggarwal said.

It’s not only nationalized insurers and private ones who are experiencing this trend. Even stand alone health insurance providers have seen cases wherein customers have utilized their non claim bonus towards a higher sum insured for the next year. “Customers can add the bonus to the sum insured and thereby enhance coverage provided they have no previous claim or illness,” CEO of Star Health and Allied Insurance said. He added that usage of such bonus can see the sum insured rise by 10% during the renewal year and 20% the following year, provided there is no previous claim or illnesses in each of the two years.

While some insurers have brought OP (outpatient) cover under cashless scheme for those hospitals that are under their network, observers state that it would take a while before OPD as a product category becomes popular in the health insurance space. “Out patient cover is one of the important emerging trends in the sector and we are working towards technically pricing it,” Ajay Bimbhet, managing director, Royal Sundaram Alliance Insurance said.

United India Insurance extends an OP cover under cashless scheme in some of its group policies on payment of additional premium. In some cases, insurers extended this as an add-on offering in their main mediclaim or standard health product policies with specific limits. The offerings also include vouchers to the insured for buying medicines at pharmacies or discounts while visiting a clinician or undergoing certain tests. The biggest concern if OP becomes a full fledged offering under health insurance would be that claim management would not be an easy task. “From a product standpoint, this offering entails frequent visits to a physician (especially in case of lifestyle ailments) and while the costs related to claims management rise, the bill amount is low (from Rs 300-500 per visit). On the other hand, hospitalization is not a frequent event and normally entails a lump sum payment and a one time claim settlement ,” Milind Kharat, CMD, United India Insurance said.

Costs also have a role to play. “Due to the higher assumption on incidence rates (near 100%); the OPD premium is often quite high. Therefore customers need to see added value on the offering that goes beyond cashless payment of OPD expenses subject to the limit,” Manasije Mishra, CEO of Max Bupa said. Moreover, medical reimbursements also can take some shine out of an OP offering. “Many people try to meet their out patient expenses through their annual medical reimbursements , the ceiling limit (no tax) of which is Rs 15,000,” Renuka Kanvinde, associate VP, health insurance, Bajaj Allianz General Insurance said.

Insurers also state that the need for enhanced coverage is more pronounced in those categories where customers have opted for the basic cover (Rs 1.5 to 2 lakh) and want to move into the next bracket. “There continues to be a rise in cost of medical procedures across the board. Customers who have a basic cover are on the lookout for an enhanced cover at the time of renewal,” Dr Renuka Kanvinde, assistant vice-president, health insurance, Bajaj Allianz General Insurance said.

There are other issues too. “In the absence of a national brand in the OP space be it dental, eye or even diagnostic , controlling frauds in matters pertaining in billing and uniformity in service for claims assessment and payment will be an issue,” Rahul Aggarwal, chief executive officer of insurance advisory, Optima Insurance Broker said.

British financial major Aviva Plc’s reported plans to exit Indian market is unlikely to affect the operations of insurance firm as majority partner Dabur may rope in another overseas investor as replacement.

There have been similar instances in the past where foreign promoters quit by selling stake to other overseas entity or the domestic joint venture partner. However, the company remained in existence and there was no disruption in insurance business.

Last year, the US-based insurer New York Life had exited India by selling its 26 per cent stake in its joint venture company to Japan’s Mitsui Sumitomo Insurance Company.

Notwithstanding change in shareholding pattern and change in the name to Max Life, the business continued as usual.

According to industry experts, there are two options before the UK-based financial services major Aviva. One is to find another overseas life insurance player and sell its 26 per cent stake. The other is to sell its stake to Dabur.

As part of restructuring, Aviva Plc is looking to cut costs and exit less remunerative markets to improve its financial performance.

Regulatory authority has to ensure that in case of mergers and acquisition, interests of various stakeholders are protected, Ernst & Young national leader (global financial services), Ashvin Parekh said.

Protection of interest of the policyholders is one of the key objectives of the insurance sector regulator Insurance and Regulatory Development Authority (IRDA), he said.

The change in shareholding is vetted by the regulator which ensures that the promoter is fit and has enough financial strength to carry on the business without compromising interest of the policyholders, Optima Insurance Brokers CEO, Rahul Aggarwal said.

So, there is unlikely to be a major impact on the Indian joint venture of Aviva Plc, Aggarwal added.

Earlier this year, the Netherlands-based ING decided to exit ING Vysya Life Insurance Company by selling its 26 per cent stake to domestic partner Exide Industries.

ING’s exit from the Indian life insurance joint venture is part of the previously announced divestment of ING’s Asian Insurance and Investment Management businesses, the Dutch banking and insurance company had said in a statement.

According to Parekh, foreign players are exiting India because the markets have changed and they are facing problems in their own country.

Indian insurance sector has 42 private players in life and general insurance business sharing about 30 per cent of the market share in life insurance and 41 per cent of the market share in general insurance sector.

The frequency of natural calamities is a cause for concern. The destruction it brings with it leaves a big hole in the pockets of those affected. However, with a little care, you can avoid the financial setback. Since your house is one of your biggest assets, it makes sense to insure your house and its contents. We give you a lowdown on how to shop for the right policy.

What is home insurance?

There are two types of home insurance policies — basic fire insurance policy and a comprehensive policy, also called the householder’s package policy (HPP). Fire insurance policy covers your house against fire and other allied perils including lightening, storm, flood and riot. However, some insurers may ask you to pay an extra premium in order to cover disasters such as earthquake and landslides. You can also insure your house and contents against terrorism by buying an add-on cover.

HPP on the other hand packs in more covers. The basic cover bifurcates into two: one covers the structure of the building against fire and other allied perils and the second covers the contents of the house. Tenants can just opt for cover for just the contents. A HPP also offers optional covers that insure contents of your house against burglary, damage, mechanical or electrical breakdown.

How do you choose the sum insured?

The value of your house has three components: land, building and locality costs. Insurance will cover only the building cost. For example, if the market value of your house is Rs. 1 crore, of which the building cost is Rs. 30 lakh, your policy will insure only Rs. 30 lakh. “A civil contractor will tell you the cost of construction, which will vary depending upon the city,” says Rahul Aggarwal, CEO, Optima Insurance Brokers.

But, what happens when the entire house is brought down, like it happened recently in Uttarakhand where rows of houses got flushed away? “If the land is yours, you should be able to rebuild the house. But if you have an apartment, you alone can’t reinstate the house. Therefore it’s recommended for housing societies to buy insurance for entire premises,” says Rajagopal Gopalan, head, operations, Bharti AXA General Insurance.

There are two ways of buying home insurance: one is on the market value basis or depreciated cost basis and the other on the reinstatement basis. Don’t confuse market value for resale value. When you re-sell your house, you get the value of land and the locality as well. In insurance, market value is akin to the value of your house after factoring in depreciation. “Insurer will depreciate the market value by 2% per annum going up to 100% in 50 years,” says Aggarwal. Reinstatement on the other hand is the value of reconstructing the house. The insurer in this case will not deduct depreciation. Go for reinstatement cover even in case of the contents of the house. But keep in mind that the insurer will settle the claim only after the house is reconstructed. Some insurers may make partial payments to help you reconstruct the house.

What happens if you are underinsured?

The value of your house has three You will also need to review your cover periodically to ensure you are not underinsured. “If the policyholder underinsures himself, we assume he has agreed to self-insure for the remaining cost. The insurance claim in this case will reduce proportionately,” says TA. Ramalingam, head-underwriting, Bajaj Allianz General Insurance. Say, you bought building cover for R5 lakh. After five years, your insurer assesses its cost of construction to be Rs. 7.5 lakh. In this case you have paid for only two-thirds of the risk and therefore you will be paid only two-thirds of the claim.

How much does it cost?

Insuring the house and its contents is not very expensive. For instance, for a sum insured of R30 lakh for the building and R5 lakh for the contents a pure fire insurance cover that covers against fire and other allied perils along with a terrorism cover would come to about R2,000 for a year. Pack in burglary and theft cover for a sum insured of Rs. 5 lakh and the premium will be Rs. 3,155. Add additional cover for breakdown domestic appliances for a sum insured of Rs. 4 lakh, the policy will come for about Rs. 5,600 for a year. If you own a house you should buy home insurance as soon as possible. If you are a tenant you could insure just the contents.

What happens at the time of claim?

It’s important to cover your house, but do not ignore the claims process. At the time of a claim the insurer will have the damaged goods inspected thoroughly. Therefore you will need to ensure that you have made the right declaration and you have sufficient proof. “Insurer can refuse claim in case of subsidence building or poorly maintained building or unauthorized construction,” says Sanjay Datta, chief, claims, ICICI Lombard General Insurance.