United India Insurance keen to re-enter overseas markets

Public sector general insurer United India Insurance has said it is looking to re-enter the overseas markets and will soon carry out a feasibility study to assess the business potential. 

The company was present in Hong Kong, but had shut it down in 2002. 

"We are exploring business potential in overseas markets. We will undertake a feasibility study for this soon. We are also studying the regulatory frameworks in some of the target markets in this regard," United India chairman and managing director Milind Kharat told PTI. 

Kharat said the company may look at markets of the Middle East and Sri Lanka to begin with, as these markets offer good business potential. 

"Many business houses from Tamil Nadu have commercial and business interest in Sri Lanka. So it is a natural extension for us. In the Middle East, there is considerable expansion in infrastructure, oil and energy and other sectors which again offers huge potential for us," he said. 

The country's largest non-life insurer New India Assurance is present in 22 countries. 

Many Gulf countries have announced large projects like airports, smart cities and so on, he said, adding that domestic corporates are also increasingly becoming a part of these developments. 

"Also, many of them are our existing customers here. They look forward to continuing their relationships with us. Therefore we see a sense in expanding our presence in these geographies," Kharat added. 

On the domestic business, Kharat said a stable government at the Centre has brought in a new kind of confidence in the people. 

"We believe this optimism will definitely help the industry perform better and we hope the insurance market will also benefit from this in the days to come," he said. 

United India Insurance has opened 1,114 micro offices last fiscal and it plans to strengthen these offices further by providing technical support as well as additional manpower, Kharat said. 

The company has provided online access to its agents across the country and is planning to use hand-held devices which will help generate a standard policy and receipt which can be delivered instantly to the policyholder. 

"Such innovations will help expand our business. Apart from opening more micro-offices, we would be recruiting about 14,000 agents to expand business," he said. 

Health insurers offer Nano price schemes

With increased penetration of government health insurance schemes like RSBY (Rashtriya Swasthya Bima Yojana) coupled with private hospitals building capacity across the country, health insurers are also looking at smaller markets.

Private health insurer, Star Health is at present piloting a Rs 1 lakh sum insured cover with an annual premium of Rs 1,000 across a few districts in Tamil Nadu and Kerala. "The increased penetration of healthcare facilities has resulted in lesser movement of patients to metros at least for routine procedures. If a person chooses to get a procedure done in a metro, the entire sum insured is wiped out very soon. On the other hand, the same policy can be better utilized if the same procedure is possible back in his home town," V Jagannathan, CMD, Star Health and Allied Insurance said.

And while a differentiated product offering may help insurers get volumes initially, officials state a growing population plus demand for quality health care is pushing insurers to look at such markets. "Today, customers from smaller towns and cities want an open product with minimal exclusions with many not minding to pay additional premium for the same," Renuka Kanvinde, associate VP at Bajaj Allianz General Insurance said.

With banks allowed to tie up with one standalone health insurer, penetration is expected to rise. "For mono line companies, it is not feasible to open branches in locations with limited potential as it takes them minimum four to five years to break even," Antony Jacob, CEO, Apollo Munich Health Insurance said. Nearly, 30% of the company's customer base resides in such locations.Even recent entrants are finding takers from the mini metros and other regions. For instance, Cigna TTK Health Insurance is seeing good traction in Aurangabad, Kochi, Indore and Kanpur.

Insurance company has to reveal claim computation

Right to information is recognized under the Consumer Protection Act (CPA). If an insurance claim is partially repudiated, the insured has a right to know how the claim has been computed and the reason why it has been rejected, either fully or partially. If this information is not given, it may be a pointer that the insurance company has not computed the claim properly.

Case Study: Rohit Patel, a businessman and former president of the Indian Merchant Chamber, frequently travels abroad. He was insured under Tata AIG's Travel Guard Annual Platinum Policy valid from May 13, 2010 to May 2, 2011.

During a trip to USA, Patel fell sick and had to be hospitalized. ON August 28, 2010, a surgical procedure known as Endoscopic Retrograde Cholangiopancreatography (ERCP) with balloon extraction of bile duct stones with stent placement was performed on him under anaesthesia.

The three-day hospitalization expenses came to US$ 23360.56. The claim was submitted to Tata AIG, and he presumed that it would be settled.

Months later, Patel was surprised to know from the hospital that only a part of the bill had been paid and a balance amount of US$ 9862.31 was outstanding. Patel asked the insurance company why he had not been informed about the partial settlement of the claim. He also demanded that the balance amount be paid to the hospital, or a computation be given to clarify the basis on which the claim had been partially settled. But Tata AIG gave an evasive reply without disclosing the claim calculation.

Patel then filed a complaint before the Mumbai Central district forum. He demanded that Tata AIG should either satisfactorily explain the computation of the claim, else pay the balance amount. The insurance company contested the complaint. It gave the details of the break-up of the claim paid, but contended that it was in accordance with the sub-limits stipulated under the policy. The company also argued that the dispute involved adjudication of complicated issues, which was not permissible under the CPA's summary procedure.

The computation of the claim amount given in the reply before the forum revealed that the cost of the surgery had not been paid, even though the sub-limit under the policy covered surgical treatment up to US$ 10,000. So, there was a short payment of US$ 9862.31.

Having been caught on the wrong foot, the insurance company now came up with a unique argument that there was no proof that ERCP under anaesthesia is considered a surgery. This stand was falsified from the hospital bill, which included the surgeon and anaesthetist's charges for the ERCP.

On the basis of medical evidence, the forum concluded that ERCP was a surgical procedure. It its judgment dated September 1, 2011, delivered by the presiding officer B S Wasekar for the bench, along with member H K Bhaise, the forum held that the insurance company was liable to pay for the surgery. Since the amount of US$ 9862.31 was within the coverage limit, the forum held that the entire amount would be payable by the insurance company directly to the hospital, and report compliance. Additionally, the forum awarded Rs 10,000 to Patel as compensation and Rs 5,000 as costs.

Conclusion: The consumer has a right to be informed about the manner in which his claim has been computed. Since the money has to be paid to the hospital, it is advisable to get the insurance company to pay the amount directly to the hospital in US dollars, so that fluctuation in currency rate would not affect the claim.

Non-life insurance space to have innovative products soon

Insurers indicated that product meant for specific risk profiles after assessing the individual customers would also be launched

Customers might soon see specific general insurance products suited to their profession, income-bracket, age and need, if the recommendations of the Working Group on File & Use guidelines for the non-life sector is accepted by the  Insurance Regulatory and Development Authority (Irda).

The working group has said general insurers can launch a product for a short period in a defined pilot area with defined exposure limits on a pilot basis after informing Irda. After gaining experience on the product, they might finalise the product and take it through approval process depending upon whether it is a retail product or commercial.

Rakesh Jain, CEO of Reliance General Insurance, said from a use-and-file perspective, insurers will be enabled to offer customised products for different individuals rather than generic products.

The industry had been recommending a use-and-file system for some product types to co-exist with file-and-use system so that they could respond to customer requirements faster under a use-and-file system. The working group, after considerable deliberations on the subject, has recommended a use-and-file system for commercial products. Retail products will continue to be governed by file and use.

The current file-and-use system requires all products to be filed with Irda before these can be used. The working group report said the process of developing innovative products requires experimentation, testing, refinement and finalisation, but the current system does not afford this freedom of testing and refinement and jumps from experimentation to finalisation.

In April 2014, Irda had set up a working group to review the file-and-use norms for the general insurance industry. The regulator said these norms that have been followed since the past eight years, insurers have filed various products as well as add-ons and most of them have been approved by them.

Insurers indicated that product meant for specific risk profiles after assessing the individual customers would also be launched.

Though insurance companies do market testing across different segments before a new product is launched, officially companies are not allowed to launch pilot products.

Sector experts said this would enable insurers to test the market beforehand, so that they do not burn their fingers launching a product that is a misfit.

Having a product management committee as envisaged by the working group will ensure that the adequate due diligence is done before any product is sent for approval, with respect to its features, usability and pricing, said a senior non-life industry executive.

Amarnath Ananthanarayanan, CEO and MD, Bharti AXA General Insurance, explained that pilots should be allowed for specific geographies, since India is a diverse market. “A product launched as a pilot in north India may not be representative of the entire country. We are hoping that we are allowed to launch products in a few states pan India,” he added.

In order to bring a more structured approach to the process, which takes into account the interests of all stakeholders of an insurance product, the working group has recommended the creation of a board-led product management committee.

The role of product management committee will be akin to the role of a regulator within an insurer. The committee affords an internal self-regulatory mechanism that will create appropriate structures and processes for effectively managing the operations in the entire product life-cycle. All products either under file-and-use or use-and-file will be approved by the committee.

Products under file-and-use will be sent to Irda after the committee’s approval for regulatory approval process, while products under use-and-file might be sold by an insurer after the committee’s approval under information to Irda.

The working group's report said it is expected that Irda should revert with its observations on the products under file-and-use within 30 days of receipt of product filing, failing which insurers might be free to sell the product. Though the insurance regulations had talked about product approvals under 30 days, in practice there have been delays due to various causes. Jain of Reliance General Insurance added the 30-day approval will help Irda to have a time frame to revert to insurers.

At present, insurance companies have classified products as retail and commercial products. Retail products that are primarily designed for retail customers and commercial products that are primarily designed for customers other than individuals and includes firms, companies, trusts, associations, societies, government, etc.

Ananthanarayanan further said under the use-and-file guidelines, there is no clarity on whether it would mean flexibility in tariff. He said the exact meaning of the terminology should be clarified by the regulator.

It would also become easier to track products since the working group has recommended a Unique Identification Number (UIN). UIN is proposed to be allotted through an automatic online process and will be a unique number for each company, each product and each add on cover.

Under the existing file and use system, any product approval is valid till eternity. This is proposed to be changed and it is recommended that products once approved under any of the approval systems will remain valid for 5 years after which they will have to be filed again. The underwriting of a private general insurance company said that with changing market dynamics, it is not viable to have one product existing for several years and hence insurers would have the product segmented out every three years.

Insurers want rich to pay more for universal health cover

Insurers and other health insurance industry stakeholders feel that the proposed universal health cover (UHC) must be underwritten in a variable way, so that the rich pay higher premium to help fully subsidise health insurance cover for the really poor. 

"Personally, I feel that the government should pay full premium for health cover for the below poverty line (BPL) segment and it should be subsidised for the middle class. 

"However, the rich must be asked to pay the full premium for getting health insurance cover," New India Assurance Chairman-cum-Managing Director G Srinivasan told PTI here today. 

The idea is that people may freely go for add-on or top-up health insurance cover on their own. 

"It's the basic model of universal health cover that we are working on. Health cover will be the same for all people because as an insurer, we don't differentiate between people, Srinivasan said. 

The fact that only 20 per cent of people have health cover, out of India's 124 crore population, makes it clear that India is a hugely underpenetrated market when it comes to health cover. 

Individual health cover is only 2 per cent, while 4 per cent have group cover and another 14 per cent are covered under various central and state schemes like the central government's Rashtriya Swasthya Bima Yojana. 

A leading doctor at the renowned Sir Gangaram Hospital in the national capital also agreed with the largest general insurer. 

"If somebody is poor, then the government must pay the full premium. However, the premium can be raised if the person covered is rich. It could be brought down a bit for the middle class," Sir Gangaram Hospital Chairman and Head of Surgical Gastroenterology and Lliver Transplant Saumitra Rawat said. 

Experts also said premium amount may be brought down in case policies are underwritten on a large scale, thus enabling economies of scale for insurance providers. 

"Cost of underwriting a health insurance policy will become affordable if the volume goes up," ICICI Lombard General Insurance Company Chief for Underwriting and Claims Sanjay Datta said. 

The government should provide basic coverage for all diseases and some higher coverage for critical illnesses like cancer and heart diseases, though all secondary and tertiary diseases must be covered by insurance providers themselves, he said. 

Insurers also said that universal health cover would address the issue of under-penetration of insurance to a great extent and its scope could be enlarged by forming a pool to cover serious diseases like cancer.

J&K floods may trigger higher motor claims than Uttarakhand

With the valley battling one of the worst floods in recent decades, general insurers are anticipating claims mostly from motor vehicles, shops and establishments and home inundated with water.

Bajaj Allianz which has a bancassurance partnership with the Jammu and Kashmir Bank is also monitoring the situation closely and expects auto loans to exceed losses on account of last year's floods in Uttarakhand. "We have a large number of insured assets that include motor as well as non motor. We anticipate the motor loss to be higher in J&K because the number of vehicles in the region is more as Srinagar is a big city when compared to Uttarakhand," Vijay Kumar, chief technical officer, motor insurance, Bajaj Allianz General Insurance said. The company recently set up a dedicated helpline to assist customer register claims.

"Going by reports of damage there will be an additional loss on the motor front during this quarter," G Srinivasan, chairman and managing director, New India Assurance said. He added that as the flood waters have not receded and communication facilities are yet claims have not yet been registered so far."

"The total losses in Uttarakhand were higher as the region is home to numerous industrial units and power plants," Srinivasan said. The company net loss (post reinsurance) due to the Uttarakhand floods stood at Rs 50 crore last fiscal.

Milind Kharat, chairman and managing director, United India Insurance also said that the losses on account of J&K floods were expected to be lesser than the Rs 850 crore company's losses in Uttarakhand floods last year. "While we anticipate more claims from J&K on account of the density of the population, but the average claim size would be lower as it's largely a tourist spot," Kharat said. He added that the company has readied seven surveyors to travel to the region to assess the loss once the water recedes.

5 Things to know about India’s Healthcare System

Here are 5 things you should know about India’s healthcare system.

1. Rural Versus Urban Divide: While the opportunity to enter the market is very ripe, India still spends only around 4.2% of its national GDP towards healthcare goods and services (compared to 18% by the US). Additionally, there are wide gaps between the rural and urban populations in its healthcare system which worsen the problem. A staggering 70% of the population still lives in rural areas and has no or limited access to hospitals and clinics. Consequently, the rural population mostly relies on alternative medicine and government programmes in rural health clinics. One such government programme is the National Urban Health Mission which pays individuals for healthcare premiums, in partnership with various local private partners, which have proven ineffective to date.

In contrast, the urban centres have numerous private hospitals and clinics which provide quality healthcare. These centres have better doctors, access to preventive medicine, and quality clinics which are a result of better profitability for investors compared to the not-so-profitable rural areas.

2. Need for Effective Payment Mechanisms: Besides the rural-urban divide, another key driver of India’s healthcare landscape is the high out-of-pocket expenditure (roughly 70%). This means that most Indian patients pay for their hospital visits and doctors’ appointments with straight up cash after care with no payment arrangements.  According to the World Bank and National Commission’s report on Macroeconomics, only 5% of Indians are covered by health insurance policies. Such a low figure has resulted in a nascent health insurance market which is only available for the urban, middle and high income populations. The good news is that the penetration of the health insurance market has been increasing over the years; it has been one of the fastest-growing segments of business in India.

Coming to the regulatory side, the Indian government plays an important role in running several safety net health insurance programmes for the high-risk population and actively regulates the private insurance markets. Currently there are a handful of such programmes including the Community Health Insurance programme for the population below poverty line (like Medicaid in the US) and Life Insurance Company (LIC) policy for senior citizens (like Medicare in the US). All these plans are monitored and controlled by the government-run General Insurance Corporation, which is designed for people to pay upfront cash and then get reimbursed by filing a claim. There are additional plans offered to government employees, and a handful of private companies sell private health insurance to the public.

3. Demand for Basic Primary Healthcare and Infrastructure: India faces a growing need to fix its basic health concerns in the areas of HIV, malaria, tuberculosis, and diarrhoea. Additionally, children under five are born underweight and roughly 7% (compared to 0.8% in the US) of them die before their fifth birthday. Sadly, only a small percentage of the population has access to quality sanitation, which further exacerbates some key concerns above.

For primary healthcare, the Indian government spends only about 30% of the country’s total healthcare budget. This is just a fraction of what the US and the UK spend every year. One way to solve this problem is to address the infrastructure issue… by standardising diagnostic procedures, building rural clinics, and developing streamlined health IT systems, and improving efficiency. The need for skilled medical graduates continues to grow, especially in rural areas which fail to attract new graduates because of financial reasons. A sizeable percentage of the graduates also go abroad to pursue higher studies and employment.

4. Growing Pharmaceutical Sector: According to the Indian Brand Equity Foundation (IBEF), India is the third-largest exporter of pharmaceutical products in terms of volume. Around 80% of the market is composed of generic low-cost drugs which seem to be the major driver of this industry.

The increase in the ageing population, rising incomes of the middle class, and the development of primary care facilities are expected to shape the pharmaceutical industry in future. The government has already taken some liberal measures by allowing foreign direct investment in this area which has been a key driving force behind the growth of Indian pharma.

5. Underdeveloped Medical Devices Sector: The medical devices sector is the smallest piece of India’s healthcare pie. However, it is one of the fastest-growing sectors in the country like the health insurance marketplace. Till date, the industry has faced a number of regulatory challenges which has prevented its growth and development.

Recently, the government has been positive on clearing regulatory hurdles related to the import-export of medical devices, and has set a few standards around clinical trials. According to The Economic Times, the medical devices sector is seen as the most promising area for future development by foreign and regional investors; they are highly profitable and always in demand in other countries.

Drop Hospitals From Insurance List If They Press Patients to Pay in Advance

The Madras High Court has indicted the State government for not removing the hospitals, which demanded advance payment for admission of patients and directed the patients to claim the amount from the medical insurance company, from its hospitals network.

A division bench of this court had on an earlier occasion directed the State government to inform every network hospital that if any complaint from claimants regarding demand of money for admission was received, the hospital concerned will be removed from the network. In spite of such a direction, the hospitals were demanding advance payment and the government had not taken any action against them, Justice N Paul Vasanthakumar observed.

The judge was passing orders on two writ petitions praying for a direction to the United India Insurance Company to reimburse the amount spent for treatment. In the first case, a staff of the High Court had admitted his six year old son for treatment. The hospital insisted him to pay the entire amount in advance and he paid `2.98 lakh. However, his son died.

In the second case, Jalaja admitted her husband in a hospital for treatment and she had to part with `2.50 lakh in advance.

When both made the claims, the United Indian Insurance Company refused reimbursement on the ground that the scheme itself was a cashless model, which meant that no reimbursement was permissible and the company would pay the claim to the hospital.

The judge said the petitioners were covered under the TN Medial Health Fund Scheme, which was subsequently modified under NHIS. The modification of the scheme could not be put against the petitioners. They were entitled to claim medical reimbursement, the judge said and told the company to reimburse the amount.

CLT20 insurance cover set to soar

Champion’s League T20 (CLT20) is set to get bigger, at least in terms of insurance cover. The much-anticipated cricket league, slated to be held in India from September 17, will see a jump of nearly 100 per cent in the cover for each match, taking the total insurance cover amount to Rs 150-200 crore. This will be on a par with the cover for the Commonwealth Games held here in 2010.

“We have got the coverage policy in place and it will be no less than a standard IPL (Indian Premier League) match cover. For the matches, we have also secured coverage against acts of terrorism disrupting the game,” Sanjay Patel, secretary of the Board of Control for Cricket in India (BCCI), told Business Standard.

It is learnt each match is covered for about Rs 5 crore, higher than in previous editions of the tournament. This year’s edition will have around 30 matches. The event cancellation policy will also cover damages resulting from terrorist-backed activities. The cover for CLT20 will safeguard BCCI against any loss of revenue on account of cancellation of any match for reasons beyond its control (terrorism, bad weather, natural calamities, strikes, etc).

AOL and Allianz are learnt to have brokered the insurance coverage for this year’s CLT20.

An insurance sector official said, “The cover for the league this year will be higher than usual, as it is happening in India. Therefore, stakes will be higher in terms of ratings, gate revenue and other such aspects of each match. It could mean a marginal rise in premium as well.” Usually, the premium for such covers during IPL is about two-three per cent of the sum assured.

Typically, public sector general insurers lead in bidding for high-voltage sporting events. In 2011, when India won the ICC World Cup, BCCI had purchased a Rs 400-crore event cancellation policy.

This edition of the CLT20 will be held across four cities — Hyderabad, Mohali, Bangalore and Raipur.

Cigna TTK Health Insurance expands in 5 more cities

Cigna TTK Health Insurance a joint venture between US-based Cigna Corporation and Indian conglomerate TTK Group, today announced the launch of its branches in Pune, Ahmedabad, Chandigarh, Coimbatore, and Cochin as a part of its expansion plan.

Cigna TTK Health Insurance currently has its presence in Mumbai, Delhi, Calcutta, Chennai and Bangalore.

Sandeep Patel, chief executive officer and managing director, Cigna TTK Health Insurance Company Limited, said in a statement, "We deliver products and services that will help increase awareness and assist customers to lead healthier lifestyles. Given the continued rise in medical costs in India, coupled with a parallel increase in lifestyle related diseases, there is an urgent need to upscale health insurance penetration in the country".

He said that there was huge potential from these important markets and the unique combination of health products, wellness solutions and customer focused services will be successful in increasing health insurance penetration in the country.

Launched in February 2014, Cigna TTK has already built a strong reputation in launching innovative products and services aimed towards specific individual and family health needs, with processes that are easy to experience, the release said.

Consumer as king: ‘No depreciation on reinstatement policies’

Background: Indemnification by an insurance firm can be on the basis of the value of the subject matter insured, or on the basis of reinstatement value to restore the subject matter to its condition prior to the loss or damage. Where depreciation is applicable, reimbursement is according to the sum insured after deducting the depreciation. But in reinstatement policies, reimbursement is the replacement cost. Depreciation cannot be made applicable to policies issued on reinstatement basis, as per a recent ruling of the national commission in the case of New India Assurance v/s Kamboj Ultra Sound & Diagnostic.

Case Study: Kamboj Ultra Sound & Diagnostic had obtained an Electronic Equipment Insurance policy from New India Assurance for insuring its diagnostic equipment— CT MX 640 whole body CT Scanner with 8X10 multi-format camera, voltage stabilizer, lead glass and frame for lead class manufactured by Wipro GE Medical System. This equipment was installed at Jupiter Golden Hospital and was insured for Rs 65,75,000.

The equipment was initially covered under a manufacturer's warranty, and subsequently insured under an EEI Policy from January 9, 1997, to January 8, 1998. The terms of the policy stated that the coverage was on replacement basis.

On October 25, 1997, a scanning procedure came to a standstill. A Wipro engineer inspected the equipment and gave a quotation of Rs 9,15,200 for replacement of the X-Ray tube. Kamboj lodged a claim under the policy. Meanwhile, when the policy was due for renewal, the premium of Rs 99,823 was accepted with 30% loading. Later, the claim was rejected on the grounds that the tube had undergone 100% depreciation and its value was nil.

Kamboj filed a complaint before the Delhi state commission. The firm contested, saying the tube was not covered as it had completed 42,470 exposures at the time of taking the policy. It said there was an endorsement on the policy that no claim was payable for tubes that have over 40,000 exposures.

The state commission directed the firm to reimburse the replacement cost of the tube along with 12% interest and awarded Rs 50,000 towards compensation. The firm then moved the national commission.

Justice K S Chaudhari, in his August 27 order, noted that the company was aware of the extent of usage of the tube at the time of issuing the policy, but had opted to cover it. The national commission held that a question of depreciation cannot arise in a policy issued on reinstatement basis. Accordingly, it upheld the order.

Conclusion: Consumers must ensure claims are settled on the basis of policies issued.