Health Insurance, Cashless 'Juggernaut'!
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Case Details:
Case Code : INS054
Case Length : 10 Pages
Period : 2010-2011
Pub Date : 2011
Teaching Note : Not Available
Organization : -
Industry : -
Countries : India
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INS054) click on the button below, and select the case from the list of available cases:
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Health insurance in India was promulgated initially by mandated social health insurance1 through different schemes of central and state governments. It was more a group2 policy and was not designed either for specific medical conditions or for any individual/family coverage. Penetration3 of health insurance picked up only after private insurance companies players introduced individual/family health insurance policies with flexibility and additional features.4 Cashless Claim5 facility was one of such product which nullified the need of 'initial spending and claiming later' aspect and had become instantly popular among customers.
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Boosted by the popularity of cashless claim policies, health insurance grew at a brisk pace in India. Though the health insurance industry was growing, insurers complained that they were constrained by losses owing to factors like higher administration expenses, adverse claims ratio, high hospital charges and improper risk assessment.6
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To contain the losses, apart from other corrective measures, insurance companies proposed deduction and standardization of hospital charges.
When most of the hospitals refused the proposal, insurers went ahead and announced delisting the hospitals which rejected the proposal and scrapping cashless hospitalization facility.
This raised alarm in the customer groups and industry attracting the government, legal and regulating bodies to involve for an amicable solution.
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Excerpts
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1] A social health insurance scheme is one where the policy-holder is obliged or encouraged to insure by the intervention of a third party like employer or government agency.
2] Group Insurance is issued to a group, such as employees, credit union or trade association, and which provides coverage for individuals and their dependents depending on the policy offered.
3] Insurance penetration is defined as the ratio of premium underwritten in a given year to gross domestic product (GDP).
4] Private insurance companies in India were incorporated after 2000 as per the guidelines of IRDA.
5] Health insurance claims were usually first paid to hospital by customer and then reimbursed by insurance company to the customer. In cashless feature, insurance company is expected to pay directly to the hospital subject to prior approval.
6] "Indian Non Life Insurance Industry Performance Update-2009," www.careratings.com, June 2009
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