IRDA to establish health insurance database

Soumya Viswanathan - Mumbai

N Rangachary, Chairman, IRDA

It may be the most memorable parting gift for the healthcare industry from the the Insurance Regulatory Development Authority chairman, slated to retire in March 2003.

The chairman, N Rangachary has taken upon himself to establish a database for health insurance in an attempt to regulate the health insurance sector and ensure proper pricing of the premium. According to reliable sources, it is close to roping in the US-based research organisation, American Institute of Medicine Inc (AIM) to create and maintain the database. The project is learnt to cost approximately 300 million USD. The AIM has recently set up its Asia region office in Chandigarh.

Mr Rangachary however refused to name anyone. “The IRDA is in talks with a couple of organizations which are in the business of database development for health insurance. These discussions are still going on and no conclusions have been reached,” he said. Speaking on the importance of creating a database, the chairman said, “Without a database it would be difficult to introduce the range of products available in the menu of any health insurer in the developed world.” The chairman admits that due to the absence of reliable database insurers are unable to price their products properly.

Data required for health insurance is much more than the morbidity and mortality data, which is enough for Life Insurers, says Kamesh Goyal, GM, Bajaj Allianz, the only private insurer to market retail health insurance product called Health Guard. “Database generally required for health is average period of hospitalisation, average cost per day/ average cost for each type of illness.

Similarly we require break up of doctor’s fees /room/ pharmaceuticals etc for effective pricing. This information is needed age/sex/occupation wise.”

Another expert who has experience of working in the area of health insurance says that data recorded should also include health statistics of already insured members and procedures, time taken and charges in the accredited hospitals. He says that lack of standardisation in procedures and rates in the hospitals is posing a great problem to the insurers.

It is a known fact that health insurers are facing heavy losses, one of the reasons being irrational pricing of premiums, say experts. Unlike the ideal situation which requires that premiums be priced depending primarily on illness, they have been priced based on the loss figures under the particular age group, says Sanjeev Misra, general manager, Reliance General Insurance.

Experts also opine that the non-availability of extensive database is one reason private health insurance companies have not ventured into retail health insurance and existing ones have failed to design new products.

To regulate the health insurance sector, IRDA also wants to involve the Medical Council and standardise health treatment protocols. Says Mr Rangachary, “To introduce a proper workable medical insurance regime in India, it is necessary to seek and obtain the cooperation of all the significant parties viz. providers, medical institutions and the insurers.”

He also said that with regard to Law Commission of India’s proposal to undertake comprehensive review of insurance laws, insofar as healthcare is concerned, he wishes to propose definitions of health insurance in various forms.

IRDA also recently introduced training programme for the CEOs of TPAs to introduce a sense of professionalism. “It also serves to introduce them to the various nuances of health insurance and regulations so that they can understand the business better and are more sensitive to the needs of the policy holders,” said Mr Rangachary.

With the 18 TPAs having been finalised, MoUs signed, training programme for the CEOs of TPAs in place, and the task of drawing up a data base on hand, health insurance is certainly emerging as one of IRDA’s priority sectors. And as the chairman spells his vision to make health insurance popular and pricing more scientific, their efforts are not restricted to the professionals in the industry. “We want to ensure efficient customer service parameters,” he says. To make the common man aware of the various insurances available and educating them on their rights and responsibilities, they are coming up with an advertisement campaign to be aired on AIR and Doordarshan.