Has attitude towards insurance changed?

Sheenu Jhawar

To India, insurance as a concept is almost one and a half centuries old, having begun in the 1850s with the Tital Insurance Company, and continuing today, years later with several new and varied ventures.

However for the general public what does the IRDA mean and what implications does the IRDA Bill have. One thing is for sure, the customer is definitely getting spoilt for choice. Several private companies provide health insurance out on a platter. The government has re-awakened with a major facelift with MoUs being signed out to the TPAs, a novel concept in the field. There is by and large a huge hue and cry about IRDA. But what catches my concern is a fact different in vein altogether.

Who needs this insurance in the country, for whom has this bill been passed? The population at large before and after IRDA is obviously the same. Much effort has gone and is going for the most part into the infrastructure related aspects of the bill. But none so far to educate the population.

Is the insurance meant to be for the urban well-read elite then, who does not require any explanation or education, and will buy insurance as soon as a company opens up?

But chances are that a certain percentage from this group, might go to the US anyway for an operation, and the rest can still afford to pay for what is known as preferred providers, at the market price.

So if he can afford, why will he deem insurance necessary. Or is it for the man who needs subsidisation through risk sharing to be able to avail medical facility at an affordable price?

Several questions immediately spring up:

Who is this man? What is his demography? What illness does he normally get afflicted with? What are his hospital related costs anyway? And what is his perception of health insurance?

The government’s interest in the ’database’ structuring is all very well, but it doesn’t still say anything about educating the masses about the benefits of insurance. Even after all this musing, I need to ask one more question, which to my mind seems to be the most important of all. Even after knowing the whys and where offs of insurance, is he, the customer going to BUY it? What is the driving force behind an individual to buy health insurance. This aspect needs looking into as well, before we claim that a following policy has not worked.

To look deeper into one of the aspects of public insurance facelifts: Up until now, many policies of the government on health insurance have not been popular with the masses, (except on the more than occasional episode of fake medical bills for reimbursements!)

Mediclaim, as studies point out, was indeed favoured as compared to other policies like ESIS. However when not studied in relative terms, it has had its share of criticism as well. The fact that premiums are high in relation to the claim payments, example, average claim payments are only 58 per cent of average premiums, does not go down very well with the purchasers of the policy.

And yet as an answer to the existing scenario, here comes the news that: "For mediclaim policy customers, health insurance premiums are likely to show a considerable increase, if the insurance regulator has its way." The premium as of now is already considered high, then there was a 15-per cent hike in January this year. Added to it is the fact that, the commission for the TPAs will also have to come out from the pocket of the policy holder. What does this imply for the purchaser?

Consider this: Even though the government is taking on the third party administrators to facilitate their working. But at what price. The policy holder is paying for his policy so that he can get reimbursement in future, and he is also now paying extra for the price of that ’convenience’! Besides, it seems ironical that TPAs will get 5.5 per cent, on the face of it --- to get claims settled. However due to the high claim losses being incurred by the company, for curtailing these losses, TPAs will be offered incentive of 10 per cent for bringing down claims ratios to anywhere between 60 per cent and 90 per cent. What does this have to say about the motivation for a man to buy mediclaim policy, if at all he does, in the face of the following incentives?

And if the public at large is not satisfied with the claims, then where do these high claim losses figure from?

Even if the aforesaid have correct cost based evaluations, they still do not sound user friendly --- for the person who is going to pay all these costs. The bottom line is:

Insurance cannot be sold, it has to be marketed, because we are still a developing nation, a vast majority of the population, is coming to grips with their basic necessities, much less be prepared to give up, a decent percentage of its salary to a condition it doesn’t envisage in the foreseeable future.

In any case, it is only normal, day to day medical ailments of the common man, which are going to give a jump start to the insurance sector, not major urban-related medical ailments. Therefore, it is worth finding out, who that section is, what that section of society wants in his medical coverage, and how much is he ready to pay for it. Granted that the input has to exceed the output for policy viability, the crux of the problem however lies in making a viable package acceptable and good value-for-money to the masses. And thereafter upgrading it, once the purchaser is satisfied and develops faith in what he gets.

(The author is clinical auditor, Mid Stafford General Hospital, UK. She may be contacted at sheenujhawar@yahoo.com)