Introduction

How many accident you need to realise that you need Health Cover? It takes just one
visit to a hospital to make us realize how vulnerable we are, every passing second. For
the rich as well as poor, male as well as female and young as well as old, being
diagnosed with an illness and having the need to be hospitalized can be a tough ordeal.
Heart problems, diabetes, stroke, renal failure, cancer – the list of lifestyle diseases just
seem to get longer and more common these days. Thankfully there are more speciality
hospitals and specialist doctors – but all that comes at a cost. The super rich can afford
such costs, but what about an average middle class person. For an illness that requires
hospitalization/ surgery, costs can easily run into five digit bills. A Health insurance
policy can cover such expenses to a large extent. Read why Health Insurance is more
important these days compared to Old days Health is a human right, which has also
been accepted in the constitution. Its accessibility and affordability has to be insured.
While the well-to-do segment of the population both in rural & urban areas have
acceptability and affordability towards medical care, at the same time cannot be said
about the people who belong to poor segment of the society. It is well known that more
than 75% of the population utilizes private sectors for medical care unfortunately
medical care becoming costlier day by day and it has become almost out of reach of the
poor people. Today there is need for injection of substantial resources in the health
sectors to ensure affordability of medical care to all. Health insurance is an important
option, which needs to be considered by the policy makers and planners. As mentioned
earlier, the cost of Health Insurance depends on the sum assured , age, current health
condition and your previous medical history. Higher the sum assured, higher the
premium. So what is the ideal health insurance cover requirement? There is no standard
answer or thumb rule for this. If we agree that health insurance is important, one has to
look at his/ her own lifestyle, health condition, age/ life stage, family history of
illnesses and affordability. Keep in mind that most insurance companies limit the sum
assured to a maximum of 5 lakhs. Also note that many health insurance policies provide
additional benefits such as daily allowance, ambulance charges, etc. for hospitalization.
Not only are such benefits superfluous, they tend to drive the premiums higher. So it is
best to avoid such plans and stick to something basic and simple.
Health insurance is a form of group insurance, where individuals pay premiums or taxes
in order to help protect themselves from high or unexpected healthcare expenses. Health
insurance works by estimating the overall "risk" of healthcare expenses and developing a
routine finance structure (such as a monthly premium, or annual tax) that will ensure that
money is available to pay for the healthcare benefits specified in the insurance agreement.
The healthcare benefit is administered by a central organization, which is most often
either a government agency, or a private or not-for-profit entity operating a health plan.
The concept of health insurance was proposed in 1694 by Hugh the Elder Chamberlen
from the Peter Chamberlen family. In the late 19th century, "accident insurance" began to
be available, which operated much like modern disability insurance. This payment
model continued until the start of the 20th century in some jurisdictions (like California),
where all laws regulating health insurance actually referred to disability insurance.
Patients were expected to pay all other health care costs out of their own pockets, under
what is known as the fee-for-service business model. During the middle to late 20th
century, traditional disability insurance evolved into modern health insurance programs.
Today, most comprehensive private health insurance programs cover the cost of routine,
preventive, and emergency health care procedures, and also most prescription drugs, but
this was not always the case. Insurance may be described as a social device to reduce or
eliminate risk of life and property. Under the plan of insurance, a large number of people
associate themselves by sharing risk, attached to individual insurance plan that
exclusively covers healthcare costs and is called Health Insurance. Since the past two
decades, there has been a phenomenal surge in acceleration of healthcare costs. This has
compelled individuals to have a re-look on their actual monthly expenditures, spending
patterns and simultaneously allocate a proportion of their income towards personal
healthcare. This has resulted in individuals availing healthcare insurance coverage not
only for themselves but also for their family members including their dependants. In
short, healthcare insurance provides a cushion against medical emergencies. The concept
of insurance is closely concerned with security. Insurance acts as a shield against risks
and unforeseen circumstances. In general, by and large, Indians are traditionally r i s k- av er
s e r a t h e r t ha n r i s k l ov e r s b y na t ur e .
India‘s fast growing demand for affordable health cover is attracting greater business
attention, with both life and non-life insurance companies now entering the market with
innovative new protection and savings medical insurance products. This intense
competition for health insurance customers has only intensified in recent months, with the
introduction of new savings- linked and investment-oriented health insurance schemes by
some of the country‘s largest insurance groups.
India‘s insurance sector first opened up to private and international investors in 2001.
Over the past ten years coverage rates across the populous South Asian country have
doubled and the domestic insurance industry has overtaken several more developed
financial markets in the process. The overall number of insurance policies sold has
increased several times over, and combined premium income is now projected to reach
between US$350 to US$400 billion by 2020. Health insurance, in particular, has become
as one of the country‘s fastest growing insurance lines, accounting for almost a third of
new written premiums last year. Sales of medical insurance products have been driven by
three key factors: a low penetration rate of about 5 percent at present, surging treatment
costs, and a lack of other social safety options across most of India. With total
expenditure on healthcare, through both Indian government schemes and private sector
activity, expected to exceed US$200 billion by 2015, even more significant opportunities
for the country‘s health insurance sector will likely emerge. Over the next three years,
health insurance has the potential to become an INR300 billion market (US$6 billion),
according to industry observers.
The introduction and increased proliferation of private sector players in India‘s health
insurance sector has worked to both develop innovative new coverage products and
increase service standards for clients in the domestic market. Of particular note has been
how the entrance of several major life insurance brands, including Life Insurance
Corporation of India, Aviva Life Insurance and Max Life Insurance, has affected the
market recently. These life insurers offer largely savings-based health plans that provide
lump sum compensation to clients in case of a critical illness or other malady specifically
defined by a specific policy. These long-term products have tenures that can last up to 20
years. When the policy expires, customers are entitled to receive the fund value.
Normally this is not a cashless process as payment is reimbursed on submission of
medical bills. Most of these health insurance plans sold by life insurance companies are
unit-linked insurance products (Ulips), whereby returns are determined by the
performance of the stock market.
While life insurer health plans are tied to equity returns, medical insurance policies sold
through non-life companies tend to provide cashless hospitalization cover for
policyholders in the event of an illness or accident. These plans, with premiums
reviewed and renewed annually, also offer customers a variety of additional value-added
benefits such as hospital cash allowance, home nursing allowance and recovery grants.
Some insurance companies offer these outpatient services as add-on covers with their
hospitalization plans, while others provide discounts through certain affiliated
hospital networks. These products have so far proven to be the most popular in India.
Health insurance policies sold through non-life and dedicated medical insurers currently
dominate the market, accounting for roughly INR100-120 billion (US$1.9-2.3billion) of
the country‘s INR150 billion (US$3 billion) health insurance sector. It is expected that
increased intra-market competition going forward will enable successful insurers to meet
the country‘s changing healthcare needs.

Despite the positive growth indicators, India‘s health insurance market still has many
problems to contend with in order to match its true potential going forward. The most
important challenge for insurers remains the low level of awareness concerning the value
of obtaining adequate coverage as a valuable savings and investment tool across much of
the country. This problem is slowly being addressed as more insurers develop their
product and distribution platforms to reach previously untapped regions and client bases
with more innovative and affordable coverage products, including micro insurance and
local bank.
Indian consumers already aware and enrolled in health insurance schemes, the industry
faces the continuing challenge of keeping them happy. Customer satisfaction levels for
health insurance in India have consistently ranked below comparable levels elsewhere,
with critics frequently citing the low coverage of plans in terms of both the diseases and
number of hospitals covered. Unlike other homogenous general insurance products,
premiums for medical plans are based on the health of an individual policyholder and this
had lead to confusion from customers who do not find any value in their health insurance
policies.

The Insurance Regulatory Authority of India (IRDA) has come to the forefront in
tackling these service standard issues recently. Speaking at the first meeting of the India
Health Insurance Forum in Hyderabad last Thursday, IRDA chairman J Harinarayan said
the industry must now work to improve communication with its customers, particularly
with regard to health insurance policy documentation, as a third of all consumer
complaints this year have been directed towards health insurers. According to IRDA data,
of the 92,898 complaints levied at the non-life sector so far in 2012, 38,891, or 37.5
percent have been focused on health insurance issues. ―If one-third of complaints are
from the health side, I will conclude that the nature of communication on health
insurance policies and the understanding of the policy by the consumer are areas of
concern. Probably, the lack of clarity is reflected in the increasing number of
complaints,‖ IRDA chairman J Harinarayan said, adding that ―good communication is
the good communication is the responsibility of the insurance company and not of the
policy holder. An insurance policy, as a contingent contract, has to be specific and
unambiguous.‖ With a reach of just about 2% of the country‘s 1.2 billion population,
India offers a huge potential in health insurance market. There are over 30 health
insurance products in the category offered by both life and non-life insurers. While ICICI
Lombard, Bajaj Allianz and Reliance General are some of the prominent general insurers
in the health insurance space, Apollo DKV, Star Health & Allied Insurance are the
standalone players. Health insurance‘s annual premium collections are over Rs 6,000
crores. Despite the high growth,
the business is a huge challenge for insurers because of the high losses over soaring
medical expenses
A survey showed massive dissatisfaction with the healthcare system in India. The
interesting find about health insurance in India was how people perceived health
insurance in India. It is seen as an instrument to protect savings. It is not aimed at
protecting the asset that is health. This is probably common to developing markets,
where people tend to place wealth ahead of health. On a macro level, very few
households in India have contingency plans to meet their health expenses. Health risks
in India are perceived differently than the western population. Prior planning in
health issues is yet to be a major priority The industry is also becoming tech-savvy with
facilities to buy certain types of insurance products online and payment of premium
through Internet. The insurance penetration level in India is very low when compared
with the global average. This has brought about a plethora of distribution channels such
as agents, brokers, bancassurance (bank insurance model) avenues, soliciting insurance
through Internet or direct mailing. Many banks, financial institutions and insurance
intermediaries saw a huge opportunity in marketing insurance products. Insurance
brokers play a vital role in bringing together insurance companies and the insured, and
their role assumes importance when a claim arises. Research includes awareness of
health insurance , preference of health insurance consumption pattern ,new services
offered by insurance sectors, claim settlement procedure, and major issues of
health insurance. Health insurance policy does not always cover every possible health
 problem someone might encounter in the future. There are certain terms and conditions
agreed to by the insured (person who is taking the plan), and the insurer (entity that is
providing the plan) and the entire procedure happens according to what has been agreed
to in the contract. The best time to avail a health insurance plan is when the insured is
still in a good physical condition. The normal logic among young people is that since
they are rarely afflicted by physical ailments they do not need such a plan. In reality
people can fall prey to a disease or other physical problem at any time nobody can be
absolutely sure of a life fully free of such issues. Normally as someone gets older the
problems increase and the possibilities of some major disease are always there. A
problem with trying to get a medical insurance during old age is that since there are
more chances of a medical condition the premium is often high or the insurer is not
ready to cover the individual in question..

SOME OF THE MAJOR HEALTH INSURANCE COMPANIES IN INDIA

1. Apollo Munich Health Insurance Company Limited
2. Star Health and Allied insurance Co Ltd
3. Future Generali India Insurance Company Ltd
4. Bajaj Allianz General Insurance Co Ltd
5. ICICI Lombard General Insurance Co. Ltd
6. Cigna TTK
7. National Insurance Co Ltd
8. Iffco Tokio General Insurance Co Ltd
9. The New India Assurance Co Ltd
10. The Oriental Insurance Co. Ltd
11. Reliance General Insurance Co Ltd
12. United India Insurance Co Ltd
13. Royal Sundaram Alliance Insurance Co Ltd
14. Tata AIG General Insurance Co. Ltd.
15. Cholamandalam MS General Insurance Co Ltd
16. HDFC ERGO General Insurance Co Ltd
17. Universal Sompo General Insurance Co Ltd
18. Bharti AXA General Insurance Co Ltd
19. SBI General Insurance Company Ltd
20. Raheja QBE General Insurance Co Ltd
21. MAX Bupa Health Insurance Company Ltd
22. L & T General Insurance Co Ltd
23. Religare Health Insurance Co Ltd
24. Liberty Videocon General Insurance
25. Export Credit Guarantee Corporation of India Ltd. (ECGC)
26. Agriculture Insurance Co. of India Ltd.
27. Shriram General Insurance Company
28. Magma HDI General Insurance Company Limited
Review of literature