Friday, August 31, 2012

Fwd: IRDA’s senior citizen initiatives: On the track or off it?

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IRDA's senior citizen initiatives: On the track or off it?

As per an RTI reply by the ministry of finance, IRDA has taken several initiatives for senior citizens, but has it made the life of senior citizens any easier?

The reply of the ministry of finance to an RTI query by MV Ruparelia gives details ofrecommendations by the Sastry Committee and the action taken by the Insurance Regulatory and Development Authority (IRDA) for issues faced by senior citizens as far as health insurance is concerned. While some have been implemented, few are in the draft stage and may get into the final guidelines, while the rest have been rejected citing various reasons. Even though IRDA has taken steps in the right direction, the ground situation for senior citizens is far from easy.

Following are the recommendations made by the Sastry Committee and action taken by IRDA:

  1. Committee's recommendation: Health insurance should be accessible to senior citizen up to 65 years of age

IRDA's response: Accepted vide circular dated 25 May 2009


Ground reality: While mediclaim does offer entry up to 65 years of age and health insurance draft reiterates the same, some insurers are reluctant to underwrite customers above 45 years of age. The "Right to Underwrite" is freely used by insurers to deny mediclaim policy.

  1. Committee's recommendation: No exit age limit on renewal of health insurance policies

IRDA's response: Accepted vide circular dated 7 March 2009, 25 May 2009 and 31 March 2009.

Ground reality: Has not been effective yet—many mediclaim policies end at age 70, 75 or 80 years; few offer lifelong renewal, although health insurance draft guidelines do specify lifelong renewal. Many senior citizens do not receive renewalnotice and have to chase the insurance company to accept the premium payment cheque.

  1. Committee's recommendation: The price of health insurance should be fixed at Rs3,000 for sum insured of Rs1 lakh.

IRDA's response: This wasn't accepted completely because in a de-tariffed market, fixing the price is not appropriate. IRDA has issued a circular which restricts insurers to increase premium beyond 75% at the time of renewal of policies for senior citizens.

Ground reality: While it is understandable that premium cannot be fixed in an open market, allowing 75% increase in premium at the time of renewal is a major increase. Moreover, premium is hiked every year, which means that the premium can shoot sky high for senior citizens especially for those already suffering from some disease. Claims based loading is still prevalent in mediclaim policies.

  1. Committee's recommendation: Senior citizens should be able to opt for change of TPA, and settlement of claim should be done within 30 days from the date of receipt of claim and seven days from date of acceptance of offer.

IRDA's response: Accepted.

Ground reality: While change of TPA may be allowed, many senior citizens do not want services of a TPA and ask for reduction of premium equivalent to the 6% paid to TPA. This is not allowed by most insurers. Also, settlement of claims within 30 days from the date of receipt does not happen in reality. The health insurancedraft guideline specifies the settlement of claims should be within 30 day from the date of receipt of all claims documents. This is a vague statement as "all claims document" is subjective. Insurer/TPA keep raising queries to ask for frivolous documentations, which leads to an enormous delay in settlement of claims. Many a times, the claims file is closed on the pretext of incomplete documentation from the hospital, and the insurance company/TPA does not even take the trouble of informing the same to the insured. It takes a lot of persuasion to get the file reopened, which agonises the insured, despite him not being at fault.

  1. Committee's recommendation: The cost for medical tests at the time of issuance of a policy to senior citizens should be shared equally by the insured and the insurer and also the insurers should establish a separate grievance channel to address complaints from senior citizens.

IRDA's response: Both these points are still in the draft stage and hence not yet implemented. Intimation to TPA/insurer within 24 hours of hospitalisation and claims filing with seven days has led to mechanical rejection of claims.

Ground reality: Some claims are rejected even when the insured follows the timelines. No standard processes of confirming intimation from the TPA exist, and the TPA may refuse receipt of intimation by email or assert that the fax was illegible. Government insurers offer an incentive to TPAs for keeping the claims ratio low, which is in direct conflict of interest with the insured and can hamper genuine claims.

  1. Committee's recommendation: Adequate regulations of hospitals. 

IRDA's response: Not within the purview of IRDA. However, MOHF (ministry of health and family welfare), GOI (Government of India) was requested to look into this recommendation.

Ground reality: IRDA has completely washed its hands off on hospital pricing even though the Air Force Medical College (AFMC) submitted its report on hospital pricing to IRDA after a detailed study. Cashless feature was removed by government insurers in July 2010 without informing the insured about the move, leaving policyholders in lurch—IRDA did not get involved in settling of the issue. Few hospitals are added to Preferred-Provider-Network (PPN) of government insurers, and majority of high-end hospitals are not willing to be part 



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