Mediclaim & Health Product 2018

A Report on
Disease Burden Analysis and Optimal Mediclaim Selection

(Reference city : Jaipur)
SUBMITTED BY:
NEHA DUGAR
12BSPHH010608
IBS HYDERABAD
A Report on
Disease Burden Analysis and Optimal Mediclaim Selection
(Reference city : Jaipur)
A report submitted in partial fulfillment of

The requirements of
MBA Program at
IBS HYDERABAD
SUBMITTED BY:
NEHA DUGAR
Enrolment No.: 12BSPHH010608
Distribution List:
1. Mr. Prashant Rathi (Company Guide)
2. Dr. Aruna Kumar Dash (Faculty Guide)
DECLARATION
This is to certify that this report is submitted towards partial fulfillment of the requirements of MBA program of
IBS Hyderabad.
This report document titled “Disease burden analysis and optimal mediclaim selection” has been carried out
by me as part of the completion of the study at N.K Kothari Wealth Consultants Pvt. Ltd. under the guidance of
Mr. Prashant Rathi, Director, NK Kothari Wealth Consultants Pvt. Ltd.
This report has been formally submitted to Dr. Aruna Dash, Faculty, IBS Hyderabad.
Neha Dugar
12BSPHH010608
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ACKNOWLEDGEMENT
This project has been the culmination of multiple efforts and therefore I would like to extend my sincere gratitude to
the following people for their constant guidance and support:
I would also like to extend my sincere appreciation to Mr. N.K Kothari, Mr. Prashant Rathi, Mr. Kaustubh Kach-
chava, Miss Geetika Mishra, Mr. Asif Khan, Mr. Lokesh Karamchandani and all the other members in the team for
giving me valuable guidelines, inputs and for creating a conducive environment for learning throughout this period.
I am grateful to my faculty guide Dr. Aruna Dash for his constant assistance, suggestions and encouragement. Fur-
ther, His role has been instrumental in guiding me right from the commencement to the completion of the project.
Surpassing the place and time constraint, He made sure that he was always available when required.
Lastly, I would be failing in my duty, should I not acknowledge the support of my family and friends at all times.
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TABLE OF CONTENTS

Contents Page No.
Declaration 3
Acknowledgement 4
Certificate 5
List of tables 7
List of figures 8
Executive summary 9‐11
Scope of the study 12‐14
Health expenditure in India-Pre and post liberalization 15‐17
Introduction to health insurance 18‐22
History of Mediclaim 23
Industry analysis 24‐31
Profile of the company 32‐33
Opportunities and threats of Health insurance industry 34‐36

Third party administrators and their role in Health insurance in-
37‐39
dustry
Data analysis and interpretation 40‐63
Sample case study
o Case Study 64‐65
o Observation & Recommendation 66‐72
Conclusions 73
Limitations 74
Scope for further research 75
Practical implications of the study 76
Gaps & suggestions for improvement in mediclaim 77‐79
Bibliography 80
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LIST OF TABLES
TABLE NO. TITLE PAGE NO.
1 Health expenditure in India pre liberalization 15
1A Claim settlement history of TPA'S as per IRDA REPORT 2011‐2012 40
2 Total no of claims received by six TPA of the city 40
3 Cases pertaining to New India Assurance 41
4 Cases pertaining to National Insurance 42
5 Cases pertaining to United India Insurance 42
6 Cases pertaining to Oriental Insurance 43
2.A Probability of diseases for sample 43
2.B Classification of cases for Park mediclaim 44
7 Total expenses on diseases for the sample 45
2.C Average expenditure on each disease 45
2.D Compilation of total claims for each disease by all the TPA 46
2.E Diseases having maximum probability 47
8 Major diseases and expenses under opthamology 47
9 Major diseases and expenses under orthopaedics 47
10 Major diseases and expenses under gastroenterology 48
11 Major diseases and expenses under cardiovascular 48
12 Major diseases and expenses under Tumours 48
3.A Cost of major surgeries in hospitals-a Short research by Medimanage 50
13 Inflated expenditure figures for Hospital A 51
14 Inflated expenditure figures for Hospital B 52
15 Inflated expenditure figures for Hospital C 52
16 Comparison of all healthcare products available in the market 54‐57
2.F Top up and Super top up plans 63
17 Sample case study‐family details 64
18 Sample case study‐Current insurance plans 64
19 Recommendations regarding the current plans of the sample 64
20 Competitive product prices 65
21 Comparison of all the family floater plans available 66‐71
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LIST OF FIGURES
FIGURE NO. TITLE PAGE NO.
1.1 Health Expenditure in India – Post Liberalization 16
1.2 Market Shares of all Insurance Companies 24
1.3 Competitive Structure of Health Insurance Companies in India 25
1.4 Working Environment of TPAs 37
2.1 Probability Of Diseases For Sample For 8531 Cases 44
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EXECUTIVE SUMMARY
A widespread lack of health insurance is the challenge that faces Indian healthcare system today. Although
some form of health insurance is provided by the government and major private players, the health insurance
schemes available to Indian public are generally basic and inaccessible to many people. Only 11% of the popu-
lation has some form of health insurance coverage. For the small proportion of Indians who do have some in-
surance the main provider is general insurance company i.e its four subsidiaries(New India assurance, National
insurance, United India insurance and Oriental insurance). Gic obtains funds for underwriting from other coun-
tries. Private healthcare houses have also been established.
The current statistics on health insurance indicate that out of 1.2 billion populations only about 2.5 million of
population is covered by Mediclaim scheme. The reason for lack of popularity of this scheme could be several.
The three biggest problems :

There are three overarching problems that plague India’s health care sector today, and that must be addressed in
response to patients’ changing needs: quality, access and affordability. These problems are exacerbated by:
1. A shortage of doctors across India: India only has 700,000 doctors serving a population of more than a
billion people. The situation is further exacerbated by the limited number of specialists available to treat
this vast patient population. The Government is implementing some measures, including a “return bond”
requiring doctors who pursue their higher studies abroad to return to India after completing their studies.
But the problem is far from solved. Doctors in India are paid poorly – a freshly minted doctor with over
five years of medical education is paid 15,000 rupees per month (around $275). It’s not rocket science to
understand why most doctors prefer to work in better-paying urban hospitals rather than poorly stocked and
staffed rural hospitals.
2. Poor medical infrastructure: In 2011-12, India’s central and state governments together spent only about
906 billion rupees – approximately 1 percent of GDP – on health care. The government’s 12th five-year
plan proposes to increase health care spending to 1.6 percent of GDP, ignoring the Planning Commission’s
recommended health care spending rate of 2.5 percent of GDP. This has had a direct impact on India’s
primary health care centers, sub-centers, community health care centers and direct hospitals, which have
fallen woefully short of the numbers of people they are expected to serve. In community health care cen-
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ters, for example, this shortfall ranges from 33%- 91 percent across Assam, Bihar, Karnataka, Madhya
Pradesh, Maharashtra, Uttar Pradesh and West Bengal.
3. Poor health insurance resulting in a higher share of private expenditures: Due to poor insurance pene-
tration in India, Indians pay 60 percent of all health care expenditures out-of-pocket - comparable to poorer
countries like the Central African Republic (63 percent), Nigeria (62 percent), Bangladesh (65 percent) and
Vietnam (58 percent). People in the United States (12 percent), United Kingdom (10 percent) and Germany
(13 percent) spend far less because of better social security coverage, deeper insurance penetration and
higher state expenditures on public health.
Although India’s health insurance market is one of its fastest-growing segments . Only 2.2 percent are covered
under private health insurance, of which only 10 percent covers rural people. So there is a tremendous
market to be tapped. This untapped potential motivated me to carry forward my research on this area. Also very
few studies have been conducted on this topic so this would add to the review of literature.
The following project report will give an overview of the optimal mediclaim selection to be made by an
individual. As known increasing medical costs and inflation is the biggest challenge today the need for medic-
laim is on the rise. The perception of people towards health insurance business in that it is a money making me-
chanism. Besides the reasons provided above for the lack of health insurance another fact is that the people of
our country do not have an estimation of the ideal health insurance coverage to be taken according to their sui-
tability. This project will first provide an overview of the disease burden analysis in the city of Jaipur. This in-
formation has been obtained through the yearly MIS records of the third party administrators. The data given
vas for individual patients and their expenditure on the afflicted disease. The data has then been classified into
fourteen categories according to the severity of the diseases. Further there is an expenditure analysis on each
category of disease. This way the estimate of the expenditure will help the company in providing value added
and correct health insurance coverage to be taken by the customer.
The third party administrators have been the main source of information for the data collection of the
project. This is because the information provided by them regarding the number of claims gives an idea about
the prevalence of diseases in the city.
After finding out the major health risk categories in the city through the arrived probabilities there is a face to
face survey held with the doctors of each of the departments to find out the five most common problems under
each health risk category. The expenses regarding the five common problems under each category is recorded
and the maximum out of them is found out.
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Next comes the healthcare inflation into picture. Due to the rising medical costs and the shortage of beds as well
as poor infrastructure in our country inflation is on the rise. For understanding purpose the maximum expendi-
tures have been shown along with their calculated inflation figures. This is done to educate the people that a
cover of a certain amount may be sufficient for today but after a leap of twenty or thirty years it will not suffice
due to the rising inflation.
Along with the lack of awareness about the need for health insurance policies people do not have the correct
knowledge of the features and the exclusions to be checked while buying the policy. Moreover the knowledge
regarding the appropriate sum assured and premium is also incomplete in people. Therefore first of all a com-
parative analysis is carried to compare all the health insurance products available in the market. They are com-
pared on certain features like pre and post hospitalization , critical illness, day care treatments etc.
Further is an explanation about the top up and super top up plans available in the market. The detailed discus-
sion about the difference between both the type of plans has been explained in detail later.
Lastly through a sample case study of a family the recommendations regarding the best options for mediclaim
has been provided. The suggestions provided are considering the premium aspect as well as other additional
benefits while arriving at a conclusion. The information regarding the different policies has been collected
through the brochures and policy wordings of the companies. The premium rates are given for each age bracket
in the policy wordings of the company.
In this way it is a path breaking study meant to identify the major health risk hazards in the city, study
their financial impact and provide recommendations regarding the most optimal mediclaim policy to be
selected.
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SCOPE OF THE STUDY
Inarguably the potential market for insurance buyers is tremendous in India and offers great scope for growth.
While estimating the potential of the Indian insurance market we are often tempted to look at it from the pers-
pective of macro-economic variables like the ratio of premium to GDP (which is indeed comparatively low in
India) but the fact is that the number of potential buyers of insurance in India is certainly attractive.
However, this ignores the difficulties of approaching this population. New entrants in other mass industries such
as consumer products or retail banking have discovered this after burning their fingers. Much of the demand
may not be accessible because of poor distribution, large distances or high costs relative to returns.
Also, most new entrants have a tendency to target the business of existing companies rather than expanding the
market, this is myopic. This not only leads to intense competition for the new players and their much of their
effort is spent on trying to capture existing customers by offering better service or other advantages. Yet, the
benefits of this strategy are likely to be limited. For example, 50% of the current demand for general insurance
comes from the corporate segment. The corporate are likely to shop around for the best rates, products and ser-
vice. Nevertheless, the corporate segment, as a hole will not be a big growth area for new entrants. This is be-
cause penetration is already good here, companies receive good service because of their size and rates are tariff
governed .In both volumes and profitability, therefore, the scope for expansion is modest.
A better approach may be to examine specific niches where demand can be met or stimulated, like targeting the
chief wage earners and more importantly, moving to rural India. The main thrust of a new insurer’s strategy
should be to stimulate demand in areas that are currently not served at all. If insurers are to take advantage of
India’s large population and reach a profitable mass of customers, new distribution avenues and alliances will
be imperative. In recent years, there has been a liberalization of the Indian healthcare sector to allow for a much
needed private insurance market to emerge. Due to liberalization and a growing middle class with increased
spending power, there has been an increase in the number of insurance policies issued in the country. In 2001
02, 7.5 million policies were sold. By 2003-4, the number of policies issued had increased by 37%, to 10.3 mil-
lion.
The Insurance Regulatory and Development Authority (IRDA) eliminated tariffs on general insurance as of
January 1, 2007, and this move is expected to drive additional growth of private insurance products
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The IRDA believes that eliminating tariffs will encourage scientific rating and adoption of better risk manage-
ment practices, and lead to independent pricing for each line of business, so that premiums will be based on ac-
tual risks and costs.
The implementation of the new policy also will encourage the development of innovative practices and cus-
tomer-friendly options for policyholders, boosting penetration. Removal of tariffs also will result in wider ac-
ceptance of individual health coverage. Health insurance will make healthcare more affordable to larger seg-
ments of the populace, boosting healthcare expenditures per household and driving the demand for quality care.
Finally, the elimination of insurance tariffs will serve as a litmus test for further legislation, such as co-
payments and hospital accreditations, which the government plans to implement over the next two to three
years. In the post liberalization era, some companies have been licensed to act as third party administrators of
health services. The objective is to strengthen the health insurance industry and increase its penetration by
bringing more professionalism to claims management, facilitating cashless services to policyholders, and reduc-
ing the claims ratio. Currently there are 25 licensed third party administrators in the Indian health insurance in-
dustry. In another effort to improve the insurance prospects for India, the IRDA is focused on standardizing
medical definitions to ensure consistent pricing and products, and is providing incentives for stand-alone insur-
ance companies. (Currently only Star Health exists as a stand-alone health insurance company.) In addition,
government subsidies and tax incentives for health insurance are expected to attract key players to the industry.
In response to liberalization, a large number of international private insurance companies are moving into India
and forming joint ventures. Two prominent examples are Max New York Life, a joint venture between Max In-
dia and New York Life, and ICICI Prudential Life Insurance, a joint venture between the ICICI Group and UK-
based Prudential plc. Some companies are experimenting with more targeted forms of insurance coverage. For
example, ICICI Prudential is offering plans designed specifically for diabetics. We can expect to see more inno-
vations as the health insurance market evolves in the coming years. While the liberalization of the healthcare
sector will increase the penetration of insurance policies, the widespread use of health insurance in India could
take many years. One reason is that insurance companies lack the data they need to assess health risks accurate-
ly. In addition, today’s insurance products work on an indemnity basis—that is, they reimburse patients only
after they have paid their healthcare bills. Since many people cannot afford such large payments, even if they
are subsequently reimbursed, they will not choose to purchase medical insurance.
The Indian health insurance market accounted for 3.2 per cent of the overall insurance industry in 2011-2012.
Key factors driving the growth of the health insurance sector are rising healthcare expenditure, increasing dis-
posable income and the rise in the number of people with affluent lifestyles. Though the health insurance mar-
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ket is currently dominated by public-sector companies, the top six private health insurance companies increased
their cumulative market share from 17.2 per cent to 29.1 per cent during 2007 to 2011.
Financial Burdens for Curative Health Care

The financial burdens of health care in India are enormous and growing. Given the constraints and difficulties in
raising additional public resources and the rapid growth in spending on health care, if will be very difficult for
the public health system to keep pace. We argue that even if the government decides to increase the level of
public spending on health services dramatically, a substantial financial burden would still remain for users of
health services.
To be more precise, if direct public spending on health facilities is increased by 50 per cent – which would in-
deed be a remarkable achievement – it would at the most reduce the share of private expenditure on health from
75 to 62.5 per cent. It is also very likely that the additional public spending would augment private expenditures
rather than replace them. Public spending should be focused more on primary health care and treatment for
those with very limited ability to pay. Already, the demand which for such services exceeds the supply. There is
enormous scope, therefore for increasing public spending on health without reducing the demand for private
health services. The public health sector is rapidly becoming the “provider of the last resort”. Higher income
individuals and those without chronic disabilities rely increasingly on private providers with some degree of
insurance or reimbursement. As this progress, it may result in further deterioration in the quality of public
health facilities and the public
This report is an attempt to educating the youth about the requirement and necessity of taking up health insur-
ance. Moreover the basis of differentiating between different mediclaim policies should also be understood.
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Health expenditure in India-Pre and post liberalization
India has entered a high growth rate trajectory of 9 per cent. This high rate of growth, however, is not accompa-
nied by a high level of social development. The social sectors particularly health and education have been ac-
corded a very low priority in terms of the allocation of resources. For example, public expenditure on health
services as a percentage of Gross Domestic Product (GDP) in India was less than 1 per cent pre liberalization.
Table 1 – Health expenditure in India pre liberalization

Trends in Health Expenditure in India
YEAR HEALTH EXPENDITURE AS A PERCENTAGE OF
GDP
YEAR. REVENUE CAPITAL TOTAL
1950‐51 0.22 NA 0.22
1955‐56 0.49 NA 0.49
1960‐61 0.63 NA 0.63
1965‐66 0.61 NA 0.61
1970‐71 0.74 NA 0.74
1980‐81 0.73 0.08 0.81
1985‐86 0.83 0.09 0.91
1990‐91 0.96 0.09 1.05
1995‐96 0.89 0.06 0.96
2000‐01 0.82 0.04 0.88
2001‐02 0.79 0.04 0.9
2002‐03 0.82 0.04 0.83
2003‐04 0.86 0.06 0.86
CURRENT 4
SOURCE-52ND ROUND OF NSS, 2001 POPULATION CENSUS
Health sector suffered more during post-liberalization period. Economic Liberalization policy was introduced in
India during the middle of 1991. The major thrust of economic liberalization is to give more leverage to market
forces so far allocation of resources among various sectors of the economy is concerned. In the preliberalization
period of independent India, the health expenditure as percentage of 6the GDP increased as a whole from 0.22%
in 1950-51 to 0.96% in 1990-91. However, it has seen a steady decline ever since in the Post-Liberalization pe-
riod from 0.96 % in 1990-91 to 0.91% in 2003-2004.
It is not only that India spends very low proportion of its GDP on public health services, another problem is the
wide ranging regional variations in expenditure on public health services is also reported.
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POST LIBERALIZATION
Low public sector spending on health services results in over-dependence on private sector for getting health
services. In India the share of private sector on health care expenditure constitutes around 72 % and household
sector being the major constituent of the private sector claims 68.8% of expenditure on health care . In other
words out-of-pocket expenditure comprises major share of expenditure on health care.
All the three layers of governments (federal, state and local) spend only 23.8 per cent of the total expenditure on
health services after liberalization. NGO sector is almost non-existent in terms of spending on health services.
Now we will try to understand the current dimensions of healthcare expenditure in India. Health expenditure
can be divided into private source of financing and public sources of financing. Given below is a brief under-
standing of the kind of financing for healthcare in India.
Health care expenditure is also increasing day by day
Figure 1.1 - Health Expenditure in India – Post Liberalization
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In case of Private financing, there are 3 options, available with any person, which
are under-mentioned:-
Out of Pocket – Self financing. I.e. the person pays from his or her own pocket & savings.
Private Health Insurance – The expense is taken care by the health policy, which the person owns.
External Source – By way of managing personal loans from friends & family or Banks etc
In the case of Public Financing option, the person again has 3 options, under mentioned:-
State Funded – The Govt. provides for the medical care or gives some subsidy.
Social security – In developed countries by paying a small amount to the state, you are covered for medical.
External funded – Aid or grants etc
The current problem with Indian healthcare system is that the out of pocket expenditure is rising in the
population because of the lack of awareness about health insurance. This also becomes a reason that our
country lags behind other nations in the healthcare sector. Following is an abstract from a recent study
conducted on the out of pocket expenditure in various countries.
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INTRODUCTION
Basic Concept-Health Insurance
Health insurance or medical insurance also known as mediclaim is a type of insurance coverage that pays for
medical and surgical expenses that are incurred by the insured. Health insurance can either reimburse the in-
sured for expenses incurred from illness or injury or pay the care provider directly. Health insurance is often
included in employer benefit packages as a means of enticing or retaining qualified employees. As health insur-
ance in India is synonymous with hospitalization, health insurance policy will mainly cover hospitalization ex-
penses provided :insured undergo treatment in the hospital for at least 24 hours. The expenses for hospital fees,
nurses, surgeon cost of blood, operation theatre are all covered. While certain diseases that are specified under
the policy terms and conditions are excluded from coverage or may be covered after one or two years of the pol-
icy issue date. Also cosmetic treatments and those which do not require hospitalization are not covered. Health
insurance can be broadly classified into these categories:
1. Indemnity plans
 Individual health plan
 Family floater plan
2. Defined benefit plans

 Critical Illness plan
 Daily hospital cash benefit plan
3. Unit linked health plans
INDEMNITY PLANS
Also called as mediclaim policy and was introduced in India in 1986.These plans work on the principle of reim-
bursement-they take care of the actual cost incurred by the insured during the period of hospitalization. So while
the insured might have the cover of 2 lacs, if during the course of hospitalization the insured incurred an ex-
pense of Rs.75000 the insurance company will reimburse Rs.75000 only. While an individual health insurance
policy caters to the medical requirement and expenses of a single person insured. In a family floater the insured
could cover himself ,his spouse ,children, siblings and even parents in law sometimes. A family floater policy is
less expensive as compared to an individual policy. The total cost of purchasing individual policies for all the
four members of the family is more than an umbrella cover for the entire family. It is suitable for a family with
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lower health risk. In case of only one claim in an year the family member in a family floater plan gets a larger
coverage than what he might get in an individual policy. However family floater policy can be renewed only till
the senior most member of the family reaches the maximum age of renewability allowed by the particular insur-
ance company which is usually 65 to 70 years after which other family members need to take a fresh policy.
Cashless policies under the category of policies means that the health insurance company directly settles the bill
with healthcare provider whether the hospital or nursing home. This is to reduce the direct financial burden on
the insured at the time of hospitalization. Therefore whatever bill is raised by the healthcare provider ,Insurance
company settles it directly with the healthcare provider through TPA. The TPA acts as a mediator between
hospitals and insurance companies and settles the medical bills of the insured. It is readily essential for the in-
sured to understand the role of hospitals while availing the cashless mediclaim facility. To avail the insurance
health cashless facility one needs to approach the hospital which is under the preferred provider network of the
respective insurance company. The cashless mediclaim is of two types: Planned mediclaim –it is when an in-
sured is aware of the hospitalization two or three days in advance. Emergency-It is when an insured or his fami-
ly member requires immediate hospitalization either due to grave illness or accident.
DEFINED BENEFIT PLANS
These plans are also called hospital cash plans. They pay defines benefits depending on the number of days the
insured is hospitalized. Health insurance plans that have a defined benefit are equally popular. Since the benefits
under these plans are fixed they work well as income supplement products. For instance a critical illness plan
gives a predefined lump sum if the policy holder is diagnosed with a critical illness. The policy terminates after
this. The idea behind the lump sum is to compensate for the loss of income due to the critical illness. The point
to be noted is that the indemnity or the mediclaim policy covers expenses incurred on hospitalization and treat-
ment while a defined benefit plan is meant to cover incidental expenses and loss of income due to hospitaliza-
tion. Unlike indemnity plans these policies do not place limits on claims. In most indemnity plans there are sub-
limit on the amount that can be claimed under different heads. For instance many plans cap the claim on daily
room rent up to one percent of the sum assured. Many are not paid in full because the sublimit on a particular
head has been exhausted. A fixed benefit plan suits people who want to enhance their existing health cover and
these plans are a must for people who can suffer loss of income due to hospitalization. Most salaried people get
paid medical leave but if the employer of the insured does not offer this benefit then a fixed benefit plan comes
to the rescue. These plans are more suitable for self employed professionals.
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UNIT LINKED HEALTH PLANS
Just like unit linked insurance plans (ULIP) a unit linked health plan (ULHP) is a combination of a health insur-
ance cover and a market linked investment plan. Like any health plan the cost of the cover depends on the age,
gender, health and other underwriting variables. The insurance charges do not vary due to the savings compo-
nent of the premium. The customer decides the premium to be set aside for the health cover. After paying for
the coverage the rest of the premium (after deduction of charges such as premium allocation, policy administra-
tion and fund management) goes into savings pool. ULHP’S provide a unique combination of health insurance
and investment. Apart from giving health protection, they help building a corpus that can be used to meet ex-
penses not covered by health policies. Just like a basic health insurance plan this too covers and individual for
the hospitalization expenses. Except for one or two companies none of the ULHP offer hospitalization expense
reimbursement. Even in case of few companies that offer hospitalization expenses reimbursement , the risk
premium deducted for providing the mediclaim facility is significantly higher than what is offered by their own
associate company. The major benefit of ULHP is the savings can also be used to pay for treatment of pre exist-
ing diseases not covered by health plans till three to four years of buying the policy and that too subject to con-
tinuous renewal. For instance, if an individual is hospitalized for a pre existing disease before the waiting period
is over a mediclaim policy will not pay anything. With a ULHP one has an option of withdrawing from the cor-
pus. ULHP’S also have maturity benefits. The systematically built savings pool can take care of medical ex-
penses even after the policy expires. The major limitation of ULHP is that there is no cashless facility .This
means individuals to pay from their pockets and get the amount reimbursed later. There is also no claim bonus.
In a health policy for every claim free year the sum assured is increased by around 5 % without any change in
the premium. A ULHP does not have this benefit.
HEALTH INSURANCE-NON COVERAGE AREAS
In some situations despite having health insurance cover the insured may have to shell down the cost through
his pocket. These situations are generally called exclusions. These exclusions are also called “IMPAIRMENT
RIDERS”. A “Rider” is a separate attached to a standard policy that documents coverage for a condition that is
generally not covered by a standard policy; or exclusion of a specific condition that generally would be covered
by a standard policy. An “Endorsement” is similar to a rider but is included in the body of the policy. In general
the following items are excluded from the health insurance cover:
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 Pre existing diseases at the time of buying the policy are generally excluded. Also the complications arising from
pre existing diseases are usually considered a part of pre exiting disease. A lot of diseases might go back a long
way. The insured should make sure that he discloses the details of pre existing diseases. This is the single biggest
problem in medical insurance claims.

 Certain disease will be excluded in the first year of the policy. The basic premise of the exclusion is that the in-
surance cover is not meant to protect us if we anticipate something happening in the near future. In other words
insurance be strategic and essentially provides for unforeseen events or emergencies.

 Injury or disease caused by nuclear weapons is excluded. This of course is a distant possibility but should be
known. Similarly a less possibility of injury or disease caused by war is also usually excluded. It is important to
understand what the policy says about the terrorist events.

 Expenses on any injury or disease incurred during first 30 days from commencement of the policy is excluded.
This clause however is not applicable to the renewal of the policy. Also in case of accident a person is covered.

 Pregnancy and child birth is generally excluded from mediclaim policies. However in one of the significant ver-
dicts, the consumer forum directed Oriental insurance to bear the cost of the treatment given the circumstances of
that particular case. If we are planning a family it is important to check this exclusion before getting the policy.

 Cosmetic surgeries cost of spectacles and dental treatment are generally excluded from mediclaim. Treatments
other than allopathic are also excluded. It may be important to check that whether psychological or physiological
diseases are covered or not.

 Plastic surgery for cosmetic treatments is not covered. However plastic surgery on account of accident
or illness is covered.

 Expenses arising from any treatment of HIV+ or AIDS are usually excluded. This is very important. It is
important to check this clause with an insurer.

 Medical expenses arising from misuse of liquor, drugs etc is also not included in the health insurance
policy.

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The basic idea behind this list is to ensure that every policy holder is aware of such exclusions that are a part of
standard industry practice and enable them to ask the right questions. In the long rum asking the right questions
is the best way to avoid unnecessary hassles.
CHANGING REGULATIONS IN THE HEALTH

INSURANCE DOMAIN
In the recent past, the insurance regulator, Insurance Regulatory and Development Authority (IRDA) has
brought in a few required changes. Some of the most important changes that were brought in by IRDA in the
recent past were Insurance Portability and health cover for senior citizens. From October 1, 2001 India has
opened doors to Health Insurance Portability. This allows switching a mediclaim policy from one insurer to
another without losing out on coverage due to exclusion. So if a customer has a policy and wants to switch to
another insurer after a year he will be allowed to do so while retaining the benefit of carrying forward the avail-
ing period served. Before October 1st if we needed to move to a new health insurance company, it was required
to purchase a new health insurance policy losing all the benefits that our existing health insurance policy would
have accumulated. Health insurance portability is bound to make insurers compete with each other to deliver
better services and to retain existing clients. This could possibly lead to another advantage for clients.
TAXATION BENEFITS
Income tax allows for several taxation benefits for availing medical insurance. Under section 80D both individ-
uals and HUF’S can claim deduction. In case a Hindu united family is taking the deduction, the medical insur-
ance policy can be taken in the name of any member of the family. Deduction is available upto 20000 for senior
citizens and 15000 in other cases for insurance of self, spouse and dependent children. Additionally a deduction
for insurance of parents is available to the extent of 20000 if the parents are senior citizen and 15000 in other
cases. Therefore the deduction available under this section is to the extent of Rs.4000 .From accounting year
2013-2014 within the existing limit a deduction of up to Rs 25000 for preventive health checkups is available. It
may be noted that prior to April 1 ,2009 premium payment was required to be done only by cheque .Credit card
or other online payment mechanism where not allowed. Now all payment modes except cash payment are ac-
cepted.
-22-
History of Mediclaim scheme
The government insurance companies started first health insurance in 1986, under the name Mediclaim; thereaf-
ter Mediclaim has been revised to make it attractive product. Mediclaim is a reimbursement base insurance for
hospitalization. It does not cover outpatient treatments. First there is used to be category-wise ceilings on items
such as medicine, room charges, operation charges etc. and later when the policies were revised these ceilings
were removed and total reimbursements were allowed within the limit of the policy amount. The total limit for
policy coverage was also increased. Now a person between 3 months to80years of age can be granted Medic-
laim policy up to maximum coverage of Rs. 5 lacs against accidental and sickness hospitalizations during the
policy period as per latest guidelines of General Insurance Corporation of India. This scheme is offered by all
the four subsidiary companies of GIC. Mediclaim scheme is also available through private companies now.
Working of Health Insurance
To purchase health insurance, we need to pay an annual fee to the company for this coverage known as “pre-
mium. We choose the amount of coverage that we want, by paying a high or low premium. The higher the pre-
mium the more the coverage. Let’s say, we choose a coverage of Rs 500,000 for the year. If during the course
of the year, we incur some medical costs due to disease or injury – the insurance company will reimburse us up
to the maximum of Rs. 500,000. This Rs. 500,000 can be used in one time or through multiple claims in one
year. ”
This payout by the insurance company can be claimed in two ways:
1. After the charges have been paid by our upfront. Claimed as a reimbursement where in we bear the
costs first and then file a claim to the insurance company and it’s paid back to us.
2. Cashless settlement – where if the treatment is sought in a hospital which is associated with the insur-
ance provider, the insurance company pays the hospital directly.
-23-
IN
NDUSTR
RY AN
NALYSIIS
As per
p IRDA repport 2011-12
2, health Insuurance regisstered 14.05%
% growth (inn terms of prremium earnned) in 2011-
12 ass compared to the previo
ous year. Thhe Indian heaalth insurancce market acccounted for 3.2 per centt of the overr-
all innsurance inddustry in 20
011-2012. Key
K factors driving
d the growth
g of thhe health inssurance secttor are risingg
healtthcare expennditure, incrreasing dispoosable incom
me and the rise
r in the number
n of people
p with affluent life-
stylees. Though the
t health in
nsurance marrket is currently dominaated by public-sector com
mpanies, thee top six pri-
vate health insurrance compaanies increaased their cuumulative maarket share from 17.2 per
p cent to 29.1
2 per cennt
durinng 2007 to 2011.
2
Unlike life insurrance, wheree LIC rules a major chunnk of the marrket, health insurance
i is thinly distribbuted amongg
varioous players. Health insu
urance is a more
m intricate product thhan life insurrance and coomes in a loot of variants
serviing various niches.
n Thatt is the reasoon why healtth insurancee market is not
n ruled by a single playyer. Here’s a
detaiiled health innsurance rev
view of the leeading playeers in India .
Maarket shares
Nattional insuraance 114.11
New w India assuurance 1
17.89
Oriental 1
11.94
Uniited India 1
15.09
Icicci Lombard 1
12.04
Starr health 1
11.06
other private pllayers 18
Figure – 1.2 – Maarket Sharess of Insurancce Companies
Source : IRDA Report 2011--12
-24-
Figgure 1.3 – Competitive Structure of Health Insurance Coompanies in India
Sourcee : IRDA, India
-25-
National Insurance Co. Ltd.
Celebrating its 106 glorious years, NIC is the oldest insurance company in India (even older than LIC). With a
14.11% market share, National Insurance Co. Ltd. is the third leading player in the health insurance sector and
the fastest growing public non-life insurer. With its robust network of 1,340 offices and 15,200 employees,
NIC serves over 16 million customers.
 Business leader award by NDTV Profit in 2011

 Unserved market penetration award by Indian Insurance Awards in 2012
 Outstanding social contributor of the year award by Indian Insurance Awards in 2012
 Recognized as best in service in health insurance
 Best customer service by HT-Ma Rs survey in 2010-11
 Rated AAA/Stable by CRISIL, suggesting a sound financial health
Bajaj Allianz General Insurance Co. Ltd.
Bajaj Allianz is the joint venture between Bajaj Finserv Limited and Allianz SE. In a short span of time, the
brand made its way to the leading health insurers in India. Features like tie-ups with over 3,200 network hospi-
tals and 24X7 call assistance for claims settlement is the proof of their customer oriented approach.
 Lowest claim rejection ratio among private health insurance companies

 The only private insurer to make a whopping profit of Rs 100 crore in the last 4 years
 ISO re-certified for claim processing
New India Assurance Co. Ltd.
New India is the first wholly Indian owned insurance company in India. With a 17.89% market share, it stands
tall as the nation’s leading health insurer. Bolstered by a network of 1068 offices and 21000 employees, New
India has always tried to add an Innovative approach to insurance products. As a health insurer, New India As-
surance launched mediclaim policies that cover Ayurvedic / Homeopathic and Unani system of medicine (lim-
ited to 25% of the sum insured), a first of its kind initiative.
 Rated A- (Excellent) by A.M. Best Co., reflecting its robust financial framework
 The only Indian insurance company to be rated by an international rating agency
-26-
Bharti AXA General Insurance Co. Ltd.
Bharti AXA is a joint venture between Bharti Enterprises, India’s leading telecom business group and AXA
Group, a global leader in insurance.
Recently, it has gained huge attention of the market by transforming the way a claim is perceived by the cus-
tomer. With their new strategy, they have managed to speed up the claim settlement process by assigning a
dedicated claim handler to each insured person making a claim. The brand has also come up with an innovative
health insurance product ‘Lifestyle Protection Solution’, that promises to take care of not just health expenses
but also lifestyle expenses of the insured.
 Claims initiative of the year award by Star of the Insurance Awards in 2013
 Best performance in insurance category by Hyundai’s CCS Vendor Conclave in 2013
 Best product innovation award by Indian Insurance in 2012
Oriental Insurance Co. Ltd.
Incorporated in 1947, Oriental Insurance Company is a general insurance company owned by the Central Gov-
ernment of India. With over 900 offices and 16,000 employees, Oriental Insurance enjoys 11.94% market share
and stands tall as the 5th biggest player in the health insurance sector.
Its claim settlement ratio is high and so is its Incurred claim ratio (102.83%), reflecting a high level of trust and
reliability, customers can put in this brand.
 Best public general insurance award by CNBC TV18 in 2011

 Best bank and financial institution awards by MCX in 2011
 AAA rating given by ICRA, indicating a sound financial health
-27-
United India Insurance Co. Ltd.
United India Insurance, set up in 1938, is one of the oldest insurance companies in India. In 1972, as a conse-
quence of nationalization of general insurance, a number of Indian and foreign insurers merged together with
United India Insurance. From that point, there was no turning back for the brand. At present with a 15.09%
health insurance market share, United India stands only second to the New India Assurance in the health insur-
ance domain. Supported by 1,340 offices and a diligent workforce of 18,300 employees, the company has in-
sured over 10 million people.
 Innovation in product award for super top-up medicare in 2012

 General insurer of the year – public sector award from Bloomberg UTV in 2012
Future Generali India Insurance Co. Ltd.
Future Generali is a joint venture between Future Group, India’s leading business house and Generali Group,
Europe’s largest insurance provider. To give you an idea of how gigantic this group is, Generali Group employs
1,00,000 people serving 70 million clients in 68 countries. Future Generali differentiated itself as a brand by
introducing the concept of mallassurance channel that is providing total Insurance solutions at shopping malls.
 A+ rating given by A.M Best global rating agency, indicating a robust financial framework
HDFC ERGO General Insurance Co. Ltd.
HDFC ERGO General Insurance Company Limited is a joint venture between HDFC Limited, India’s premier
Housing Finance Institution & ERGO International AG, the primary insurance entity of Munich Re Group.
HDFC is renowned for its customer centric approach and its efficient claim settlement. HDFC has one of the
highest claim settlement ratios among health insurers (96% CSR in 2011) and has a comparatively shorter claim
settlement turnaround time than most of its competitors.
 ISO 9001:2008 certified for its claim services

 Best general insurance company in India by IAIR in 2013
 AAA rating given by ICRA, indicating a sound financial health
-28-
ICICI Lombard General Insurance Co. Ltd.
ICICI Lombard GIC Ltd. is a joint venture between ICICI Bank Limited, India's second largest bank and Fair-
fax Financial Holdings Limited, a Canada based multi-billion dollar financial services company.
With a 12.04% market share, ICICI Lombard is the fourth largest general insurance company and the largest
among private players. It boasts of having one of the highest claim settlement ratios in the health insurance
segment.
 Golden peacock award for corporate social responsibility in 2012

 Best technology implementation award by NASSCOM - CNBC TV18 in 2010
 Most preferred brand in the General Insurance category by CNBC Awaaz Consumer Award in 2010
IFFCO Tokio General Insurance Co. Ltd.
IFFCO Tokio is a joint venture between IFFCO (Indian Farmers Fertilizer Co-operative) and its associates and
Tokio Marine and Nichido Fire Group, the largest listed insurance group in Japan.
The brand is known for its customer focused strategies such as speeding up claim settlements and conducting
bi-annual customer satisfaction surveys.
 Mentioned as an innovative distribution channel in Capgemini World Insurance Report, 2009
L & T General Insurance Co. Ltd.

L&T General Insurance is a wholly owned subsidiary of Larsen & Toubro Limited which was listed as one of
the world's top 50 most reputed companies by Forbes in 2009.
L&T General Insurance leads all the other health insurance companies in incurred claim ratio. A high ICR
(183.40% for the year 2011-12) is a reflection of how dedicated a company is, in paying out the financial cover
to its customers at the time of need.
 Health Medisure Prime Insurance was voted product of the year by Nielsen in 2012
 Rising star insurer award at the Indian Insurance Awards in 2011
 Technology leader award at the Indian Insurance Awards in 2012
-29-
Reliance General Insurance Co. Ltd.
Reliance General Insurance is a subsidiary of Reliance Capital, India’s leading financial services company. The
company was set up with an objective to make health insurance an easily accessible product in India through a
network of hospitals and distribution channels. Reliance is well keeping up with its objectives via 152 offices
spread throughout the country and 24x7 customer care center.
 First ISO 9001:2000 certified insurance company in India
Royal Sundaram Alliance Insurance Co. Ltd.
Royal Sundaram Alliance is joint venture between Sundaram Finance, a non-banking financial company and
Royal Sun Alliance, one of the largest insurance companies in UK. The company boasts of providing cashless
facility in more than 3000 hospitals throughout India. Currently, it has over 1700 employees fulfilling the health
insurance needs of over 5 million customers. The company’s high claim settlement ratio is a reflection of its
dedication to its customers.
 First private sector general insurance company in India to be licensed since 2001
 First private insurer to introduce innovative health insurance concepts like hospital cash and cashless
settlement
SBI General Insurance Co. Ltd.
SBI General Insurance Company Limited is a joint venture between the State Bank of India, the largest banking
franchise in India and Insurance Australia Group (IAG), an international general insurance group.
With a high incurred claim ratio of 122.82% in 2011-12, SBI gained the trust of the customers and is on its way
to capture a big chunk of the health insurance market this year. SBI General registered a staggering 481%
growth in premium in 2012.
-30-
TATA AIG General Insurance Co. Ltd.
Tata AIG General Insurance is a joint venture between Tata Group and American International Group, an US
based global insurance organization. The brand is a perfect blend of Tata Group's leadership position in India
and AIG's global insurance leadership.
 Recognized for its effective mobile application in insurance by Celent Model Insurer in 2013
Apollo Munich Health Insurance Co. Ltd.
Apollo Munich is a joint venture between Apollo Hospitals Group, Asia’s largest healthcare provider and Mu-
nich Health, a global health insurance leader. With such a cogent tie-up, the brand has created quite a buzz in
the market.
Apollo Munich Health Insurance is one of the four stand alone health insurance companies in India and purports
to offer the fastest claim settlement though its network of 4000 hospitals and 10,000 doctors.
The brand is known for its innovative health insurance plans with unique features such as 50% NCB in just a
year. The following statistics gives an idea of their customer centric approach.
Cashless authorization done within 2 hours of claim intimation – 90%

Customer satisfaction – 85%
Renewal Rate – 80%
<30 days claim settlement – 95%
Max Bupa Health Insurance Co. Ltd.
Max Bupa is a joint venture between Max India Limited and the UK based Bupa Finance PLC. This diverse
partnership has strengthened the brand with the best of both worlds, Max India’s local expertise and Bupa’s
global healthcare experience.
-31-
COMPANY PROFILE
N K Kothari Wealth Consultants was established in year 2007 as an independent consultancy. The purpose was
to fill the void in the market for research based consultancy service for wealth creation. As the organization
grew it carved out a niche for itself in high value analytical work. Gradually, it has transformed into a boutique
wealth consultancy outfit offering a host of services some of which were hitherto unheard in financial services
domain.
At NK Kothari we believe that high-quality, professional investment planning can only be achieved through ex-
pert, transparent and unbiased services. In our endeavour to provide 'best in class' investment solutions, we lis-
ten to our clients carefully, aiming to understand their immediate and long-term financial goals. We then use
our extensive market knowledge and expertise to provide a financial advice, that our clients can trust. We are,
therefore, able to offer a holistic approach to in managing and protecting our client's wealth and financial future.
This has been endorsed by our growing client list which stood at 800 clients as on March 2011
We take a lot of pride in the wealth consultancy we offer. Rather than simply giving you options from a range
of different financial service providers, we prepare a 'route map', showing where you are today and what actions
you need to take to achieve your financial aspirations. At N K Kothari, we believe in bringing long-term happi-
ness to the lives of people by efficiently and productively planning investments for our clients, to suit their
goals.
Mission Statement
-32-
Our mission is to make a positive difference in the lives of our clients and their families, which can help them
achieve their financial goals. We are committed to provide high-quality services with utmost dedication, integ-
rity and honesty in all our dealings.
One of its kinds, path breaking service offered for the first time in India.
NK Kothari Wealth Consultants offer you a unique path breaking service to evaluate your existing Life Insur-
ance Policies and provide you an unbiased opinion on them. We provide a detailed report which elaborates on
following parameters:
 Adequacy of Risk Cover.
 Current cost incurred to buy that risk cover; can the cost be reduced?
 Detailed cash flow analysis.
 Benefits you can derive out of the similar products available in the market at lower cost.
-33-
OPPORTUNITIES AND THREATS OF INSURANCE IN-
DUSTRY IN INDIA
OPPORTUNITIES
o India is now the second fastest growing major economy in the world.
o Third largest economy in the world
o Indian healthcare has emerged as one of the largest service sectors in India.
o Healthcare spending in India is expected to rise by 15% per annum.
o Healthcare spending could contribute 6.1% of GDP in 2012 and employ around 9 million people.
Along with these other reasons, as why the Health Insurance will see a major boom in the coming days is on
account of many factors As under-mentioned:-
o Shift from socialized to private providers

o Booming economy and High literacy rates
o Shift to lifestyle-related diseases
o Easier financing
o Increasing life expectancy
o Recognition by government priority section
The majority of healthcare services in India are provided by the private sector & the Private sector in India is
one of the largest in the world, having:-
o 80 percent of all qualified doctors,

o 75 percent of dispensaries
o 60 percent of hospitals in India belong to the private sector
With the booming economy and High literacy rates, the capacity to spend along with the capacity of the people
to pay has increased. As people earning & education level increase with it will lead to more spending in health
care. The increase in purchasing power & education will lead to a number of positive trends for the Health care
industry as under-mentioned:-
-34-
o When families move from middle income to rich, the highest growth in spending is recorded in healthcare.
o The top 33 per cent income earners in India accounted for 75 per cent of total private expenditure on health
care.
o The proportion of households in the low –income group has declined significantly and the “Great Indian
Middle-class” has come of age.
o With Literacy the Per-capita expenditures on healthcare rise with higher education levels. o Households that
have higher education levels tend to spend more per illness.
The Demographics Middle Income Class in India to grow to 400 to 500 Million by 2015.It has been noted in a
number of researches & surveys, that there is a alarming increase in lifestyle-related diseases. The shift in dis-
ease profiles from infectious to lifestyle-related diseases is expected to raise expenditures per treatment. Life-
style-related diseases are typically more expensive to treat than infectious ones. India’s disease profile is ex-
pected to follow the same pattern as in developed economies. Diseases - cardiovascular, asthma and cancer have
become the most important segments & inpatient spending is expected to rise from 39% to nearly 50%.
The government of India has also identified Healthcare as the priority section for focused attention. Measures
taken by the government to stimulate market development in the healthcare sector are as follows:-
o Reduction in Import duty on medical equipment.
o Depreciation Limit on medical equipment increased.
o Customs duty reduced.
o The Government has announced Income tax exemption of the hospitals set up in rural areas.
-35-
THREATS OF INSURANCE INDUSTRY IN INDIA
o Inadequate healthcare infrastructure
o Limited reach
o Significant underwriting losses for Health Insurance business in India
o Lack of standardization and Accreditation norms in healthcare industry in India
o Insufficient data on Indian consumers & disease patterns resulting in difficulty in product development and pricing.
New modern private insurance companies are indulging in money-making businesses with little interest in insur-
ance.
o Insurance policies contain too many exclusion clauses.
o Most insurance companies now use ‘call centers’ and staff attempt to answer questions by reading from a script. It
is difficult to speak to anybody with expert knowledge.
o Perception of people Considering health insurance as a money making mechanism
o Delay in claim processing by the third party administrators.
-36-
THIRD PARTY ADMINISTRATORS AND HEALTH
INSURANCE IN INDIA
The advent of Third Party Administrators (TPAs) is expected to play an important role in health insurance mar-
ket in ensuring better services to policy holders. In addition their presence is expected to address the cost and
quality issues of the vast private healthcare providers in India. However, the incurrence sector still faces chal-
lenge of effectively institutionalizing the services of the TPA. A lot needs to be done in this direction.
The evolution of a new body for cash-less claim processing in the form of Third party Administrators (TPAs)
marks a new chapter towards addressing some of the problems of health insurance industry.
Third Party Administrators and their Role
Third Party Administrator (TPA) was introduced through the notification on TPA-Health Services Regulations,
2001 by the IRDA. Their basic role is to function as an intermediary between the insurer and the insured and
facilitate the cash-less service of insurance. For this service they are paid a fixed per cent of insurance premium
as commission. This commission is currently fixed at 5.6 per cent of premium amount. Figure l provides a
graphical representation of working environment of insurance industry and role of the TPA in the system. The
core product or service of a TPA is ensuring cashless hospitalization to policyholders. Intermediation by TPAs
ensures that policyholders get hassle-free services, insurance companies pay for efficient and cost efficient ser-
vices, and healthcare providers get their reimbursement on time. By doing this it is expected that TPAs would
develop appropriate systems and management structures airing at controlling costs, developing protocols to
minimize unnecessary treatments/investigations, improve quality of services and ultimately lead to loyal insur-
ance premiums. However, the system is currently struggling through teething troubles: Cash-less policies,
where the insurer directly pays the hospital bills to the healthcare provider. have not yet fully materialized.
As of July 2004 ,24TPA-Health Services arc registered with the IRDA. They. in their current form in India are
suffering from weak hospital . networking ,institutionalizing identity cards to policyholders, poor standardiza-
tion of billing procedures for hospitals. The industry is said to be suffering from an informal nexus among cor-
porate houses, corporate hospitals, TPA’s and insurance companies in entering high claim ratios on corporate.
-37-
Figure 1.4 : Working Environment of TPAs
Source :Vipul Medcorp
PROCESS OF WORKING OF TPA IN CASHLESS HOSPI-

TALIZATION
Pre-authorization form
Pre-authorization form is the form that we get at the insurance desk in the hospital or in the website of the TPA,
after being duly filled by the patient and the hospital’s representatives, it is sent to the TPA which decides to
approve or reject the claim.
Process for Cashless Facility

Planned hospitalization:
In a planned hospitalization, we have a recommendation for hospitalization by our doctor and have time to de-
cide which hospital to go to. We have to complete the formalities at least 3-4 days before a person is hospital-
ized.
 Take a look at the list of network hospitals provided while buying the policy or call the toll free number
on health insurance card and select the network hospital nearest and most convenient
-38-
 Show health insurance card and fill up the first part that is to be filled by the patient of the ‘pre-
authorization’ form that the person get in the insurance desk of the network hospital or which we can
download from website of your TPA.
 The other part of the form will be filled by the attending physician.
 Provide the filled form on the insurance desk of the hospital, the person at the insurance desk will verify
its completeness and then fax it to the TPA.
 The TPA will then process the form and either approve or reject the request.
 If the form is approved, the TPA will send the authorization letter with an approved amount for the
treatment.
 Person have to follow up with the TPA to know the status of the request.
Emergency hospitalization:
In an emergency hospitalization, the important thing is to get the patient treatment at the earliest. The procedure
for cashless mediclaim facility within 24 hours of hospitalization.
 Show the health insurance card and fill in the pre-authorization form.
 The insurance desk in the hospital will fast track the process for cashless process but in case we cannot
wait for the approval, we can pay the deposit if demanded by the hospital and start the treatment and
reimburse the expense later on.
 Generally the time to taken to process an emergency case is 6 hours. We need to follow up with the TPA
to know the status of the request.
-39-
DATA-ANALYSIS AND INTERPRETATION
As discussed above I have shown the market shares of various health insurance players. The general insurance
companies (New India assurance, National Insurance, Oriental insurance and United India Insurance) contribute
to 70% of the market. This means 70% of the claims are processed in these companies. These insurance compa-
nies outsource their work to third party administrators. There are six TPA in the city of Jaipur and their
claim efficiency for the year 2011-2012 as per the IRDA report is:
Table 1A- Claim Settlement History of TPA'S As Per IRDA Report 2011-2012
Settlement
Name of TPA Claims re‐ < 1 month >1 and < 3 >3 and < 6 >6 claims o/s
ceived months months months
Park mediclaim 45535 40895 686 97 10 7735
Vipul Med corp 268367 250304 13529 1826 1185 34507
Alankit healthcare 50379 28234 17930 4526 772 2718
Safeway TPA 9926 5648 3349 424 0 1187
Raksha TPA 172084 160898 8604 26 0 2556
Genins India pvt 60489 52750 5970 1301 489 4771
ltd.
Family health plan 183288 92752 76701 16009 2479 13950
Source : IRDA annual report of 2011-2012
The above number of claims are for the entire country. As my study pertains to the city of Jaipur so following
are the number of claims which I have collected from all the six TPA of the city.
Table 2- Total No Of Claims Received By Six TPA of The City
Name of TPA Claims in jpr.
Park mediclaim 125
Vipul Med corp 8531
Alankit healthcare 3015
Safeway TPA 1600
Raksha TPA 3000
Genins India pvt NR
ltd.
Family health plan 1806
Source : Author’s calculation
-40-
This shows the total number of claims in the city of Jaipur in the financial year 2011-2012 .The population of
Jaipur as per 2012 census is 3165550. According to national statistics 2.2% of the people in India are having an
access to health Insurance. This means two out of hundred people in our country avail health insurance so the
number of people having health insurance in Jaipur are:
(3165550 *2.2)/100=69642
 The next step taken further is that I have collected the MIS records from the TPA. The data col-
lected has also been classified according to the name of the insurer. For example- Vipul Medicorp
is a TPA that deals with cases from all the four insurance companies (New India assurance, Na-
tional Insurance, Oriental insurance and United India Insurance).There are fourteen categories in
which the diseases have been classified in the data. The following data is relating to 8531 individu-
als .This sample has been taken as a representative of the population and the ratio in which these
diseases have been classified in the sample will be the same ratio of these disease claims from other
TPA.
DATA CLASSIFICATION FOR SAMPLE SIZE- 8531
Table 3 - Cases Pertaining To New India Assurance
THE DISEASE WISE CLAIMS RECEIVED BY NEW TPA IN JAIPUR
INDIA ASSURANCE IN JAIPUR

NO.OF FEMALE TOTAL EX‐
DISEASES TOTAL NO.OF CLAIMS NO.OF MALE CLAIMS
CLAIMS PENSES
Cardio vascular 175 139 36 8563035
Dermatology 28 16 12 495665
Ear,Nose,Throat 19 11 8 343538
Endocrinal 26 12 14 941527
Gastro intestinal 184 97 87 3564147
Hepato Biliary 64 27 37 2152709
Infectious 123 58 65 1571212
Male reproductory 23 23 0 675409
Opthalmic 177 99 78 3417298
Orthopaedic 92 47 45 4714796
Respiratory 78 40 38 1981290
Trauma 124 91 33 3286968
Tumour 163 44 119 5955146
Urinary 99 74 25 2954949
Other 198 100 98 2701279
Source : Author’s calculation after data collection from Vipul Medcorp
-41-
Table 4 - Cases Pertaining To National Insurance
NATIONAL INSURANCE

TOTAL NO.OF NO.OF MALE NO.OF FEMALE
DISEASES TOTAL EXPENSES
CLAIMS CLAIMS CLAIMS
Endocrinal 45 26 19 1239109
Infectious 136 80 56 1945546
Opthalmic 209 117 92 4516286
Orthopaedic 107 49 58 7379073
Respiratory 108 71 37 2307705
Trauma 188 126 62 5041757
Tumor 257 93 164 8870318
Urinary 104 61 43 2529573
Other 192 89 103 3218892
Table 5- Cases Pertaining To United India Insurance
DISEASES TOTAL NO.OF NO.OF MALE NO.OF FEMALE

TOTAL EXPENSES
Cardio vascular 362 203 104 17108683
Dermatology 74 42 32 1475701
Endocrinal 79 45 34 2217987
Infectious 376 182 194 5334593
Opthalmic 370 214 156 7446511
Orthopaedic 176 107 69 9887594
Respiratory 249 153 96 5222035
Trauma 377 128 249 11645668
Urinary 273 147 126 4994076
Other 694 337 357 8702353
Tumour 377 128 249 2345352
-42-
Table 6 - Cases Pertaining To Oriental Insurance
TOTAL NO.OF NO.OF MALE NO.OF FEMALE

DISEASES TOTAL EXPENSES
Endocrinal 17 14 3 266546
Infectious 55 28 27 1090518
Opthalmic 86 41 45 1799990
Orthopaedic 35 20 15 2331008
Respiratory 41 24 16 1233174
Trauma 92 63 29 2607396
Tumour 69 26 43 2980178
Urinary 65 44 21 1611673
Other 101 50 51 2386582
The next step would be to calculate the total no. of claims received for each disease. When this will be divided
by the total number of claims then we will get the probability of occurrence of each disease. The data
represented above was for 8531 individuals. This sample has been taken as a representative of the population.
The ratio or proportion of each disease will be the same ratio applied to the number of cases from other
TPA. This is because the sample collected is from the biggest TPA of Jaipur covering the maximum mar-
ket share.
Table 2.A- Probability Of Diseases For Sample For 8531 Cases
DISEASES TOTAL CLAIMS PROBABILITY IN %
Cardio vascular 860 0.100808815 10.09
Dermatology 142 0.016645176 1.66
Ear,Nose,Throat 116 0.013597468 1.35
Endocrinal 167 0.019575665 1.95
Gastro intestinal 1104 0.129410386 12.9
Hepato Biliary 263 0.030828742 3.08
Infectious 690 0.080881491 8
Male reproductory 110 0.012894151 1.28
Opthalmic 842 0.098698863 9.8
Orthopaedic 410 0.048060016 4.8
Respiratory 476 0.055796507 5.5
Trauma 799 0.093658422 9.3
Tumor 826 0.09682335 9.6
Urinary 541 0.063415778 6.3
Other 1185 0.138905169 13.8
Total 8531
-43-
Figu
ure 2.1 - Proobability Of Diseases For
F Sample For 8531 Cases
C
Sourcee : Author’s calcullation
DAT
TA OF OTH
HER TPA WILL
W BE DIVIDED
D IN
N THE SAM
ME RATIO AS ABOVE
E:
Tablle 2.B - Classsification of
o Cases Forr Park Med
diclaim
TOTAL CASES(PR
ROPORTION**
DISEASES IN %
CASES TOTAAL CASES)
Cardio vascular 10.09 125 13
Derm
matology 1.66 125 2
Ear,N
Nose,Throat 1.35 125 2
Endo
ocrinal 1.95 125 2
Gastro intestinal 12.9 125 16
Hepaato Biliary 3.08 125 4
Infecctious 8 125 10
Male
e reproductorry 1.28 125 2
Opth
halmic 9.8 125 12
Orthopaedic 4.8 125 6
Resp
piratory 5.5 125 7
Trauma 9.3 125 12
Tumo
or 9.6 125 12
Urinaary 6.3 125 8
Othe
er 13.8 125 17
Sourcee : Author’s calcullation
-44-
This way we will add up the total number of cases for the rest of the TPA and divide it in the same ratio.
The remaining cases are (1600+1806 +3000+3015)=11937. These cases will also be divided according to the
same disease categories following the same procedure as the table above.
First we will find out the average expenditure per individual in the sample of 8531 individuals. The ex-
penditure for each disease will be calculated by adding all the expenditure figures of table 3,4,5 and 6.
Table 7 - Total Expenses On Diseases For The Sample
DISEASES Ref. table 3 Ref table 4 Ref table 5 Ref table 6 Total expenses
Cardio vascular 8563035 13702403 17108683 6949968 46324089
Dermatology 495665 295319 1475701 579680 2846365
Ear,Nose,Throat 343538 225173 1283070 0 1851781
Endocrinal 941527 1239109 2217987 266546 4665169
Gastro intestinal 3564147 6150895 10845515 3306512 23867069
Hepato Biliary 2152709 2030746 2865059 903852 7952366
Infectious 1571212 1945546 5334593 1090518 9941869
Male reproductory 675409 893421 1769402 0 3338232
Opthalmic 3417298 4516286 7446511 1799990 17180085
Orthopaedic 4714796 7379073 9887594 2331008 24312471
Respiratory 1981290 2307705 5222035 1233174 10744204
Trauma 3286968 5041757 11645668 2607396 22581789
Tumour 5955146 8870318 2345352 2980178 20150994
Urinary 2954949 2529573 4994076 1611673 12090271
Other 2701279 3218892 8702353 2386582 17009106
Now for calculating the average expenditure per disease in the sample we will divide the total expense of the
diseases for the sample by the number of claims of each disease in the sample:
The total expenditure for the diseases in the sample has been calculated above and the number of cases
for each disease have been shown in the Table 2.A
Finding the average expenditure on the disease:
Table 2.C - Average Expenditure On Each Disease
Disease Total expenses Total claims Average expenditure
Cardio vascular 46324089 860 53865.21977
Dermatology 2846365 142 20044.82394
Ear,Nose,Throat 1851781 116 15963.62931
Endocrinal 4665169 167 27935.14371
Gastro intestinal 23867069 1104 21618.72192
Hepato Biliary 7952366 263 30237.13308
Infectious 9941869 690 14408.5058
Male reproductory 3338232 110 30347.56364
Opthalmic 17180085 842 20403.90143
Orthopaedic 24312471 410 59298.70976
Respiratory 10744204 476 22571.85714
Trauma 22581789 799 28262.56446
Tumour 20150994 826 24395.87651
Urinary 12090271 541 22348.00555
Other 17009106 1185 14353.67595
-45-
It is to be noted that in the above table these were the number of claims for the sample .So now we can
find the total number of claims for each disease in the entire population of the people claiming. It should
also be noted that as the number of claims in the population have been divided in the same ratio as the
sample so the average expenditure will remain the same. Following table shows the total number of
claims of the disease.
Total number of claims of each disease from the total people claiming i.e (8531+125+11937(working shown
earlier)) can be shown in the following table:
Table 2.D - Compilation Of Total Claims For Each Disease By All The TPA
DISEASES Total claims(Table 2.A+Table
2.B+prob*11937)
Cardio vascular 121317
Dermatology 19959
Ear,Nose,Throat 16232
Endocrinal 23446
Gastro intestinal 155107
Hepato Biliary 37032
Infectious 96196
Male reproduc‐ 15391
tory
Opthalmic 117836
Orthopaedic 57713
Respiratory 66136
Trauma 111825
Tumor 115433
Urinary 75752
Other 165932
Until now we have analyzed the disease burden analysis in the city of Jaipur by estimating the probabilities of
each disease. We will now select the category of diseases having the maximum probability. After knowing
the category of diseases having the maximum probability in the city, we will further classify that category in
five most common problems occurring in that category and their related expenditure.
The information regarding the five most common problems occurring in that category and their expendi-
ture has been collected through a face to face survey meeting with the doctors of these particular de-
partments in three categories of hospital:
-46-
HOSPITAL A- FORTIS ESCORTS HOSPITAL
HOSPITAL B- SANTOKBA DURLABJI MEDICAL HOSPITAL
HOSPITAL C- A SMALL SCALE PRIVATE HOSPITAL
Following are the categories of diseases having the maximum probability:
Table 2.E- Diseases Having Maximum Probability
Disease Probability
Cardio vascular 10.09
Gastro intestinal 12.9
Opthalmic 9.8
Orthopaedic 4.8
Respiratory 5.5
Trauma 9.3
Tumour 9.6
Infectious 8
Thereafter the five most common problems under each category and their related expenditure in hospital A
,hospital B and hospital C were identified through face to face survey with doctors from each department. It is
to be noted that these expenditure figures are the package charges of various hospitals for these diseases. The
package charges include OT charges, Surgeon charges, Medicine charges, Investigation charges and hospital
general ward charges. In a hospital there are separate charges for general, deluxe and super deluxe rooms. The
data is pertaining to package of general ward rooms because in health insurance due to the limitation of
sublimit(room rent to be 2% of sum assured) people generally opt for general ward rooms.
Following are the tabular details of the diseases under each category and their related expense:
Table 8 - Major Diseases and Expenses Under Opthamology

OPTHAMOLOGY
Disease Hospital A Hospital B Hospital C
Cataract 23000 15000‐20000 10000
Pterygium excision 7000 7000 6200
Glaucoma 20000 10000 8000
Chalazion extraction 3000 1500 500
Retinal surgery 40000 25‐30000 20000
Source : Primary data collection (Survey from doctors)
Table 9 - Major Diseases and Expenses under Orthopedics
ORTHOPAEDICS
170000 +implant 105000 + implant 200000
Total Knee replacement
(Rs 75000 each) (Rs.75000 each) (including implants)
170000 +implant 100000 + implant 300000
Total hip replacement
(Rs 75000 each) (Rs.75000 each) (including implants)
Fractures fixation 30000‐100000 32000‐100000 25‐50000
Arthroscopy 60000‐65000 60000 50000
Spine surgeries 60000‐100000(if implant) 25000‐50000 50000
-47-
Table 10 - Major Diseases and Expenses under Gastroenterology
GASTROENTEROLOGY
Gall bladder surgery 30000‐35000 28000 16500
Piles surgery 30000 20000 15000
Hernia surgery open‐30000 laparoscopic‐ Open‐14000
open‐28000 laparoscopic‐90000
80000 Laparoscopic‐20000
Laprotomy 40000‐45000 30000 12000‐18000
Appendix 30000 28000 16000
Table 11 - Major Diseases and Expenses under Cardiovascular

CARDIOVASCULAR
Myocardial infarction includes:
1.Angiograph
10000 10000 4000
y test
2.If heart blockage>70% then 2 options:
a.Angioplasty 65000( package)+stent(65000‐ 45000‐55000+stent cost(65000‐ 50000+stent cost(65000‐
120000) 120000) 120000)
b.Byepass
165000(package)+20000(drugs) 140000(package)+20000(drugs) 133500+20000 (drugs)
surgery
3.Valvular heart disease:
Double valve
165000(package)+135000(65000 90000(package)+100000(50000 130000(package)+100000(50000
replacement
for each volve) per valve) per valve)
surgery
4.Conjestive heart failure:
Left ventricu‐ 4000‐6500(ICU 3500(ICU charges)+drugs(2000‐
3500+drugs(2000‐5000)
lar failure charges)+drugs(5000‐10000) 5000)
5.Complete heart block(heart pulse<60)
Single cham‐ 25000(package)+pacemaker(600 20000(package)+60000(pacema 20000(package)+60000(pacema
ber 00) ker) ker)
Dual chamber 35000(package)+pacemaker(150 20000(package)+pacemaker(150 25000(package)+150000(pacem
000) 000) aker)
6.Corpulmona
4000‐6500(CCU)+drugs(variable) 3500(CCU)+drugs(variable) 3500(ccu)+drugs
le
RESPIRATORY 4000‐6500(ICU)+15000‐ 3500(ICU)+10000(drugs)+ventilato 3500(ICU)+10000(Drugs)+ventilato
PROBLEMS 20000(drugs)+ventilator( r(3500 per day) r(1000 per day)
3500 per day)
Table 12- Major Diseases and Expenses under Tumours

TUMOUR(CANCERS)
Surgeries Hospital A Hospital B Hospital C
Head and neck cancer 250000 100000 62400
Lung cancer 375000 150000 120000
Stomach cancer 175000 70000‐80000 65000
Breast cancer 100000 40000 30000
Cervix cancer 175000 70000‐80000 60000
-48-
It is to be noted that trauma consists of all accidents so the cost cannot be determined. It varies according to the
intensity of the injury. Moreover there are separate personal accident policies available.
The average individual expenditure figures calculated in TABLE 2.C cannot be used as a basis for pro-
viding recommendations to the customers on taking the right health insurance policy. This is because the
expenses figures as arrived from the data are skewed up. They cannot provide a correct estimate because
the claims received by the TPA can include claims for a high expenditure disease as well as a low cost dis-
ease. Therefore there is a possibility that the average expenditure figures arrived are little lowered down as
compared to real scenario because most of the claims may include only low cost investigations or less duration
hospitalization. For this reason we have found out the actual expenditure related to most probable categories
from the hospitals.
The next step further is the concern regarding the best mediclaim policy to be opted. When we decide upon buy-
ing a health insurance policy one of the most pertinent question that crops in our mind is the coverage amount-
how much health insurance should we buy. A very important factor that comes to mind is the HEALTH CARE
INFLATION.
HEALTHCARE INFLATION :

The health insurance companies eagerly selling policies mostly to younger age group are actually giving them a
false sense of security about their twilight years. The current policy will hold good for the next five years but
not after that because of the rising medical inflation. So this sense of security has a shelf life of maximum five
years. After that it lies in the hands of the insurer whether he finds the policy upgrade worthy or not. Consider-
ing a most conservative healthcare inflation rate of 15% a humble 3 lakh coverage for a 38 year old per-
son would translate into 130 lakh final amount at the age of 65
The calculation is fair:

300000(1+1.15) ^ 27=130 lakh
We can clearly see that the decision of taking health insurance currently depends on two things
 Health insurance is a super long investment which we may need at the old age of 60 and above
 Hospital costs are rising continuously becoming unaffordable to the common man.
-49-
We will try to understand how much is enough to financially support our family healthcare needs. This is the
step by step explanation:
Costs of common surgeries & Hospital Costs In India
A recent analysis done by Medimanage Research team show that the cost of some major surgeries in hospi-
tals across India. Going by these numbers, assuming only one surgery is required during a year, per member;
a sum insured of Rs. 3-4 Lakhs should be good enough for the year 2012. Major supply deficit with respect
to healthcare infrastructure – hospital beds, doctors and nurses, increase in cost of medical equipment’s, land
has resulted in an increasing trend of health insurance inflation. Here are the 2012 costs for surgeries, com-
pared with costs in 2007.
Table 3.A - Cost of Major Surgeries in Hospitals-A Short Research by Medimanage
Sr. 2012 2007
Treatment Increase
No Cost Cost
1 Cataract 24,000 16,000 50%

2 Angiography 22,000 14,000 57%
3 Coronary Artery Bypass Graft (CAGB) 235000 165000 42%
4 Appendectomy 42,000 28,000 50%
5 Heamorrhoidectomy (Piles) 35,000 21,000 60%
6 Cholecystectomy (Gall Bladder removal) 52,000 32,000 63%
7 TURP (Prostate Surgery) 62,000 37,000 68%
8 Angioplasty (PTCA) with 2 stents 245000 155000 58%
Source : Medimanage.com Research Team
The costs of common surgeries have increased by 50-60% in 5 years. This means healthcare costs have in-
creased by 9-10% year-on-year, since the last 5 years. The above table is a research done by medimanage
research team. This table shows the expenses of these common surgeries in a metro city. The expenditure
figures which have been collected through a survey from doctors are for the city of Jaipur which is not
counted as a metro city. This is the main reason of the slight difference in the prices.
Now how to decide the correct rate of inflation:
The average annual health inflation would be at 5%.If we look at 30 years duration the hospitals do
not increase their tariff each year. Generally they increase it by every 15-20% in every 2-3 years. This
comes to an effective CAGR of 5 %. India is currently having supply deficits in terms of hospital beds.
But a good amount of capacity increase in beds is there for the past 7-8 years which is continue to
-50-
grow. On the other hand population is stabilizing. In 15 years there will be ease of pressure on the
prices.
India is a developing economy and it will continue to be on the growth plan for the next ten years. After that
once the wealth distribution is even we would see stabilization of inflation rates.
There is a major crisis in the making in the healthcare industry due to overflowing demand coupled with
very slow growth in hospital bed to patient and doctor to patient ratio in India primarily due to deprived par-
ticipation from the government.
In my opinion, while costs are bound to rise due to slow growth in the ratios on a 30 yr scale costs will have
to plateau somewhere. So we can take inflation year on year for the next ten years as 12% and then average
5% for the remaining twenty years. A tower Watson report tells healthcare inflation in India is 13%for the
year 2012.
The next step now would be to take the inflation rate as 12% for the next ten years and five %for the rest
twenty years. From the research regarding 2012 we have already seen that a mediclaim policy of 3-4 lakh is
sufficient for covering the expenses currently but it will not be sufficient for the next thirty years. As was ex-
plained earlier also the present value of suppose Rs 50 lakh at 10% inflation on thirty years is just Rs.3 lakh. So
we can see that we need to suggest a policy which will be worth after 30 yrs also.
The following steps will now be undertaken:

Under each of the disease category find out the one out of the five problems having the maximum ex-
penditure and then apply inflation rates to each and get the new expenditure figures upto further 30
years. The expenditure figures have been calculated using the future value function in excel. The inflated
expenditure figures have been calculated separately according to the choice of hospital (A ,B or C)
Table 13 - Inflated Expenditure Figures for Hospital A
INFLATED FIGURES
Maximum expenditures Hospital A 2022 2032 2042
Opthamology‐Retinal surgeries 40000 Rs. 1,24,233.93 Rs. 2,02,363.98 Rs. 3,29,629.60
Orthopaedics‐Total knee replacement 320000 Rs. 9,93,871.43 Rs. 16,18,911.83 Rs. 26,37,036.78
Gastroenterology‐Laparoscopic hernia 80000 Rs. 2,48,467.86 Rs. 4,04,727.96 Rs. 6,59,259.19
Cardiovascular‐Double valve replacement 300000 Rs. 9,31,754.46 Rs. 15,17,729.84 Rs. 24,72,221.98
Respiratory 27000 Rs. 83,857.90 Rs. 1,36,595.69 Rs. 2,22,499.98
Tumour‐lung cancer 375000 Rs 1164693 Rs 1897162 Rs. 30,90,277
Thus we can see that if an insured person chooses for a treatment of the above most common diseases in an A
category hospital like Fortis Escorts then a simple expenditure of Rs.320000 today in knee replacement can go
-51-
upto Rs 27 lakhs in the next thirty years and the expense of Rs.3 lakh in valve replacement surgery can go upto
Rs. 25 lakhs in future. .Similarly we will see the expenditure in category B hospital and category C hospital.
Table 14 - Inflated Expenditure Figures for Hospital B

Inflated figures
Maximum expenditures Hospital B 2022 2032 2042
Ophthalmology‐Retinal surgeries 25000 Rs. 77,646.21 Rs. 1,26,477.49 Rs. 2,06,018.50
Orthopaedics‐Total knee replacement 255000 Rs. 7,91,991.29 Rs. 12,90,070.36 Rs. 21,01,388.68
Gastroenterology‐Laparoscopic hernia 90000 Rs. 2,79,526.34 Rs. 4,55,318.95 Rs. 7,41,666.59
Cardiovascular‐Double valve replacement 190000 Rs. 5,90,111.16 Rs. 9,61,228.90 Rs. 15,65,740.59
Respiratory 17000 Rs. 52,799.42 Rs. 86,004.69 Rs. 1,40,092.58
Tumour‐lung cancer 150000 Rs. 4,65,877.23 Rs. 7,58,864.92 Rs. 12,36,110.99
Thus we can see like in category B hospital the expenses of knee replacement of Rs 255000 today can go upto
Rs. 21 lakhs after 30 years due to the rising medical inflation. Now we will see the rising expenditure in small
private hospitals specializing in each of the fields.
Table 15 - Inflated Expenditure Figures for Hospital C
INFLATED FIGURES
Maximum expenditures Hospital C 2022 2032 2042
Opthamology‐Retinal surgeries 20000 Rs. 62,117 Rs. 1,01,182 Rs. 1,64,815
Orthopaedics‐Total knee replacement 200000 Rs. 6,21,170 Rs. 10,11,820 Rs. 16,48,148
Gastroenterology‐Laparoscopic hernia 20000 Rs. 62,117 Rs. 1,01,182 Rs. 1,64,815
Cardiovascular‐Double valve replacement 230000 Rs. 7,14,345 Rs. 11,63,593 Rs. 18,95,370
Respiratory 14500 Rs. 45,035 Rs. 73,357 Rs. 1,19,491
Tumour‐lung cancer 120000 Rs 3,72,701 Rs 6,07,091 Rs. 9,88,888
This was an overview of the expenditures that a person would have to incur according to the choice of
hospitals in all three categories. The problem which arises now is that according to these forecasted ex-
penditures if one takes a cover of Rs 2500000 then the premium payable in today’s date is very high and
unaffordable. So now we will look at the recommendations of how a person should go for the health in-
vestment plan.
-52-
Planning the sum assured:
Here are the recommendations for the step by step health investment plan:
 Buy Health Insurance, preferably one which covers you for lifetime, and provides a no claim bonus, for the
sum insured of Rs. 5 Lakhs individual or Rs. 7-8 Lakhs Floater. If you are buying plans, with Restore op-
tions, then the sum insured could be lower at around Rs. 5 Lakhs.
 We can take a good top-up plan, which takes your cover to a floater of Rs. 10-15 Lakhs for the entire fami-
ly.
 Invest in a Rs. 5-10 Lakhs critical Illness plan, which covers maximum no. of ailments, especially for
the earning members of the family. This will help us get lump sum payment for critical ailments, and
compensate for any loss of earnings. We can also explore the option of a more comprehensive benefit plan
with our health insurance advisor, with products like Tata AIG Wellsurance, Aegon Religare iHealth, which
provide lump sum benefits for large no. of surgeries, in addition to the Critical Illness benefit.
 Plan a Healthcare Contingency fund, for Rs. 15 Lakhs for individual, and Rs. 25 Lakhs for a family of 4,
maturing at age 60. A contribution of Rs. 15000 per annum at 10% return will accumulate Rs. 25 Lakhs in
30 years.
Now I will be showing the comparative analysis of all the health insurance products available in the
market on the basis of some features . The brochures and the policy documents of various companies
and their health insurance plans were the source of information used.
-53-
Table 16 - Comparison of All Healthcare Products Available in the Market
RE-
ICICI RE- APOL- APOL-
BAJAJ BAJA- LIAN APOL-
Lom- ICICI LIANCE LO MU- LO Apolllo
NAME/ AL- JAl- CE LO MU-
bard Lom- Health MU- MU- MunichOp-
FEA- LIAN lianze Health NICH
Health bard wise (Sil- NICH NICH timum Re-
TURES Z In- Family wise (Pre-
Advan- FPP ver&Gold (Stan- (Exclu- store
div floater (Stan- mium)
tage ) dard) sive)
dard)
Age 3m-65 3m- 5-65 5-60 3m-65 3m-55(60) 3m-60 3m-60 3m-60 5-65 years
years 65years Years years years years (Re- years years years (Renewal Up
and (Re- ( Re- (Re- (Re- newal Up (Renewal (Renew- (Renewal to life)
(Re- newal newal newal newal to 75 ) Up to al Up to Up to
newal Up to Up to Up to Up to life) life) life)
Up to 80) 70) 70) 75 )
80)
Type Indi- Family Both Both Both Both Both Both Both Both
vidual Floater
Sum 1.5 to 2 to10 2,3 lacs 2,3,4 2,3,4,5 2,3,4,5 lacs 2,3,4,5 3,4,5,7.5 4,5,7.5,10 3,5,10,15
Assured 10 lacs lacs lacs lacs lacs lacs lacs lacs
Room & No No sub- No sub- No No No subli- No sub- No sub- No sub- No sublimit
Boarding subli- limit limit subli- subli- mit limit limit limit
mit mit mit
ICU No sub- No sub- No sub- No sub- No sub- No sublimit No subli- No sub- No subli- No sublimit
/ICCU limit limit limit limit limit mit limit mit
Expense No No No No No Yes Yes Yes Yes Yes
Of Organ
Donor
Pre & Pre – Pre – 60 Pre – 30 Pre – Pre – Pre – 60 Pre – 30 Pre – 30 Pre – 30 Pre – 60
Post Hos‐ 60 Post‐ 90 Post‐ 60 30 30 Post‐ 90 Post‐ 60 Post‐ 60 Post‐ 60 Post‐180
pitaliza‐ Post‐ Post‐ Post‐
tion 90 60 60
Critical No No No No No 10 (Gold) No 8 8 8
Illnesses
Pre ac‐ 46 46 Years 45 years 45 45 45 years 46 years 46 years 46 years 46 years
ceptance Years years years
Health
Check Up
Cumula‐ 5% up 5% up 5% up to 5% up Disc @ Disc @ 5% 10% up to 10% up 10% up 50% up to
tive Bo‐ to 50% to 50% 50% to 50% 5% up up to 20% 50% to 50% to 50% 100%
nus/ No to 20%
Claim
Discount
Day care 130 130 No No Yes Yes 140 140 140 140
treat‐
ments
Waiting 4 years 4 years 2 years 4 years 4 years 2 years 3 years 3 years 3 years 3 years
Period
Premium 15236 30472 15000 ( 20120(I 13625(I (I)S‐19025, (I) 9345 (I) 11340 (I) 13860 (I) 9813
for 5 lacs 3 lacs) (2 ) ) G‐28475 (F) 18585 (F) (F) (F) 21329
SA(50 years) 42752( 27404( (F) S‐ 21373 26716
years) F) F) 38290,
Fami‐ G‐ 57341
ly(2A+2C)
Premium 23708 47416 NA NA NA NA NA NA (I) 20868 (I)13407
for 10 lacs (F) (F) 28250
SA 39032
-54-

NAME/ CHOLA‐ CHOLA‐ CHOLA‐ ROYAL ROYAL HDF MAX MAX BU‐ MAX MAX
FEATURES MANDA‐ MANDALAM MANDA‐ SUN‐ SUN‐ C BUPA PA Heart BUPA BUPA
LAM (Superior) LAM DARAM DARAM ER‐ Heart beat Heart Health
(Standard) (Advance) (Family) GO beat (Gold) beat Comp.(Si
(Sil‐ (Plati‐ lver)
ver) num)
Age 3m‐65 3m‐65 years 3m‐65 years 3m‐60 3m‐65 3m‐ Any Any Any 3m‐65
years (Re‐ (Renewal Up (Renewal years years 65 age age(Rene age(Ren years
newal Up to life) Up to life) (Re‐ (Re‐ year (Re‐ wal Up to ewal (Renew‐
to life) newal newal s newal Life) Up to al up to
Up to Up to Up to Life) life)
70) 70) Life)
Type Both Both Both Individ‐ Family Both Both Both Both Both
ual Floater
Sum As‐ 1,2,3,4,5 3.5,4,4.5,5.5, 6,8,10,12,15 1,2,3,4, 2,3,4,5 2,3,5 2,3 5,7.5 ,10 15,20,50 2,3 lacs
sured lacs 6,8,10 lacs lacs 5 lac lacs lacs lacs lacs lacs
Room & 1% of SA 1% of SA 1% of SA 1.5% of 2% of No Up to Up to SA Up to SA Up to
Boarding SA SA sub SA 2000
lim‐
its
ICU/ICCU NA NA NA 3% of SA 4% of SA No Up to Up to SA Up to SA Up to SA
sub SA
limits
Expenses Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
Of Organ
Donor
Pre & Pre‐ 60 Pre‐ 60 Pre‐ 60 Pre‐ 30 Pre‐ 30 Pre‐ Pre‐ Pre‐ 30 Pre‐ 30 Pre‐ 30
Post Hos‐ Post‐90 Post‐90 Post‐90 Post‐60 Post‐60 60 30 Post‐60 Post‐60 Post‐60
pitaliza‐ Post‐ Post‐
tion 90 60
Critical No No No No No No No All All All
Illness
Pre ac‐ 55 Years 55 Years 55 Years 45 years 50 years 45 60 60 years 60 years 60 years
ceptance year years
Health s
Check Up
Cumula‐ 5% up to 5% up to 5% up to 5% up 5% up 5% GV GV 10% of GV 10% No
tive Bo‐ 50% 50% 50% to 50% to 50% up to 10% Ren prem. of Ren
nus/No 50% of Ren prem.
Claim prem.
Discount
Day care 141 141 141 140 140 140 All All All All
treat‐
ments
Waiting 4 years 4 years 4 years 4 years 4 years 4 4 4 years 4 years 4 years
Period year years
s
Premium (I)14469 (I) I)18479(5.5l) 11026 (I) (I) (I) (I) 15915 NA (I ) 8362
for 5 lacs (F) 30378 14587(5.5l) (F)42705(6l) 14954 1437 9250 (F) 32226 (3l)
SA(50 (F)38399(6l) (F) 2 (3l) (F)
years) 22998 (F) (F) 13342
Fami‐ 2250 17320
ly(2A+2C) 2 (3l)
Premium NA (F) 61094 (I) 27303 NA NA NA NA (I) 23020 49211(I) NA
for 10 lacs (f) 67247 (F) 45135 (F) 86431
-55-
SA
NAME/ MAX MAX BU‐ MAX BU‐ IFFCO IFFCO IFFCO BHARTI BHARTI STAR STAR
FEATURES BUPA PA Fami‐ PA Fami‐ TOKIO TOKIO TOKIO AXA AXA (Op‐ HEALTH HEAL
Health ly First ly First Indi‐ Swasth Swasth (Basic & timum) Mediclassic TH
Compa‐ (Silver) (Gold) vidual Kavach Kavach Pre‐ Fami‐
nion (Base) (Wider) mium) ly
(Gold & Op‐
Plat.) tima
Age 3m‐65 Any age Any age 5‐ 3m to 3m to 5‐65 5‐45 18‐60 years 5 m‐
years (Renewal (Renewal 55yea 60 60 years years (Renewal up 65
(Renew‐ Up to Up to rs years years (Re‐ (Renewal to 80) years
al up to Life) Life) (Re‐ (Re‐ (Re‐ newal up to 65)
life) newal newal newal up to
Up to up to up to 75)
70) 65) 65)
Type Both Family Family Indi‐ Family Family Both Both Individual
Fami‐
Floater Floater vidual Floater floater ly
Floa‐
ter
Sum As‐ 5,7.5,10, 1,2,3,4,5,1 1,2,3,4,5,1 1 to 5 2,3,4,5 2,3,4,5 2,3,5 4,5 lacs 1 to 5 lacs, 1,2,3,
sured 12.5, 0, 15 lacs 0, 15 lacs lacs lacs lacs lacs 10 lacs 4,5,
15,20,30 10, 15
,50 lacs lacs
Room & 4000/80 Up to SA Up to SA 1% of 1% of 1.5% of B‐1% of No sub 2% Up to Rs 1% up
Boarding 00 SA SA SA SA limits 4000 to Rs
(Per Day) P‐Up to 1000
SA
ICU/ICCU Up to SA Up to SA Up to SA 2.5% 2% of 2.5% of B‐1.5% No sub 2% Up to Rs 1% up
(Per Day) of SA SA SA P‐Up to limits 4000 to Rs
SA 3000
Expenses Of Yes Yes Yes Yes Yes Yes Yes Yes No No
Organ Do‐
nor
Pre & Post Pre‐ 30 Pre‐ 30 Pre‐ 30 Pre‐ Pre‐ 30 Pre‐ 30 Pre‐ 30 Pre‐ 60 Pre‐ 30 Pre‐
Hospitaliza‐ Post‐60 Post‐60 Post‐60 60 Post‐30 Post‐30 Post‐60 Post‐90 Post‐60 30
tion Post‐ Post‐
60 60
Critical Ill‐ All All All 10 No 10 20 20 No No
ness
Pre accep‐ 60 years 60 years 60 years 45 45 45 55/45 45 years 50 years 50
tance Health years years years years years
Check Up
Cumulative No GV 10% of GV 10% of 5% up No 5% up Disc 5% Disc 5% Disc 5% to 10%
Bonus/No last prem. last prem. to to 50% up to to 25% 25% up to
Claim Dis‐ 50% 25% 35%
count
Day care All All All 121 121 121 Yes Yes 101 101
treatments
Waiting pe‐ 4 years 4 years 4 years 3 4 years 4 years 4 years 4 years 4 years 4
riod years years
Premium for (I) 12604 NA NA 11590 13791 18622 (I) NA 11802 15760
5 lacs SA(50 (F) 13434
years) Fam‐ 21457 (F)
ily(2A+2C) 30142
Premium for (I) 18528 NA NA NA NA NA NA NA 14361 22800
10 lacs SA (F)32629
-56-
NAME/ New India United In‐ United In‐ United In‐ Oriental Oriental Oriental National
FEATURES Insurance surance surance surance Insurance Insurance Insurance Insurance
(GOLD) (Platinum) Family Happy Fami‐ Happy Fami‐
ly (Silver) ly (Gold)
Age 3m‐80 years 36‐60 years 3m‐35 years 3m‐80 years 5 to 60 years 3m to 55 3m‐55 years 3m‐59 years
(Renewals up (Renewal Up (Renewal up years (Re‐ (Renewal up (Renewal up
to 80 years) to 80 years) to 80) newal up to to 65) to 80)
65)
Type Individual Individual Individual Family Floa‐ Individual Family floa‐ Family Floa‐ Individual

ter ter ter
Sum Assured 50k to 5 lacs 1 to 5 lacs 1 to 10 lacs 50k to 5 lacs 50k to 5 lacs 1 to 5 lacs 5 to 10 lacs 50k to 5 lacs
Room & 1% of SA 1% of SA 1% of SA 1% of SA 1% of SA up 1% of SA 1% of SA 1% of SA up

Boarding (Per to Rs 5000 to Rs 5000
Day)
ICU/ICCU (Per 2% of SA 2% of SA 2% of SA 2% of SA 2% of SA up 2% of SA 2% of SA 2% of SA up

Day) to Rs 10000 to Rs 10000
Expenses Of Yes Yes Yes Yes Yes Yes Yes Yes

Organ Donor
Pre & Post Pre‐ 30 Pre‐ 30 Pre‐ 30 Pre‐ 30 Pre‐ 30 NA NA Pre‐ 30

Hospitalization Post‐60 Post‐60 Post‐60 Post‐60 Post‐60 Post‐60
Critical Illness No No No No No No No No
Pre accep‐ 45 years 45 years No 45 years 45 years 60 years 60 years 50 years

tance Health
Check Up
Cumulative 5% up to Discount @ Discount @ Discount @ No Discount @ Discount @ 5% up to
Bonus/No 30% 5% to 25% 5% to 25% 3% to 15% 5% to 25% 5% to 25% 50%
Claim Discount (After 3
years)
Day care Yes Yes Yes Yes Yes Yes Yes Yes
treatments
Waiting period 4 years 4 years 4 years 4 years 4 years 4 years 4 years 4 years
Premium for 5 10820 9873 9873 (F) 15797 10302 (I) 10400 NA 13307

lacs SA(50 ( F) 14320
years)
Family(2A+2C)
Premium for NA NA 23136 (F) 25275 NA NA (I) 23640 NA
10 lacs SA (F) 32630
Source : Primary data collection (Company websites, brochures)
-57-
The above tables depict the general comparison in the features of all the health insurance products in the mar-
ket. When we compare the policies the main features to be kept in mind are:
1. Room sublimits- Insurance companies generally fix a certain percentage of sum assured as a room sub-
limit for the insured. It is generally (1-2%) of the sum assured. This sublimit is fixed so that the insured does
not take advantage of the insurance company by going for unnecessary hospitalization in deluxe and super
deluxe rooms leading to higher bills. On the other hand if a person is insured he does not want any such
limitations and wants to go for the best facilities available Therefore a policy without sublimits is preferred.
In companies like cholamandalam, royal sundaram , max bupa(silver) product and Iffko Tokyo there are
certain sublimits on room rent and boarding so this is a limitation.
2. Renewal age- There should no barrier of entry as well as limitation of renewal age in a policy. Generally
policies have a renewal age upto the age of sixty years and not lifetime. It is well known that most of the
diseases are contracted after the age of sixty so this feature is very important to note. As observed from
above the government owned insurance company policies (New India, United assurance ,Oriental )have re-
newable age of 65 or 80 years which is not considered to be suitable.
3. Day care treatments –There are two kinds of departments on a hospital-out patient department and in
patient department. In patient treatments are those which require hospitalization. All mediclaim policies are
mostly concerned with in patient treatments but in some policies various kinds of day care treatments are
also covered. In policies of MAX BUPA and RELIANCE all day care treatments are covered. This becomes
an additional benefit of these policies.
4. Health check up age- An important notable feature is regarding the health checkups. Many policies
allow health checkups till the age of sixty also which is considered good. Moreover after few claim free
years a free executive health check up is also provided.
5. No claim bonus/No claim discount- There are two ways of giving benefit to the insured person.
One way is increasing the amount of sum assured if there is a claim free record of the insured person. An-
other way is giving discount on the amount of premium to be taken. The feature of no claim bonus and no
claim discount should be observed. There is a policy of the standalone health insurance company Apollo
Munich which is called optima restore policy where the bonus can go upto hundred percent (100%). Other
policies have the no claim bonus or discount upto maximum 50%. The insured people who do not claim for
a prolonged period should get this advantage. Out of the government owned companies Oriental Insurance
does not provide any no claim bonus or discount.
-58-
6. Critical Illness- There are some diseases which are counted as critical illness. Some of the examples are
cervix cancer and myocardial infarction. Almost all insurance companies do not cover critical illness poli-
cies. There is an exception to this.MAX BUPA covers all critical illness in their mediclaim policy and com-
panies like RELIANCE cover specific ten critical illness in their gold package. Apollo Munich packages
cover 8 critical illness. There is another option available for the insured in the case of critical illness. They
can also take a critical illness policy rider along with the main mediclaim policy.
7. Claims payout ratio- While choosing the best mediclaim policy the claim payout history of the com-
panies need to be taken into consideration. Sometimes even the most reputed companies get vague claims
due to which they have to reject majority of the claims and their claims payout ratio goes down. The duty of
the insured should be to verify all the authentic claims data of the companies.
8. Pre existing disease waiting period- At the time of taking the health insurance policy there is a
waiting period for certain pre existing diseases for example cataract. Companies like ICICI Lombard have
the minimum waiting period of two years. Other policies have the waiting period of either 3 years or 4
years. We should opt for the policy having the minimum waiting period.
PORTABILITY
To address this issue of rising complaints, the Insurance Regulatory and Development Authority (IRDA) has
announced the introduction of health insurance portability, so that a policyholder dissatisfied with the service
and offerings of a particular insurance company can move to another insurance company and not lose out on
any of the benefits. Under portability, an insured individual health insurance policyholder (including family
cover) can transfer the credit gained for time-bound exclusions if the policyholder chooses to switch from one
insurer to another or from one plan to another of the same insurer, provided the previous policy has been main-
tained without any break. According to insurers, however, the number of requests for porting is currently low as
insurance companies have not promoted portability aggressively. Another factor, experts feel, is the lack of
standardisation in the available health insurance products in the market which made comparison among prod-
ucts difficult for policyholders.
-59-
STANDARDISATION
To bring about clarity in health insurance products, IRDA has released comprehensive guidelines, the Health
Insurance Regulations, 2013.The regulations list standardised definitions of 46 terms commonly used in health
insurance policies and 11 critical illness terms to bring uniformity in sales, claims and settlement processes of
insurers. The guidelines allow the patient to opt for non-allopathic treatment, provided that treatment has been
taken in a government or government-authorised institution. Moreover, the latest regulations make it mandatory
for insurers to renew health insurance for lifetime and give health insurance policies to first time buyers at least
till the age of 65 years. Also, insurers cannot increase the premium (loading) if one has claimed benefits under
the policy but can only increase the premium on the overall portfolio of customers. And in case an insurer is
likely to increase the premium rates, the firm will have to inform customers three months in advance so that a
customer can shift to another insurer. Insurers expect that with the implementation of these regulations, there
will be a standardisation of health insurance products offered by all insurers and that it will go a long way in
reducing ambiguity and conflicts in health insurance policies.
LOADING
Loading, in terms of Mediclaim Insurance means the Insurer (Company) will charge more amount than the
regular premium from the policy holder after a claim has been made. Suppose, for eg., you have an Insurance
policy and you pay Rs 8,000 each year in premium, and now suppose in 3rd year you make a claim, then from
the 4th year onwards, your premium increases by a certain amount which can range from 5% to even 300%.
The increase depends on the company terms and the rules. If the loading is 50%, your premium will increase by
50%, which is Rs 12,000. Loading can apply with every claim you make.. Loading can apply with every claim
you make. But it doesn’t mean that all Mediclaim Policies in the market come with the Loading clause. There
are a few companies in the market without such Hidden Riders like United India(Gold and Platinum only) and
Max Bupa. This concept of Loading defeats the very purpose of Mediclaim. An individual takes a Mediclaim
Policy, just so that he won’t pay anything extra, out of pocket but ultimately, he spends more by way of Load-
ing after the claim has been made.
COPAYMENT
Co-pay, as the name signifies is the payment made by two parties, even if that is not in equal proportions This is
another important factor to be kept in mind while selecting the Mediclaim policy for oneself. Under this clause,
the insured is also required to bear a certain percentage of expenses incurred on illness/disease while hospital-
ized, either conditionally or under certain conditions..Usually, in our country, the concept of Co-Pay only comes
into picture after a certain age. Most of the companies levy this clause once the policyholder enters the Senior
citizen category, that is after the age of 60. Mostly this percentage is mentioned as 20% pay – i.e., policyhold-
ers required to pay 20% of the expenses out of his own pocket.
-60-
Top up and super top up plans:
.Here we should first understand the meaning of a top up plan a and a super top up plan. A top up plan is calcu-
lated per claim i.e if the person taking the policy agrees to pay a certain amount per claim which is known as
deductible and takes the top up plan with a certain sum assured.
Illustration: Mr. Shah has a primary Health Insurance RS 3 lakhs and a Top-up Healthline policy for RS 5
lakhs with deductible of RS 3 lakhs. In the event of a serious hospitalization with a claim of RS 8 lakhs, RS 3
lakhs will be paid by his primary insurance and RS 5 lakhs will be paid by his Top up Healthline. In this way
the amount of the deductible can be paid through the primary health insurance policy or from out of pocket ex-
penses also. Deductible is the amount over which the customer agrees to claim for each hospitalization. The de-
ductible amount will be deducted from the admissible claim for each and every mediclaim policy.
A super top up plan has a decided deductible amount also known as threshold which the customer agrees to pay
in the claims happening in an entire year. For example if a person makes five claims of 20000 each and the thre-
shold is Rs.1 lakh then the customer will pay for all these five claims either through the mediclaim policy he
owns or by himself and all the claims made by the person in the rest of the year until the sum assured of the su-
per top up plan can be reimbursed by him.
A super top up policy works even better as the expenses it covers are for all illnesses during the year put to-
gether and any eligible expenses incurred over and above the deductible amount is eligible for reimbursement.
Thus, in contrast to a top up policy, it will also cover expenses arising from a series of moderately expensive
illnesses as well as just one expensive illness. If we take an example if instead of 1 single angioplasty a person
had them on 2 separate occasions (say once for one blockage and another for the second blockage just an exam-
ple to understand the principle not really how it happens medically) and it had cost Rs. 2 lacks and Rs. 1.50
lacks respectively (total cost Rs. 3.50 lacks) the top up policy would not have reimbursed anything since it
works on per illness cost (neither of the 2 illness cost more than the deductible and hence no reimbursement). A
super top up policy for Rs. 3 lacks with a deductible of Rs. 2 lacks on the other hand would still have reim-
bursed Rs. 1.50 lacks since it aggregates the costs of all illnesses put together. So in many ways a super top up
policy is like a regular medic aim policy except that it does not reimburse the expenses incurred till the deducti-
ble amount is exhausted.
-61-
These kind of policies work well for the insurance companies as well, as the number of claims are much lower
and only a few people are likely to bust the deductible amount and hence the premiums are very reasonable.
Between the 2 types (top up and super top-up), the super top up plan is preferable as it is easy to understand and
avoids all possible future disputes as to what constitutes a 'single illness. The premium difference for the benefit
provided is also not very significant.
Currently only Star Health (top up plans) and United India Insurance (both top up and super top up plans) offer
such plans. The summary of the plans is given below for a Rs. 7 lakh cover with a deductible of Rs. 3 lakhs
We can see the difference between top up and super top up plans in the following features as follows:
 Deductible amount
 Maximum age of entry
 Premium amount
 Pre existing illness
 Sub limits
-62-
Table 2.F - Top Up and Super Top Up Plans
Star Health Top up United India Top United India Super

plan up plan top up plan
Deductible amount Rs. 3 lacs Rs. 3 lacs Rs. 3 lacs
Coverage amount
over and above the Rs. 7 lacs Rs. 7 lacs Rs. 7 lacs
deductible amount
Maximum age at
60 years 80 years 80 years
entry
Premium amount
Age up to 45 4,412 2,758 3,198
46 to 60 4,412 3,419 3,971
> 60 Data Not available 3,861 4,412
Coverage of pre- In the 4th consecutive In the 5th consecu- In the 5th consecutive
existing illness year tive year year.
Renewal up to 75 years Lifetime Lifetime
Room rent restricted to
Rs. 4,000 per day. Post
hospitalization expenses
Sub limits not to exceed 7% of to- None None
tal claim amount or Rs.
30,000 whichever is
lower
Source : Company websites
Thus we can see that in a super top up plan there is advantage in sublimit also. For a consumer the benefit is the
ability to get partial cover for a catastrophic high cost illness at a low cost. Moreover he is free to take regular
mediclaim insurance for the deductible amount thus getting full coverage. In fact smart consumers can effec-
tively get full coverage at a much lower cost by combining regular mediclaim policy with the United India su-
per top up policy.
Now we can talk of the real scenario .I will be putting forward a self constructed case of a family for recom-
mendations on the best mediclaim. The family consists of four members having only the male member as the
single bread winner of the family The family already avails of two health insurance plans and looks for better
recommendation. The family consists of two adults and two children. The cover or policy they might look for
will not concentrate on certain aspects like maternity benefits. The recommendations as provided below will
also consider the aspect of premium payable.
-63-
SAMPLE CASE STUDY
Now we will be constructing a sample case of a family of four members already availing four individual
health insurance policies of Rs.5 lakh each and also a top up plan
Table 17 - Sample Case Study-Family Details
Name Gender DOB Age

Mr.Sharma M 01‐01‐1978 35 years
Mrs.Sharma F 01‐01‐1980 33 years
Master Sharma M 01‐01‐2005 8 years
Baby Sharma F 01‐01‐2007 6 years
Table 18 - Sample Case Study-Current Insurance Plans
Master
Mr. Sharma Mrs. Sharma Baby Sharma Premium
Sharma
National Insurance
500000 500000 500000 500000 23146
Mediclaim 2007
United India Top‐Up 1000000 6517
Total 5l (I) + 10l (F) 5l (I) + 10l (F) 5l (I) + 10l (F) 5l (I) + 10l (F) 29663

I ‐ Individual
F‐ Floater
The family currently has a mediclaim policy of National Insurance and a top up plan of United India. We will
be providing them advice regarding whether they should continue with the current policy or not and what are
the best sum assured options available to them. The premium rates have been collected from the policy word-
ings of the company according to the age of the person. Currently they have individual policies. Now follow-
ing is our suggestion to them:
Table 19 - Recommendations Regarding the Current Plans of the Sample
Plan Name Recommendation Savings

National Insurance Mediclaim
Discontinue 23146
2007
United India Top Up Discontinue 6517
Total 29663
-64-
Based on our research about the various products available the first recommendation given was to discontinue
both the policies as there are better options available. The information regarding the competitive products avail-
able are:
Table 20- Competitive Product Prices
Premium
Plan Cover Inclusive
of Taxes
United India Family Medicare 10l (F) 14354
Star Family Health Optima 10l (F) 14382
Religare Health CARE 10l (F) 17339
Apollo Munich Optima Restore 10l (F) 17608
TATA AIG Mediprime 10l (F) M
17773
E
ICICI Lombard Complete Health 10l (F) 18803 D
MAX Bupa Health Companion Gold 10l (F) 20202 I
MAX Bupa Family First 5 (I) + 10 (F) 20420 C
Oriental Happy Family Floater Gold 10l (F) 20764 L
Star Health Comprehensive A
10l (F) 23506
I
Apollo Easy Health Premium 10l (F) 23982 M
Bajaj Allianz Health Guard 10l (F) 24524
MAX Bupa Heart Beat 10l (F) 27321
Future Generali Platinum 10l (F) 28835
Bajaj Allianz Family Care First 10l (F) 32043
United India Super Top Up 5l (Ded) + 10l (F) 8315

TOP
UP
Star Super Surplus 5l (Ded) + 10l (F) 4831
-65-
OBSERVATION AND RECOMMENDATION
Given above are all the premium rates for a family floater options available in the market. The top up and super
top up options are also given. It is to be noted that the family is currently paying a premium of Rs 29663.Under
their current investment plan each of the family member is getting a coverage of Rs 15 lakhs (5 lakh individual
from National Insurance mediclaim and Rs.10 lakhs from the United India top up plan)
RECOMMENDATION
The recommendation will be given based to two parameters-premium and other notable features discussed
ahead. According to the premium prices the policies suggested will be:
 APOLLO MUNICH OPTIMA RESTORE POLICY
As shown in the above table if the family takes a floater of Rs 10 lakhs in the optima restore policy then
firstly the premium amount is only Rs.17608.
Secondly this policy provides a no claim bonus upto 100% so if the policy remains claim free then each
of the family member gets a coverage of Rs. 20 lakhs.
 MAX BUPA FAMILY FIRST
It is recommended because it is giving the option of the combination of an individual and a floater at
lesser premium. Moreover this policy has the advantage of covering all critical illness and day care
treatments and also it has no renewable age limit.
 UNITED INDIA SUPER TOP UP/ STAR SUPER SURPLUS
These are the super top up plans which are recommended. The threshold amount is Rs.5 lakh and the sum as-
sured is Rs 10 lakh. A very notable advantage of the super top up plans is that the premium amount is very mini-
mal affordable to every man.
-66-
Table 21- Comparison of all the Family Floater Plans Available
Feature Max Oriental Star Apollo Bajaj Max Future Gen‐ Bajaj

Name Bupa Bupa erali
Plan Name Family Happy Comprehen‐ Easy Health Heart‐ Platinum Family
First Family sive Health Guard‐ beat Gold Care First
Pre‐ Famaily
mium
Plan Entry 18 Years 18 ‐ 55 18 ‐ 65 Years 18‐60 18‐65 18 Years ‐ 18‐65 Years 18‐56
Age ‐ Lifetime Years Years Years Lifetime Years
Sum Insured 1‐5 lacs 6.00 ‐ 5.00 ‐ 25.00 4.00 ‐ 2.00 ‐ 5.00 ‐ 6.00 ‐ 10.00 1.50 ‐
Ind & 5‐ 10.00 lac. 10.00 10.00 lac. 10.00 lac. lac. 10.00 lac.
15 lacs lac. lac.
Floater
Max Renewal Lifetime 65 Years Lifetime Life Time 80 Years Lifetime Lifetime 74 Years
Age
Notable Fea‐ 1. No 1. No 1. Life Time 1. Ma‐ Premium 1. No Policy SI In‐ 1. 3 Yr
tures (+) Min, Max Pre Pol‐ Renewal, No ternity Discount Min, Max crement Upto Premium
Entry icy Sub Limits. Cover. 10 ‐ Entry Rs.1.00 lac In Guarantee
Age. Medi‐ 2. SI Restore 2. Lim‐ 32.50% Age. Case of Acci‐ Plan.
2. Ma‐ cals Re‐ Facility. ited For Op‐ 2. Mater‐ dental Hospi‐ 2. 15%
ternity quired 3. Maternity OPD. tional Co‐ nity Cover talization. Premium
Cover Upto 60 Benefit. 3. One E‐ Payment. With Free Discount
With Yrs of 4. Hospital Opinion Coverage on Every
Free Age. Daily Cash For Criti‐ of New 4th Yr
Coverage 2. Op‐ Cover. cal Ill‐ Born (Renewal).
of New tion To ness. Baby As 3.
Born Include 4. No An In‐ Monthly,
Baby As Parents Sub Lim‐ sured Qtrly, Half
An In‐ or Par‐ its, Claim Member Yrly Pre‐
sured ents In Load‐ Till Next mium
Member Law ings. Renewal. Payment
Till Next (Either) 5. Life‐ 3. For All Options.
Renewal. In Single time Pol‐ Insured 4. Claim
3. For All Policy. icy Re‐ below 60 Payable
Insured newal. years all
4. Covers treat‐
13 rela‐ ments
tions. covered
5. Indi‐ from 91st
vidual day.
and
floater
cover
combo.
-67-
Notable Fea‐ 20% Co‐ 1.Claim 1. Claim Load‐ Diabetic 1. 10% 20% Co‐ Lifetime 1. Major
tures Payment Pay‐ ings Persons Co‐ Pay‐ Payment Claim Heart Dis‐
(‐) After 65 ment Upto 50%. Not In‐ ment If After 65 Limit 3 Times eases &
Age. Limit 2. 10% Co‐ surable. Treat‐ Age. of Surgeries
40% of Payment For ment Is 1st Policy If Covered
Policy SI All Policy Taken In 1st Policy Is After 3 ‐ 4
Per Holders Non Taken After Yrs
Mem‐ =>60 Age At Network 60 Age. Only.
ber, Per 1st Hospital. 2. 5%
Illness. Policy Incep‐ 2. 20% Compul‐
2. All tion. Addi‐ sory
Medical tional Co‐ Pay‐
Expense Co‐ Pay‐ ment.
Shall Be ment If 3. Sub
Re‐ 1st Policy Limits
duced If Is Taken Appplica‐
Higher after 56 ble
Than years
Allowed 3. Sub‐
limits
applica‐
ble
Room Rent No Sub Gen‐ No Sub Limits. No Sub No Sub No Sub No Sub Lim‐ General=
Sub Limit Limits. eral= Limits. Limits. Limits. its. 1.50 %
1% of of SI
SI, ICU= 2 %
ICU= 2%
City/Zonewis No Sub No Sub No Sub Limits. No Sub No Sub No Sub No Sub Lim‐ No Sub
e Claim Sub‐ Limits. Limits. Limits. Limits. Limits. its. Limits.
limit
Pre Hospitali‐ 30 Days 30 Days 30 Days. 30 ‐ 60 60 Days 30 Days 60 Days Flat 3% of
zation (Max Days (Max Accepted
15% of 20% of Hospital
SI) SI). Expenses
Post Hospi‐ 60 Days 60 Days 60 Days. 60 ‐ 90 90 Days 60 Days 90 Days Flat 3% of
talization (Max Days (Max Accepted
15% of 20% of Hospital
SI) SI). Expenses
Day Care All 26 101 140 130 All All 140
Procedures
Organ Donor Covered ** ** Covered ** Covered Covered **
Expenses
Free Health Every 3rd NA After 3 Claim After 2 After 4 Annual After 4 Claim NA
Check Up Year Free years Claim Claim Free Free
Free Years Years.
Years (1% (Max‐ Rs
of SI). 1000)
No Claim Health No NA No Claim ** Health 5% Discount No Claim
Benefit Vouchers Claim Bonus Vouchers on Bonus
10% of Dis‐ 10% Per 10% of Premium In 5% Per
Applica‐ count Annum Applica‐ 1st 5 Annum
-68-
ble 5% Max (Max ble Re‐ Claim Free (Max
Renewal 20% 50%). newal Years, Next 5 25%).
Premi‐ Premium. Claim Free
ums. Years 10% No
Claim Bonus
upto 50%
Claim Impact Nil No Premium 20% Re‐ ** Nil Discount Re‐ No Claim
Claim Loadings Upto duction duced To Bonus
Dis‐ 50% of Base In Zero, 20% Reduced
count Premium. No Claim Reduction In To Zero.
Re‐ Bonus. No
duced Claim Bonus
To Zero,
If No
NCD Is
Avail‐
able
Claim
Loading
5% upto
20%
Pre Policy 60 Years 60 ** 46 years 46 Years ** 45 Years 46 Years
Check Up Years or 7.5‐10
lacs SI
Pre Existing 4 Years 4 Years 4 Years 3 Years 4 Years 4 Years 4 Years 4 Years
Disease Wait‐
ing Period
** ‐ Data not NA ‐ Feature not
available available
Feature Name United India Star Religare Apollo Tata AIG ICICI Lombard Max Bupa

Health
Plan Name Family Family Health CARE Optima Mediprime Complete Health
Medicare Optima Restore Health Smart Compan‐
ion
Plan Entry Age 18 ‐ 80 Years 18 ‐ 65 Years 18 ‐ Life‐ 18 ‐ 65 18 ‐ 65 18‐ Lifetime 18‐ Life‐
time Years Years time
Sum Insured 1.00 ‐ 10.00 1.00 ‐ 10.00 2.00 ‐ 60.00 3.00 ‐ 2.00‐10.00 7.00‐10.00 lac 5.00 lac.
lacs lacs lac. 15.00 lac. lac
Max Renewal 80 Years 65 Years Lifetime Lifetime Lifetime Lifetime Lifetime
Age
Notable Fea‐ 1. Policy En‐ 100% SI Re‐ 1. Interna‐ 1. No 1. Animal 1. Pre Existing 1. No
tures (+) try, Renewal store tional Claim Bite Disease Cov‐ Claim
Age 18 ‐ Facility In 3.00 Treatment Bonus Treatment ered After 2 Loadings,
80 Yrs. lac & Above Facility In 50% Per Cover. yrs. Lifetime
2. Diabetes, Policy SI. 50, 60 lac SI. Annum, 2. Inpatient 2. Maternity Renewal.
Hyperten‐ 2. SI Restore Max Ayurvedic, Benefit with 2. Hospital
sion Cover‐ Facility. 100% Unani New Born Cash
age As Pre 3. 1, 2, 3 (Highest Treatment Baby Cover. Rs.2000
Existing Dis‐ Years In or Home‐ 3. Limited Per Day.
-69-
ease @30% Policy Op‐ Indian opathy OPD.
Extra Pre‐ tion. Market). Treatment 4. Hospital
mium. 4. Lifetime 2. Basic SI Covered. Daily
policy Re‐ Restore Cash.
newal. Facility. 5. Convales‐
5. Annual 3. No cence Benefit.
Health sublimit 6. No sub‐
checkup for and claim limit.
all adult loading.
members 4. Life‐
covered un‐ time re‐
der this pol‐ newal.
icy.
Notable Fea‐ 1. Sub Limits 1. Sub Limits 1. Sub Limits Diabetic ** Claim Loading 1. Sub Lim‐
tures ( ‐ ) Applicable. Applicable. Applicable. Persons up to 200% its
2.10% Co‐ 2. Policy Re‐ 2. 20% Co‐ Not Insur‐ Applicable.
Payment newal Payment Af‐ able. 2. 20% Co‐
After 60 Ages. Upto 65 Age ter 61 Payment
3 25 ‐ 100% Only. Yrs of Age In After 65
Premium 3 Post Hospi‐ SI age.
loading based talization fol‐
on claim ex‐ low up ex‐
perience penses re‐
stricted up to
Rs 50000
Room Rent Sub General= 1% Class A Cities ‐ General= 1% No Sub No Sub Lim‐ No Sub Limits. Max
Limit of SI 2% of SI up to of Limits. its. Rs.4000 Per
ICU= 2% of SI 5000 SI, Day.
Class B ‐ 1% up ICU= 2% of SI
to 3000. (In SI 2 lacs ‐
Class C ‐ 1% up 4 lacs only)
to 1000.
City/Zone wise No Sub Limits. If Zone‐ 2 Cus‐ No Sub Lim‐ No Sub No Sub Lim‐ No Sub Limits. Yes
Claim Sublimit tomer in Zone 1 its. Limits. its.
then premium
difference is
recovered from
claim amount.
Pre Hospitali‐ 30 Days 30 Days. 30 Days 60 Days 30 ‐ 60 Days 30 Days Max 15%
zation (Max 10% of of SI
SI)
Post Hospi‐ 60 Days 7% of Hospi‐ 60 Days 180 Days 60 ‐ 90 Days 60 Days Max 15%
talization (Max 10% of talization Ex‐ of SI
SI) penses. (Ex‐
cluding Room
Charges.)
Day Care Pro‐ Covered 101 All 140 140 9 All
cedures
Organ Donor Covered ** Yes (Subject Covered Covered Optional Covered
Expenses To sub limit Cover
basis of sum
assured.)
-70-
Free Health After 3 Claim No Annual NA After 4 Annual **
Check Up Free Health Claim Free
Years. Checkups Years (1% of
for all adult SI, Max
members Rs.5000).
covered.
No Claim No Claim No Claim Bo‐ No Claim No Claim No Claim No Claim Bo‐ **
Benefit Discount 3% nus Bonus Bonus Bonus nus
(Max 15% ) 15‐35%. 10% Per 50% Per 10% Per 10% Per An‐
Annum Annum Annum num Max
up to 50% Maxi‐ Max 50%. 50%.
mum
100%.
Claim Impact 25 ‐ 100% 50% Reduc‐ 20% Reduc‐ Nil 20% Reduc‐ 1. 20% Reduc‐ **
Premium tion In No tion In tion In tion In No
Claim Bonus No Claim No Claim Claim Bonus.
Per Claim Bonus. Bonus. 2. Claim Load‐
ings
up to 200%
Pre Policy 45 Years ** 45 Yrs of 46 years 46 years or 46 years or **
Check Up Age or 5.00 or 10,15 7.5‐10 lacs more than 10
SI lacs SI SI lacs SI

Pre Existing 4 Years 4 Years 4 Years 3 Years 4 Years 2 Years 4 Years
Disease Wait‐
ing Period
** ‐ Data not NA ‐ Feature not available
available
Source : Primary data collection (Company websites, brochures)
-71-
We can make the following observations regarding the benefits
provided by various policies:
 There is no barrier to entry in the products of MAX BUPA.
 In case of sum insured MAX BUPA offers the individual sum insured upto 5 lakhs and family
floater upto 15 lakhs. Moreover the STAR health policy provides sum insured upto 25 lakh.
 In terms of maximum renewal age policies like Max Bupa , Star and Future generali have no limitation.
Their renewal age is up to lifetime.
 There is no sublimit in some products of Apollo, Star, Bajaj etc.
 Religare has the advantage of a very high sum insured i.e up to 60 lakhs but it suffers from limitations
such as sublimits.
 In terms of pre and post hospitalization expenses Apollo is considered to be the best policy because
it has the highest duration for post hospitalization expenses i.e 180 days.
 In ICICI Lombard and max bupa there is annual free health check up.
 In MAX Bupa oriental the pre policy check up age is till 60 years which is a benefit
 The pre existing waiting period in case of ICICI Lombard is just two years. As the waiting period is only
two years so this is a major benefit while choosing health insurance.
 Another aspect to be considered is the claim impact. Claim impact means that if the insured makes any
claim in midst of the policy then the premium is either upgraded or any other disadvantage prevails. So
we should look for the policy where the claim impact is NIL. The policies where the claim impact is
Nil are MAX bupa heart beat gold and MAX bupa family first.
 Even in case pre hospitalization expenses the products of APOLLO are preferred as the pre hospitaliza-
tion expenses are covered for sixty days.
-72-
CONCLUSION
Health insurance in India is getting a good face lift. After certain changes in the life insurance segment, IRDA
has now turned its attention towards the health insurance space. There are many changes that are proposed.
Some of the important proposed changes are –Free look period, Making health insurance products available to
persons aged at least 65 years no exit age for the renewal of the policy, longer duration of the policy-such as
policies offered for individuals by life insurance companies should offer products with policy terms of atleast 4
years and non life insurers shall offer products with policy terms of atleast four years and non life insurers shall
offer policies for not more than 5 years. Insurers may provide coverage to non allopathic treatment provided the
treatment has been undergone in a government hospital or recognized institute, All health insurance policies
shall allow access for treatment in network provider or in any hospital which is not part of the network across
PAN India except in unauthorized hospital, travel medical policies may be offered as standalone product or as
an add on and all health insurers and TPA’s as the case may establish separate grievance channel to address the
health insurance claims and grievances of senior citizens. On the whole as the role of financial planners with
respect to the health insurance is undergoing a tremendous change and the financial planners need to provide
holistic advisories to their clients including the health insurance.
-73-
LIMITATIONS- HEALTHCARE SECTOR
There is considerable resentment of the current practice of permitting GIC subsidiaries to exclude from cover-
age a long list of specified conditions and selected chronic conditions which are pre-existing at the time of
enrolment. The existing Mediclaim plan excludes all treatment costs for HIV or other sexually transmitted dis-
eases (STDs). Such exclusions in most developed countries are regulated and not left to the decision of the in-
surance companies. A desirable policy might be to allow exclusions for a fixed period (say one or two years),
after which the health plan enrollees may become eligible for coverage. The insurance companies and some re-
searchers might argue that disorders existing at the time of enrolment are known health risks and, therefore, not
insurable events. It is true that these expenses will be predictably higher, and insurance companies will tend to
lose money on these enrollees. However, if all health plans are required to cover chronic conditions on the same
basis, such coverage need not create unfair losses. Also, it would be unfair on equity grounds to force those who
face chronic (or selected excluded) diseases to pay for the full cost of treatment out of pocket or to shift the bur-
den of treatment for such diseases to the public health care providers. Regulation is also needed to ensure that
the health plans do not enter into competition for attracting only profitable, low cost patients. There is danger
that biased selection will undermine GIC’s recent efforts to expand coverage limits. In 1996, a new benefit plan
was introduced which offers substantially higher caps on coverage (up to Rs 3,00,000 versus an upper limit of
Rs 33,000 under the previous system). Although there is some evidence of biased selection, this has so far not
been a serious issue in India. The fact that group coverage predominates over individual coverage is a possible
explanation.
LIMITATIONS OF THE STUDY

 Data has to be collected from TPA offices .This requires a prior approval from their respective insurers,
This creates a delay in data collection
 The research is extrapolative in nature. Gathering 100% data is difficult.
 The MIS Records lack geographical classification so only cases pertaining to the city of Jaipur have to
be considered. it is a tedious task.
 The in house TPA’S of private healthcare hospitals refuse access to confidential information.
 The charges of various diseases collected from each category of hospital are for the general ward rooms.
The charges regarding deluxe and super deluxe rooms was not accessible without permission.
 The face to face surveys conducted with the doctors was a time taking process as they were busy with
their schedules.
 It was also planned to include a government hospital into this study but since every treatment there was
free of cost so no break up regarding the treatment and surgery charges was made available through
them.
-74-
Scope for Further Research
o The research could also be conducted region wise for other Tier 3 cities as well as metro cities.
o The category of diseases which had less probability could be studied further with their related expendi-
ture.
o The In house claim settlement system needs to be explored further.
o The emerging trend of online mediclaim plans requires to be studied as it has a high potential for growth.
o The plans specifically designed for senior citizens could be studied in detail.
o The study could give different results taking higher room categories into consideration.
o Speciality hospitals may have different charge structure which can provide a different view of expenses.
o The concept of maintaining a contingency reserve along with the mediclaim plan can provide us with a
more cost effective way of managing investment in health insurance.
o Overseas mediclaim policies could be studied.

-75-
Practical implications of the study
This is a path breaking study to find out the disease burden in a particular city, the financial impact of these dis-
eases and choosing the optimal mediclaim. Studying the disease burden means analyzing the most commonly
prevalent diseases in a particular region. Every region has a different category of diseases happening most
commonly. If we come to know the diseases occurring commonly in a city it will be useful to the health insur-
ance companies as they can easily modulate the inclusions and exclusions of a policy according to the real data.
The same has been done in one part of the project by collecting claims data from the TPA’s of the city. In the
project the most common five problems under each most probable disease category have been taken into con-
sideration and their charges in three grades of hospitals are recorded. This makes the insured person aware of
the difference in charges of various hospitals and how to choose the best option under the network hospitals of
the insurance company. For example-a double valve surgery is twice as costly in Fortis as compared to grade B
hospital so according to the sum assured a person can go for treatment so that the policy amount is not ex-
hausted faster. Finally there are steps to suggest the suitable mediclaim policy. Firstly the project has explained
the main inclusions to be considered while choosing the best mediclaim policy. Through means of a sample
case study it is further explained that how choosing for better options like supertop up and top up plans
will reduce the premium amount as well as increase the coverage for a particular person. The main aim of the
study is also to make aware of the rising medical costs to the youth of the country by taking healthcare inflation
into picture thus encouraging the use of health insurance. Presently there is lack of awareness regarding health
insurance in India and even the penetration is very low in our country. Moreover not many studies have been
done earlier on this subject. This fact motivated me to carry forward a research in this area as health insurance is
a highly potential market and due to rising financial medical costs it is very essential to make people aware
about it.
-76-
Gaps & Suggestions for Improvement in Mediclaim
If the objective of providing some kind of insurance to the general population is a priority area for health policy
planners, a beginning can be made by carefully reviewing the mediclaim system. Some areas which need par-
ticular attention are as follows.
Premium structure:
The current premiums are too high in relation to claims payments.
The current bonus and ‘malus’ system for adjusting claims is such that the insurer is always guaranteed at least
a 20 per cent margin over the previous year’s level of incurred claims. Also there does not appear to be a me-
chanism through which premiums are reconciled according to settled claims rather than proffered claims. Final-
ly, the discount on group insurance for large employers is unrealistically large. Revising the premium schedules
will make health insurance more accessible to individuals from lower socio-economic categories.
Out-patient coverage:
There is a need for insurance cover to meet the growing cost of out-patient treatment. The reasons why some
people pay a great deal out of pocket even when they are already covered by the GIC or the ESIS should be
identified so that corrective measures could be devised. The obtaining of referrals before going to expensive
secondary and tertiary facilities can be encouraged by providing for the GIC to give lower reimbursement when
higher level care is sought without a referral.
Limit exclusions for pre-existing conditions:

At present Mediclaim does not cover most of the chronic or pre-existing conditions. This leaves out large seg-
ments of the population who suffer from diseases like diabetes, hearing disorders and STDs. Such exclusions
should be carefully reviewed and amended, for example, exclusions for preexisting conditions can be made va-
lid for not more than a year.
Require greater efficiency in processing of claims:

Consumers should be given a time schedule so that there is no uncertainty about the amount of reimbursement
and the time within which they can hope for reimbursed. Delays in prepayment and arbitrary denial of claims
need to be minimized.
-77-
Increase visibility:
In our assessment Mediclaim is not an exceptionally popular scheme. Most prospective consumers know little
or nothing about it. This should be rectified through publicity.
Require greater monitoring of fraud and excessive fees:
The government should make it mandatory for all insurance companies to devote more resources to monitoring
fraudulent claims and establishing schedules of appropriate fees for specified procedures.
Regulation of Health Insurance
The foregone points regarding a complete review of the health insurance sector are related to its regulation as
well. This suggestion is applicable to all the health insurance agencies, be it the GIC or any other corporation or
company. In addition to regulation of premium structure, exclusion clauses, extent of coverage, etc, the follow-
ing measures may also be necessary.
Discourage ‘dreaded disease’ or other specialized policies:
The government should discourage schemes like the one currently offered by LIC which covers only four
selected diseases. Such specialization further segments the coverage rather than
broaden it.
Encourage health insurance for the specially vulnerable:
Health insurance cover for the elderly, unemployed, permanently disabled, etc, deserves special attention.
Subsidized insurance plans for these categories of people are worth exploring. Mediclaim benefits, now availa-
ble only to employees, their spouses and children, may be extended to dependent adults(perhaps just grandpa-
rents initially) for a supplementary premium. This is just one example of which can be done. Encouraging
Community-Based Health Programs Community-based health insurance programs offer the best hope for reduc-
ing the financial burdens caused by sickness to a large segment of the low-income population. They would ben-
-78-
efit from systematic review and government subsidies. Conventional reimbursement-tupe insurance systems
are unlikely to be effective in rural areas, where consumers have limited ability to pay. Community-based pro-
grams need to be fostered. The SEWA insurance system, and those of other NGOs as described in Uplekar and
George (1994) should be strongly promoted. These NGOs have been innovative in both raising finance and in-
itiating community financing. For example, there are instances of user fees for selected services, pre-payment
insurance schemes for curative care, and community income-generating programs. Although, the government is
already collaborating with the NGOs, there is a need to recognize the significance of their role more explicitly
and give them financial, administrative and other support. A related point to be made is that not only reim-
bursement type policies but also insurance plans which integrate financing and delivery of care should be en-
couraged. To be found in developed countries, such integrated insurers and providers are mostly able to manage
care and monitor expenses.
Need for an Information Bank
This and several other studies have identified a variety of insurance issues that have not been fully documented
or understood. There is an immediate need for more information on various aspects of demand for medical care
(in the context of health insurance) to enable us to understand: (a) the distribution of medical expenditures, and
(b) the question of who ultimately pays for them. Greater information is required for assessing the prices, quali-
ty and access of providers and their patterns of operation.
-79-
BIBLIOGRAPHY
 Jagoinvestor.com
 Website of IRDA
 Annual health report-World Health Organisation
 Money life.com
 Financial Planning journals
 Outlook money editions of January and February 2013
 www.maxbupa.com
 www.apollomunichhealthinsurance.com
 www.bajajalliance.com
 www.niconline.in
 www.orientalinsurance.org.in
 www.uiic.co.in
 www.royalsundaram.in
 www.starhealth.in
 www.cholainsurance.com
-80-

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A Report on

Disease Burden Analysis and Optimal Mediclaim Selection

A report submitted in partial fulfillment of

Executive summary 9‐11

Scope of the study 12‐14

Health expenditure in India-Pre and post liberalization 15‐17

Introduction to health insurance 18‐22

History of Mediclaim 23

Industry analysis 24‐31

Profile of the company 32‐33

Opportunities and threats of Health insurance industry 34‐36

Scope for further research 75

Practical implications of the study 76

Gaps & suggestions for improvement in mediclaim 77‐79

1A Claim settlement history of TPA'S as per IRDA REPORT 2011‐2012 40

2.A Probability of diseases for sample 43

2.B Classification of cases for Park mediclaim 44

2.C Average expenditure on each disease 45

2.D Compilation of total claims for each disease by all the TPA 46

2.E Diseases having maximum probability 47

10 Major diseases and expenses under gastroenterology 48

11 Major diseases and expenses under cardiovascular 48

12 Major diseases and expenses under Tumours 48

3.A Cost of major surgeries in hospitals-a Short research by Medimanage 50

13 Inflated expenditure figures for Hospital A 51

14 Inflated expenditure figures for Hospital B 52

15 Inflated expenditure figures for Hospital C 52

16 Comparison of all healthcare products available in the market 54‐57

2.F Top up and Super top up plans 63

17 Sample case study‐family details 64

18 Sample case study‐Current insurance plans 64

19 Recommendations regarding the current plans of the sample 64

20 Competitive product prices 65

21 Comparison of all the family floater plans available 66‐71

1.1 Health Expenditure in India – Post Liberalization 16

1.2 Market Shares of all Insurance Companies 24

1.3 Competitive Structure of Health Insurance Companies in India 25

1.4 Working Environment of TPAs 37

2.1 Probability Of Diseases For Sample For 8531 Cases 44

The three biggest problems :

Financial Burdens for Curative Health Care

Table 1 – Health expenditure in India pre liberalization

Health care expenditure is also increasing day by day

Figure 1.1 - Health Expenditure in India – Post Liberalization

External funded – Aid or grants etc

2. Defined benefit plans

3. Unit linked health plans

DEFINED BENEFIT PLANS

HEALTH INSURANCE-NON COVERAGE AREAS

CHANGING REGULATIONS IN THE HEALTH

Working of Health Insurance

This payout by the insurance company can be claimed in two ways:

Figure – 1.2 – Maarket Sharess of Insurancce Companies

Source : IRDA Report 2011--12

Sourcee : IRDA, India

 Business leader award by NDTV Profit in 2011

Bajaj Allianz General Insurance Co. Ltd.

 Lowest claim rejection ratio among private health insurance companies

New India Assurance Co. Ltd.

Oriental Insurance Co. Ltd.

 Best public general insurance award by CNBC TV18 in 2011

 Innovation in product award for super top-up medicare in 2012

Future Generali India Insurance Co. Ltd.

HDFC ERGO General Insurance Co. Ltd.

Mediclaim & Health Product 2018

Mediclaim & Health Product 2018