While we take great care in selecting best health insurance
plan for ourselves, how to choose the health insurance provider is an equally
important question to consider. If you observe carefully, you will find that
most health insurance plans from different companies have similar terms and
conditions. Their premiums, coverage limit and diseases inclusion/exclusion
will also appear to be similar.
However, there are quite a few things about healthcare insurance
providers (insurance companies) that could differ and provide you a sound basis
of selecting or rejecting them. They are described below.
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1. Incurred
Claim Ratio (ICR) – Nobody wants their health insurance claim to be
rejected. Incurred claim ratio can give you an indication about how likely is
it for an insurance company to accept or reject your claim. ICR is the ratio of
total value of claims paid to the total premium collected, by a health
insurance provider. This data is published annually and the authentic figures
could be obtained from IRDA
annual report. The ICR varies from company to company and can range from as
low as 40% to as high as 150%. A higher ICR indicate that the claims are
generally honoured in that company and vice-versa for low claim ratio. But
while interpreting ICR, take following points into consideration
a.
ICR of companies are given for the past year.
There is no guarantee that same ICR will continue in the subsequent year.
In-fact in companies where ICR was very high (more than 100%), it just means
that company had incurred losses and will be more likely to be cautious over
claims in the coming years. Similarly, companies with very low ICR, may have
lost clients due to dissatisfaction and they may increase their claim settlement rate. Hence, it
is better to check the ICR of at-least 5 years and look for consistency. An
insurance company with consistent ICR of 80% to 90% could be a good choice.
b.
ICR value can significantly differ based upon
whether it is a private company or government company. In private insurance company
profitability is a big concern and they would do all possible to ensure that
the total value of claims paid should not cross the total value of premiums
collected. This may not be entirely true in a government owned insurance
company. Hence, ICR of government owned insurance companies are generally
higher (average 120%) than ICR of private insurance companies (average 84%).
2. Number of empanelled hospitals – It is
better to go with a company who has large number of empanelled hospitals. This
would make it easier for us to avail the insurance benefit, including cashless.
The process of availing claim becomes much more difficult if treatment is taken
in a non-empanelled hospital and the risk of rejection also increases.
3. Number of offices - While most of the work now-a-days can be done
online or over phone, there are still many instances where you would need to physically
visit the insurance office and explain your case. So, if you have an office of
the insurance provider at a reachable distance, it would be better. As medical
emergency can happen anywhere, having a company with office available in
abundance is an advantage
4. Third Party Administrator (TPA) – Most health
insurance providers operate through a TPA, which is an agency to whom
administrative work of insurance company is outsourced. For all practical purpose,
a customer of health insurance has to deal with TPA more often than the
insurance company. Hence, identifying which TPA has been empanelled by the
insurance company and whether the TPA has a presence in your city and number of
offices the TPA has in country are some of the things that must be evaluated.
5. Type of health insurance provider – Companies
providing health insurance can be of 3 types. Government owned health insurance
company, private sector general insurance company and private sector
stand-alone health insurance company. Each type has its pros and cons and can
influence your decision.
a.
Government owned health insurance company – There
are 4 government owned general insurance companies that provides health
insurance. They are The New India Assurance, United India Assurance, National Insurance and Oriental Insurance. The
pros and cons of these companies are as given below
i.
Pros – Since they are backed by government
there is very little of these companies closing down. This gives an assurance
of continuing your health insurance plan from them for entire life.
ii.
Pros - They are generally not very profitability
minded and hence, rejection of claim for petty reasons may not happen. This
also is reflected from their generally higher than 100% ICR.
iii.
Cons – Being large government company, you may
not receive very efficient service. Time delay, excessive documentation and less
supporting customer care are some of the problems you may face
b.
Private
sector general insurance company – These are the general insurance
companies who also provides health insurance. There are about 21 such companies
in India. The pros and cons of such companies are given below
i.
Pros –
Being a general insurance company they have multiple product lines which
gives a high level of sustainability to the company. Hence, continuing your
health plan lifelong with them is quite possible
ii.
Pros –
They thrive on customer satisfaction and you will get good customer
support, quick responses and all help required in all dealings with them
iii.
Cons –
Profitability being a concern, they will be extremely vigilant on claims. This
may sometime lead to rejection of claims, for some or the other reasons, even
if you think that the claim was justified
c.
Private
sector health insurance company – They are also a private insurance company
but they only operate in health insurance. There are 6 such companies in India as
of 2017. While pros of cons of these companies are similar to previous
category, one additional advantage is that these companies only focus on health
insurance and as a result can plan and execute it better. However, the risk of closing
down, in case of non-profitability is slightly higher than general insurance
companies. IRDA does take necessary measures to ensure that these companies do
not fly by night.
As health insurance is something which you would need for
lifetime. Hence, choosing a right company who can serve your needs for lifetime
is as important as choosing a right health insurance plan. Of course, you have
an option of switching the insurance company, but by doing this you lose all
benefits that you accrue as a result of continuing in a plan (like additional
increase in coverage limit, free health check-ups, inclusion of certain
diseases over time etc.). Hence, it would be worthwhile to evaluate companies
on above points and choose the best for you, right at the first time.
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