Optima Insurance Brokers Pvt. Ltd.

India is projected to be in the top of the chart in the Asia Pacific region that would see maximum escalation of healthcare cost which are offered as a part of the employer benefits programme, according to the 2017 Global Medical Trends Survey.

In the region, India (20.0%), Indonesia (11.0%) and Malaysia (15.0%) are leading the upward cost trend, followed by Mainland China (10.3%), Hong Kong (9.6%) and the Philippines (9.6%).

The survey found that the medical insurers in Asia Pacific are projecting the gross cost of health care benefits to rise 8.6% this year.  Globally, the projected increase is 7.8%. Furthermore, the outlook for reining in costs in the near term is not optimistic. Half of all insurers in Asia Pacific expect higher or significantly higher medical trend costs over the next three years.

When asked what are the most significant cost-driving factors outside the control of employers and vendors, almost three-quarters (71%) cited the high cost of medical technology, followed by providers’ profit motives (47%).

Nearly three-quarters of insurers (73%) ranked overuse of care due to medical practitioners recommending too many services as the most significant factor driving costs related to employee and provider behavior.

Managing the medical trend

More employers are implementing both traditional and innovative approaches to manage rising costs. According to the survey, requiring pre-approval for scheduled inpatient services, placing limits on certain medical services and using contracted networks of providers are cited as the most effective tools to help manage costs.

Other findings from the survey include:

Non-communicable diseases- Insurers in Asia Pacific report cancer (82%), cardiovascular disease (72%), and musculoskeletal/back illness (44%) as the top three diseases.

Having good quality data and using it properly is important for companies in managing medical costs- Respondents in Asia Pacific are mostlikely to receive high-level claims or detailed claim data identified by top 10 causes or medical conditions.

Managing stress-  Concerns about employee stress continues to rise. While 61% of insurers globally now include treatment for mental health and stress in their standard medical insurance programmes, only 36% in Asia Pacific offer such coverage. Mental health remains an exclusion in many countries in the region.

The Indian government-sponsored crop insurance scheme (PMFBY) launched last year is losing its sheen for the global reinsurers.The coverage under the scheme has increased to 40 percent of cropped area in FY17-18. More than 1 million farmers have been given cover under this scheme, making India the third largest agriculture insurance market in the world after US and China.

The PMFBY will have a higher profile in FY2018 as the government has allocated INR90 billion (US$1.4 billion) for the scheme but may have to increase the provision. In 2016-17, the government allocated INR55 billion but later revised the Budget estimate to INR132.4 billion. Data from the General Insurance Council showed that compared to a market share of 5.5 percent in FY16, it grew to 16.1 percent in FY17.

Although claims amounted to a little over INR59.6 billion against more than INR158.9 billion in premiums, the global reinsurance have reduced their exposure. While the domestic reinsurer, General Insurance Corporation of India (GIC Re), is providing cover for crop insurance, this may not be adequate when 50% of cropped area is to be covered in FY19. Global reinsurance support would be required for that.

With effect from August 1, Insurance has been made mandatory for all Emigration Check Required (ECR) category passport holders who seek jobs in 18 countries which have been notified by India.

According to the Ministry of External Affairs notification, every Indian applying for emigration clearance from the concerned Protector of Emigrants (PoE) should obtain an insurance policy for a minimum period of two or three years and should be covered for a sum of Rs 10 lakh in the event of accidental death or permanent disability leading to loss of employment while working abroad. Insurance will be valid irrespective of change of employer or the insured worker’s location during the policy period. It’ll also remain valid during the person’s visit to India or any third country.

This move by the MEA through the Pravasi Bharatiya Bima Yojana 2017 scheme, will benefit nearly 70% of blue-collared workers proceeding for overseas employment. Most of the blue-collared workers going abroad do not opt for insurance and it’s only when something goes wrong they realize it’s important.The mandatory insurance cover will also help create a database of ECR workers abroad.

To ensure the financial stability of the PSU general insurers, government has ordered for the strict adherence to the prudent underwriting practices.

The Department of Financial Services under the Ministry of Finance sent a letter to the heads of all Public Sector Unit (PSU) general insurers on 28 June 2017 in this regard. The letter said: “To ensure that unhealthy underwriting practices in these companies do not cause unnecessary financial strain on their financial stability, it is desirable that prudent underwriting practices suggested in government advisories are followed strictly.”

A senior official of the Financial Services Department has confirmed by stating “It is true that we have noticed the gross misuse of underwriting rates in almost all general insurance firms in India. So, we have decided to take prompt and corrective action against those wrongdoings in the interest of customers/policy holders in this matter. We have also asked the Chairmen and Managing Directors of all PSU general insurers to kindly note the concern and strictly focus on prudence in underwriting.”

This move from the government is due to the fact that even after 17 years of liberalisation, the insurance industry continues to register huge underwriting losses every year, and it is an investment income which drives the growth of the industry.

IRDA allowed health insurance portability in July 2011.

Since then the number of health policies which have been ported is considerably small. As per the industry data only 1 lakh health policies in the financial year ended March 2017. The major proportion of such policies is of PSU insurers which were ported to private companies.

People want to port their policies for a number of reasons. One, they may have faced difficulties in the processing of the claim, they may not be happy with the features of their existing product or New products have come into the market that offer additional benefits.

Conversely, one of the main reasons for the low portability rate is that customers normally realize the need to port after a claim is made. Given that most claims are made because of lifestyle ailments, the new insurers approached may refuse to accept the policies offered because of the policyholders’ existing health conditions. Another reason is that agents are not remunerated for referring policyholders who wish to switch insurers.

As insurance experts we advice our clients to be aware of the product and its terms and conditions where he/she is interested in porting the policy. One needs to check the applicable waiting periods for coverage of pre-existing ailments, specific ailments, general exclusions, any co-pay /sublimates for ailment/ deductible applicable, in the new product before porting the policy.

The Union road transport ministry along national highways connecting Gurgaon to Jaipur, Mumbai to Vadodara, and Ranchi to Mahaulia launched cashless health insurance scheme for injuries on highways to address financial woes that over a third of road-trauma victims in India face from the treatment costs.

Shankar Prinja, associate professor in health economics at the Postgraduate Institute of Medical Education and Research, Chandigarh, who led the team that evaluated this scheme by doing a three-hospital study at the George Institute for Global Health, New Delhi by tracking 2,200 road accident victims found that without insurance, such victims or their households spend on average Rs 25,000 on treatment during the first month after the accident, while the average spending crosses Rs 65,000 in the subsequent months.

The cashless insurance plan on the highways has made a difference. Even when victims had to pay for treatment, the analysis found significant differences in the out-of-pocket, or personal, expenditures on treatment between the victims covered by the scheme and those out of it. Patients with the most severe levels of injuries covered by the cashless scheme had an average personal expenditure of Rs 8,500 compared to the Rs 25,000 by those with comparable injuries not covered by the plan. The scheme, whose premium is paid by the Centre, provided free treatment of up to Rs 30,000 to road accident victims in government-empanelled hospitals easily accessible from the three segments of national highways.

Basis the strong evidence of financial risk protection with the cashless plan, Shankar Prinja and his team have recommended expanding the scheme to cover highways across the country.

In 2000, the private companies were allowed in insurance sector and at present there are 31 general insurance companies in the private sector. There are four state owned companies, viz. New India Assurance, United India Insurance, Oriental Insurance and National Insurance.

For the first time in over one and half decade privately held general insurers have overtaken state owned insurers in market share in April. Private insurers captured 51.63% of the general insurance market and the public sector managed 48.37% in April as reported by Press Trust of India.

In terms of gross written premium (GWP), general insurance industry grew by 16 per cent to Rs.12,206 crores on April 30, 2017. In April, the four government owned general insurers saw their GWP grow by 5.42% to Rs.5,904 crores while the private sector expanded GWP by 27.88% to Rs.6,302 crores, according to data available with Insurance Regulatory and Development Authority of India (IRDAI).

Also, the market share in PSU general insurers is showing a declining trend from the last three years. The market share of PSU insurers come down from 55.09 per cent in FY15 to 53.21 per cent in FY 17 whereas growth in private players rose from 44.91 per cent FY15 to 46.79 per cent in FY17.

The growth in the industry for the fiscal year2017 has been mainly due to increase in crop insurance segment where the private players have shown an increase of more than Rs.400 crores, compared to the insignificant growth for government owned insurers.

Full form of GST is Goods and Services Tax. It is an indirect tax reform which aims to remove tax barriers between states and create a single market.GST will unify all the Central and State taxes into a single tax and would eliminate the surging tax effect or double taxation on sale of goods and services.

Even as 95 per cent of women are aware of health and fitness, only 74 per cent go for a checkup when they are unwell, according to a recent survey. However, when it comes to health insurance, women are on top of their game — 47 per cent have medical insurance, 65 per cent said they were fully aware of insurance, and 77 per cent said they knew how to submit a claim, according to a survey – Women Health and Insurance.

The Mental Healthcare Bill’ has been passed in Apr’2017 in the Lok Sabha and it decriminalizes suicide attempt by mentally ill people and provides services for people with mental illness.

It also includes a clause which obligates insurers to make provision for medical insurance for treatment of mental illness on the same basis as is available for treatment of physical illness. Currently, health insurance plans in India do not provide coverage for mental health disorders.

As per National Mental Health Survey of India 2015-16, 1 in 20 people in India suffer from depression.

The study showed that on an average out of -pocket expenditure per month was approximately 1000 to 1500 rupees and qualitative interviews revealed that this is a big challenge. In the absence of state or insurance coverage for most families, a large proportion of payments for treatment are out-of-pocket expenses.

The introduction of mental health insurance will help in promotion of mental health literacy among the population. This would also reduce the stigma around the mental illness and enable the people to perceive it same as physical ailments.