Mint SecureNow Mediclaim Ratings 2018: The unchanging logic behind our ratings
This is the sixth annual edition of the Mint SecureNow Mediclaim Ratings (MSMR). The pace at which the health insurance industry has progressed is extraordinary. The number of products has increased from 55 in 2015 to 107 today. Price increases within an age band have been modest—6% per annum for individual products and no increase for family floaters. This is much less than the 15% medical inflation. The best outcome has been that the number of “A” rated health insurances has increased from 40 to 53 in comparable segments that were rated in 2015. Insurers with claim grievances less than 20 per 10,000 claims increased from 10 to 15. There continue to be 10 insurers with claim settlement rates of 90% or more.
Buying health insurance is an important decision because this insurance serves you for life, and at some stage, you will make a claim. It is difficult to identify the right product and, the fact that, there are so many features and high decibel sales pitches adds to the confusion. In this backdrop, the MSMR determines what really matters and rates insurances in a readily understandable way.
The first set of ratings six years ago was based on certain principles. These have remained unchanged. All products are rated. This helps set reliable market benchmarks and removes insurer or product biases.
Information is taken from public sources, primarily policy wordings and public disclosures. This makes the ratings transparent and verifiable. We do request insurers to send us information independently. Sometimes there are differences between public information and what insurers share. In such cases, we painstakingly reconcile those differences. Where a difference remains, we use public information. Three years ago, we had attempted to get product-wise claims from insurers because these were not publicly available. The exercise was unproductive because there was little consistency in how insurers estimated those claims. Since then, we have stayed with public information supervised by the regulator.
The rating criteria are balanced and include product features, premium and claims at about 40%, 30% and 30% weight, respectively. Over the years, we have slightly reduced the emphasis on price and increased it on claims. This is largely because our confidence on the published claim data has increased. There is still room for improvement though. On premium, a frequent complaint is that it increases when the customer moves to a higher age bracket. Higher premiums are factored into the rating.
From the dozens of product features that health insurance has, we have distilled five that matter: Exclusion period for pre-existing diseases, limits on room rent, the maximum no-claim bonus, wellness benefits and restoration of sum assured if it is used up. Several features have been left out because we did not find them useful enough. Maternity benefits are not considered because a small proportion of women have babies after 30, our youngest target group. Out-patient benefits (OPDs) were dropped because most products failed to meet our minimum bar of at least ₹ 10,000 a year. International cover and ayurveda were not scored because they come with many restrictions and we have no evidence of significant claims in these areas. Disease-wise capping was common enough five years ago but has now been done away by most. The only restriction that remains, across most insurers, is on cataract treatment cost.
The rating weightages are set so that no one feature or incremental change can swing the score. There has to be substantial improvement for products to move past the 65% hurdle needed to be “A”. Products do manage to move forward though. There are five products that were “B” or “C” rated in 2015 but are now “A”. On the flip side, eight previously “A” rated products dropped out of the list. There are three insurance products that have made the “A” grade every single year.
There has been substantial improvement in insurances for senior citizens. Although the number of products available is fewer, only 19 for seniors compared to 55 for younger ages in the ₹ 10 lakh category, the products are high quality. The proportion of seniors’ plans with a pre-existing waiting period of three or fewer years is 63% compared to just 45% for younger ages. Fewer than 15% of senior plans have capping for room rent compared to 25% for younger ages. The most substantial score improvements have taken place in senior citizen plans. For example, the average score in ₹ 5 lakh sum assured at ages over 65 was 49.6% in 2015 and is now 57.6%.
These mediclaim ratings are the collaborative effort of many. Mint constructively ensures that the ratings remain customer-oriented and pertinent. Insurers analyse these threadbare and share detailed feedback. A small team within SecureNow works on this for many months. And buyers write in often. It is this collaboration that allows the MSMR to be an effective chronicler of health insurance.