Optima Insurance Brokers Pvt. Ltd.

India’s proposed National Health Protection Scheme (NHPS), which is likely to be launched on 15 August with Prime Minister Narendra Modi’s Independence Day address, was announced on 1 February by Finance Minister Arun Jaitley in his Budget speech. It would cover more than 100 million poor families and provide INR 500,000 in annual medical coverage for secondary and tertiary healthcare for a family of five.

In fixing the NHPS premium, the government is banking on the scale of the scheme as well as previous schemes such as the Rashtriya Swasthya Bima Yojana, a government-run health insurance programme for those who live below the poverty line. Niti Aayog or the National Institution for Transforming India is in the last rounds of discussions with insurers and States. It is expected to finalise the full details of the health insurance scheme, and also a tender for bids from insurers by this month with an upper limit for the premium. At present, the ceiling is likely to be set for only one year and could be revised from the second year, based on the response.

NHPS is likely to have an annual premium of less than INR1,100 ($16.30) for each eligible household, with the central and state governments saying it should be closer to INR1,050 for every family. However, insurance industry sources say that insurers were keen on keeping the premium a bit higher at about INR1,500-2,000 per year for the scheme to be feasible.

The Indian insurance sector today faces the challenge of limited expertise and skilled workforce. Skilled workforce is required for risk based underwriting, creating innovative products that will appeal to people. Niche high-end skills in complex and highly-specialised areas such as risk management, credit evaluation and financial engineering are also required.

The lack of suitable candidates needed to handle such functions is the biggest challenge employers are facing today. A recent survey estimated that there is a need of at least 2.1 million insurance educated employees by 2025.

There is also a lack of awareness among students and young professionals about national and internationally recognised certifications and training for skill development. A recent market research reveals that awareness level of internationally recognised certifications and training is medium among young professionals, though there are many firms offering such courses.

The insurance industry is struggling hard to meet skill requirements. This is because the current education system does not consider the component of skilling in its curriculum, which in turn fails to churn out a skilled workforce necessary for the industry. Most Indian educational institutions continue to follow the traditional approach to teaching that is based on content delivery rather than on knowledge delivery. All these have created a huge gap in what the industry needs and the output of educational institutions.

More than 700 million Indians are estimated to be in the working age group (15-59) by 2022, of which more than 500 million will require some form of vocational or skill training. Statistics also show that 47% of graduates in India are not employable due to lack of English language knowledge and cognitive skills. For skilling to take wings, integration of skill development and education is essential.

The Health Ministry is drafting a law which will make any breach of privacy of health data punishable by up to five years and a fine of up to INR50,000.This means that insurers which use the health data of people to sell them health or life insurance policies will be affected once the Digital Information Security in Healthcare Act (DISHA) comes into force.

“Digital health data, whether identifiable or anonymised, shall not be accessed, used or disclosed to any person for a commercial purpose and in no circumstances be accessed, used or disclosed to insurance companies, employers, human resource consultants and pharmaceutical companies, or any other entity as may be specified by the Central government,” the draft says.

“Insurance companies shall not insist on accessing the digital health data of persons who seek to purchase health insurance policies or during the processing of any insurance claim. Provided that for the purpose of processing of insurance claims, the insurance company shall seek consent from the owner for access to his or her digital health data from the clinical establishment to which the claim relates,” it adds.

The proposed consolidation of National Insurance, United India and Oriental Insurance will decide the fate of 41,000 employees.Among the first casualties of a horizontal merger of three state-owned general insurers would be the elaborate layers of coordinating management.

The three public sector insurance companies reported a combined underwriting loss of INR155.91 billion (US$2.33 billion) for the financial year ended 31 March 2017.

Whether their merger will help in lowering losses from core operation will depend on how the merged entity goes about cutting costs. The biggest challenge will be streamlining manpower and the government will have to come out with a voluntary retirement scheme to let people move out.

The central government is allowing states to set up their own insurance companies to implement the Prime Minister’s Crop Insurance Scheme (Pradhan Mantri Fasal Bima Yojana [PMFBY]).

The move follows requests from several states as well as observations made by Comptroller and Auditor General (CAG) in its 2017 report that old crop insurances schemes which have now been merged with PMFBY, had been poorly implemented during the years 2011-2016.Launched in April 2016, PMFBY provides comprehensive crop insurance from the pre-sowing to the post-harvest stage against non-preventable natural risks at premiums that are low to cater to farmers.

The premiums are subsidised heavily, with the subsidies borne equally by the central government and the state.Claims are settled on the basis of yield loss assessed at the end of the crop season.

At present, five public sector insurers and 13 private insurance companies are empanelled to offer the scheme, the official said.The public insurers are Agriculture Insurance Company of India, United India Insurance, National Insurance, Oriental Insurance and New India Assurance.

The government is keen to launch the Ayushman Bharat-National Health Protection Mission (AB-NHPM), dubbed ‘Modicare’ and deemed the world’s largest public funded health insurance scheme, before 15 August, which is Independence Day in India.

Last week, Health Minister JP Nadda said the government planned to complete all pre-launch activities, including testing of the information technology systems for the AB-NHPM, by the end of July. The AB-NHPM, when it kicks-in, will subsume two on-going centrally sponsored schemes, the Rashtriya Swasthya Bima Yojana (RSBY) and the Senior Citizen Health Insurance Scheme (SCHIS).

The health insurance scheme, announced in the national Budget in February, aims to provide coverage of up to INR500,000 (US$7,700) to over 100 million poor families or 500 million people. This cover will take care of almost all secondary care and most tertiary care procedures. There is no cap on family size and age in the scheme, ensuring that nobody is left out. The insurance scheme also covers pre and post-hospitalisation expenses. All pre-existing conditions will be covered from Day One. Furthermore, beneficiaries will also be paid a defined transport allowance per hospitalisation.

The programme will require an estimated INR100 billion for the next two financial years starting 1 April 2018 and both the Centre and the various state governments will pay for the scheme.

The IRDAI has extended the deadline for linking Aadhaar, a 12-digit unique identity number issued to all Indian residents, with existing insurance policies from 31 March 2018 until the Supreme Court decides on the matter.

New insurance policies still have to be linked with Aadhaar, said the IRDAI. Policyholders are given six months from the date of buying the insurance policy to submit the Aadhaar number.

In the absence of Aadhaar, a client shall submit any of the officially valid document as mentioned in the Prevention of Money-Laundering (Maintenance of Records) Rules, it said. Under the rules, Non-Resident Indian policyholders are not required to surrender their policy for not having an Aadhaar number

The Supreme Court is hearing petitions that challenge the Aadhaar identification programme citing privacy concerns. There have also been concerns about possible leak and theft of data from the Unique Identification Authority of India (UIDAI) and the potential damage that may cause.

Regulator IRDAI has asked non-life insurers to ensure easy availability of third party motor insurance cover to vehicle owners, a move that will help states in implementing the Supreme Court order on road safety.The Supreme Court Committee on Road Safety had directed the states and union territories to periodically carry out checks to see whether vehicle owners have third party insurance cover.

The IRDAI circular follows complaints by states that cumbersome process of obtaining third party insurance is hampering implementing the apex court order. Several states, the Irdai circular said, have reported that insurers have a cumbersome process that involves inspection of the vehicle concerned and that vehicle owners have complained that it is not an easy process to obtain insurance.

In order to ensure ease of obtaining motor insurance liability, IRDAI said that “Insurers (non-life) shall ensure the easy availability of Motor TP Insurance and in no case can a request for a TP cover be denied”. It also asked them to liaise with the police authorities to facilitate issue/renewal of third party liability policy to owners of the vehicles who are not having third party cover.

The insurers have also been asked to provide facility to make available facility for obtaining online Motor TP.

HDFC Ergo has launched ‘Inherent Defects Policy’, a first-of-its-kind product in the non-life insurance sector.

The policy will compensate for the cost of repairing, restoring or strengthening of a new building or civil structures caused by inherent structural defect.

This product addresses one of the requirements of the recently enacted Real Estate (Regulation and Development) Act 2016 (RERA) that has mandated real estate builders to rectify any structural defects within thirty days, if brought to their notice in a period of five years from the date of handing over possession.

The cover is different from the standard property insurance cover. The inherent defects policy covers all those risks that are not covered by the fire policy. Besides structural defect, this will include poor workmanship. Since even small damages are covered, the premium is higher than what is paid out for property insurance.

The policy can be also be assigned to the new property owners. This means that if an apartment block is sold and the property is transferred to a cooperative society, the policy can be transferred to the society. Another reassurance from the policy provider is the knowledge that the project has been audited at the time of construction. The insurance company will appoint an independent technical inspection service to carry out monitoring activities on the quality of the building during the course of construction. This will include services ranging from sample design checks to witnessing tests at site.

The new policy can be obtained by the developer prior to the start of construction and will have five-year validity, which is co-terminus with the liability of the promoter under the new law.

According to the findings of a national ‘Cancer Financial Preparedness Survey’ by Future Generali India Life Insurance (FGILI), conducted in association with IPSOS, a leading global research firm, about 69 percent of people have no financial preparedness to deal with cancer.

The study states that the majority of Indians will dip into savings or take a loan to finance treatment for cancer.

The findings include:

Incidence: More than half (56%) of respondents were unaware of the incidence of cancer among family and friends. This is alarming, given that oncologists opine that 3 in every 10 Indians are likely to contract the disease by 2020. The survey revealed that 65.7%   (2 out of 3) cancer patients were detected in the 3rd or 4th stage of cancer.

Stage: 42% of respondents perceived themselves to be “somewhat” in the know of the various stages of cancer whereas 28% of respondents thought they were “completely aware”. In contrast, the oncologists’ survey revealed that only about 7% of patients hold “complete awareness” of the different stages of cancer, while 30% possess a “reasonable understanding” of the same.

Type: All respondents claimed to know about the different types of cancer (breast cancer and lung cancer featured high on the awareness radar at 45% and 36% respectively) whereas oncologists revealed that only a quarter of the people who visited them knew about the different types of cancer.

Cost of treatment: The majority of respondents estimated that the average cost of cancer treatment was INR390,000 (US$6,000). Oncologists disclosed the average cost of treatment to be upwards of INR500,000 depending on the type of cancer and stage of detection.