Are you happy with your health insurance?

Health insurance buyers are not a happy lot. An online survey conducted by ET Wealth earlier this month revealed that almost half the health insurance buyers (48%) are not satisfied with the features and benefits of their policies. The dissatisfaction levels are higher in the higher age groups: those aged 65 and above have the highest number of dissatisfied policyholders — 67%. Similarly, when it comes to claim settlement experience, almost 70% of those in the 60-64 age bracket are dissatisfied. medium69006132boxcontentDissatisfaction level amongst older age groups is much higher since they bear the brunt of renewal premium hikes as well as restrictions like co-pay and disease-wise capping.We list the survey’s major findings, which show widespread discontent among policyholders, and suggest ways to better handle customer issues. HIGH DISSATISFACTION At 48%, the number of people dissatisfied with their policies is too large to be ignored by insurers. The higher the age group, the larger the number of dissatisfied people. This is troubling because older people are likely to use their health policies more frequently. The survey results demonstrate that those who spent time on ascertaining their insurer’s reputation before buying the policy were better off compared to those who relied on their agents’ recommendation (guided by commissions rather than your requirements) or bought a policy based on lower premium. medium69007587On the other hand, some 58% of respondents who bought a policy based on the insurer's reputation were satisfied. medium69007599But being thrifty didn’t work out well for a majority of the respondents. A cheaper policy may be lighter on the pocket, but it may also fail to meet your expectations. medium69007602Scrutinising a policy properly, instead of leaving it to intermediaries or blindly signing documents will save trouble in the long-term. Buying a policy should not be a hurried exercise in order to claim Section 80D tax benefits. The kind of policy you buy has long-term implications for you and your family. Insurers say they are doing their bit to help people make an informed choice. “Besides the policy schedule and its terms and conditions, the policy kit includes a customer information sheet. It lists the key sections of the policy. We have also put in place a welcome calling process for new customers to explain the key benefits, features and terms and conditions,” says Prasun Sikdar, MD and CEO, Cigna TTK Health Insurance. Do not treat these processes as mere formalities that you need to get done with, even if your intermediary says so. “The insurance industry also offers the free-look period. The customer can cancel the policy if he/ she is not satisfied with any aspect of the policy with full refund of premium during this period,” says Sanjay Datta, Chief, Underwriting, Claims and Reinsurance, ICICI Lombard. A timely check after you receive all policy documents will ensure that you do not end up with an unsuitable cover. medium69008637boxcontentTwo out of three respondents have rated their insurance company average or below average — three or less. Just about 10% are totally happy with their insurersHIGHER RENEWAL PREMIUMS Steep hikes in renewal premium topped the list of policyholders’ complaints. “Hike in renewal premiums is a reality. It is linked to inflation as is the case with any other product or service. With increasing cost of healthcare in the country, the premium rates also need to be revised periodically to offset the inflation,” says Ashish Mehrotra, MD and CEO, Max Bupa Health Insurance. In 2013, the Insurance Regulatory and Development Authority of India (Irdai) abolished claim-based loading—a practice where renewal premiums for policyholders who had filed a claim in the previous year were raised. Now, insurers are allowed to hike premiums based on their claim experience for a particular portfolio or age-group, or to adjust for inflation. medium69006359boxcontentInsurers need to make reasonable premium revisions. If possible, policyholders should avoid policies with restrictions, suggest expertsConsumer activist Jehangir Gai has strong words for the industry and the regulator. “In some cases, there has been a four-fold increase in premium—from `20,000 to `80,000,” he points out. Typically, the incidence of claims is higher in older age groups as that is when people tend to fall ill. “They collect the premium while the policy is profitable and then when the person is old and the policy is likely to become onerous, they raise the premium making it unaffordable, so that the insured himself discontinues the policy. It is not the industry but the regulator who has to address the issue,” says Gai. On their part, policyholders should not look to buy policies at an advanced age when there is a greater likelihood of them falling sick. “Once the youngsters start viewing the health insurance policy as a risk cover, and purchasing it at a young age, there would not be such a steep hike in premiums that is unfortunately seen now,” says Datta. Renewal premiums also go up as you grow older. For instance, when an individual turns 36, she moves from the 30-35 age bracket to 36-40 bracket, which attracts higher premium. When you buy a health insurance policy, it needs to be renewed for the lifetime, although it is an annual contract. Therefore, it makes sense to think ahead while comparing policies at the purchase stage. “It is very important to check the next 10 years’ premium – two five-year age slabs. If the policyholder is buying the plan at the age of 35, then she should look up the insurer’s premium chart up to the age of 45 or 46,” says Bhakti Rasal, a financial planner. POOR CLAIM SETTLEMENTS Our survey showed that almost 60% of the people who filed claims were dissatisfied with their experience. Almost 65% of the unhappy respondents blame it to partial claim settlement due to various exclusions. About 42% said they were unhappy because of the delay in processing of claims. Surprisingly, dissatisfaction was comparatively lower in the 65 and above age bracket. Perhaps, because those in the advanced age groups tend to factor in the various caps and are aware of the policy exclusions and restrictions. medium69007824“Too many people being unhappy with their insurer’s claim settlement record is quite alarming and needs to change swiftly,” says Datta. But bad claim settlement experience could also be attributed to the policyholder. As a policyholder, you need to be transparent about any history of illness to avoid claim rejection on this ground. Most insurers cover preexisting illnesses only after a waiting period ranging from 1-4 years, depending on the ailment. “Maintaining transparency with communication of policy benefits, customers being up front with pre-policy declarations, defining service level turnaround time, which will be adhered to, shall all help us in improving customer satisfaction levels,” says Datta. medium69008226boxcontentPartial claim settlement has been policyholders’ top grievance. Insurers need to improve their communication and policybuyers need to understand their policies’ terms and conditions to avoid disappointmentBeing aware of exclusions can help reduce the scope for dispute. Irdai has standardised a list of exclusions that insurers must adhere to and any deviation can be taken up with the insurer and grievance redressal forums. But, at times, these exclusions are inserted at the time of policy renewal. “Policyholders assume that the contract will remain unaffected when they renew. But that is not the case. They face issues when exclusions are included unilaterally at the time of renewal,” says Sikdar. The 2017-18 annual report of the Executive Council of Insurers, which facilitates the insurance ombudsman offices, highlights the lack of clarity in the terms and conditions of health insurance policies. It specifies ‘reasonable and customary charges’ as one of the clauses that need ‘proper’ interpretation. “Pre-existing diseases should be specified on the schedule of the policies so that the insured is aware of the exclusions in the terms and conditions of the policy,” says the report. You could also look at the incurred claims ratio (ICR) of a health insurer in the individual health segment to get an idea of the company’s claim settlement record. A ratio of 75-85% is considered healthy. “The incurred claim ratio is an important indicator. I would buy from insurers who have an ICR in the 70-100% band,” says Kapil Mehta, Co-founder and CEO, Securenow.in. Do remember, however, that ICR is not the same as claim settlement ratio. medium69008260boxcontentAn overwhelming number of claims have been rejected because they fell in the exclusions category. This again stresses the need for better communication and greater awarenessConsumer activists also believe that insurers tend to service the claims of group customers better at the cost of individual policyholders. “Health insurance regulations must be amended so that the group insurance claims cannot be used to cross-subsidise the individual claims,” says civil activist Gaurang Damani, whose petition in the Bombay High Court had triggered a revision of health insurance regulations in 2013. medium69008111boxcontentWhile cashless hospitalisation is a much sought-after facility, it has not made the claim process any better for most respondents medium69008149boxcontentA majority of the people who bought their policies based on the insurer’s reputation have had unsatisfactory claim settlement experiencesOPTION TO PORT POLICIES Health insurance policyholders are allowed to switch insurers and port their policies, if they are dissatisfied with their existing insurers. They don’t lose continuity benefits of pre-existing diseases (PED) cover, if they port their policy. The Irdai introduced health insurance portability in 2011. However, 27.12% of the respondents were not aware of this feature. Policyholders can also approach the insurance ombudsman for grievance redressal. The ET Wealth survey found that over 70% of those who were dissatisfied with their insurer’s claim handling did not approach the insurance ombudsman. More than 77% found the process too complex and time-consuming, while close to 42% were not even aware of the option or the process. Instead of giving up after a claim rejection or service deficiency, policyholders should utilise all options at their disposal to seek a redressal. If you are disappointed with the ombudsman’s decision, the final option is to approach the consumer courts. medium69006462boxcontentDespite Irdai allowing health insurance portability since 2011, 41% of respondents either didn’t know about its existence or were not clear about the process to be followedWHAT POLICYHOLDERS WANT New-age insurers in particular present health and wellness benefits as a carrot to attract healthy and health-conscious individuals. While such benefits can be useful, unambiguous terms and conditions and restrictions is what policyholders really ask for. Close to 62% of the policyholders wanted their policy documents to explain restrictions and exclusions up front in a simple manner. OPD benefits (50.71%) and wide cashless hospitalisation network (50.32%) too score high on the list of most-wanted parameters, followed by no room-rent sublimits (47.47%) and loyalty discounts for long-term customers (47.21%). medium69006538boxcontentThe priority for most policy-buyers is not extra features—OPD benefits, no room rent caps, etc.—but simple and lucid communication of restrictions and exclusions in a policyThe insurance ombudsman annual report, too, emphasises the importance of better communication. “Insurers should consider lower pricing for people who buy health insurance early (and continue to be covered over long-term). Currently, everybody is charged the same premium, irrespective of when they bought the insurance first,” says Mehta. Some companies have started offering such discounts in some of their products. “We offer a 10% discount for life, if the policy is bought before the age of 35. This is a good way of keeping your premiums low even at higher ages: buy the policy early and maintain it for a longer time,” says Mehrotra. Health insurance regulations allow insurers to reward policyholders for early entry, continued renewals and favourable claims experience. Irdai’s proposed standard product construct also provides for incentivising early entry. The graphics show the findings of an online survey conducted by ET Wealth earlier this month. Of the 1,067 respondents, views of 771, who had health insurance, have been considered. Some of the responses may not add up to 100 because of multiple choices.Data analysis by Narendra Nathan and Ramanatha Pai