Published in Mint on 31st July, 2017. Written by Kapil Mehta
This is the fifth year of the Mint SecureNow Mediclaim Ratings (MSMR). These product ratings make selecting health insurance simpler. Buying health insurance is difficult because there are over 60 products and the right choice depends upon your age, sum assured, family structure, health status, product features and claims performance. This is a long list to process.
We do the ground work and score each product as A, B or C. That is time consuming, detailed work. It is also the fifth year in a row that I have misjudged the effort required. We started the process in May and it has taken us 3 months to get done. MSMR covers 23 insurers, 60 products and over 400 product-age-sum assured combinations. The main issues we face are that products are complex, information inconsistent and policy wordings sometimes open to misinterpretation.
The fact that products are complex is not necessarily bad, because they cater to diverse requirements. Our challenge is to separate real benefits from marketing pitches. Consider outpatient (OPD) payments, a popular feature. Of 60 products, 25 promise it. But when we applied a threshold that buyers should be able to claim at least Rs10,000 in a year, the number of relevant products fell to just 10. This is not a high bar because the sum assured categories we have selected are of Rs10 lakh, Rs20 lakh and Rs50 lakh. One product offered just Rs500 for OPD a year.
Similarly, wellness means many things in insurance—product discounts, availability of reading material or regular health check-ups. We say that a product has wellness benefits if there is a financial reward or sum assured increase if the policyholders keep themselves fit. Of the 60 products, 12 qualify for this. Premiums—they account for 35% weightage—must be standardised carefully because they differ by channel, city, gender, bulk purchase and third-party administrator (TPA) services availed.
Inconsistent information is common in published claims. If the data is correctly published in the public disclosures, then opening claims plus new reported claims minus claims where a decision was taken would give us the outstanding claims. For several insurers, this condition is not met and the errors are large. Public information on grievances also has inconsistencies. Twenty-one insurers report claim complaints per 10,000 claims, whereas two of them report per 10,000 policies. This significantly understates the grievance figures of the two insurers. We also found differences in premium between the website calculators, e-brochures and rate tables. These issues have been carefully resolved to make the right comparisons.
Policy wordings can be ambiguous. For example, one product allows single-room accommodation, provided that the “room shall be the most basic and the most economical of all accommodations available.” We marked this as a limitation because hospitals often have just a few of the most economical rooms available. Most will be hospitalised in the more expensive single rooms.
This year’s MSMR has many improvements. Higher sum assured categories of Rs10 lakh, Rs20 lakh and Rs50 lakh have been considered. This caters to rising medical costs. For example, cancer treatment in an A-grade hospital can cost over Rs15 lakh. Insurers have recognised this and introduced several new products. In the Rs20 lakh category, there are 32 products this year compared to 15 last year. A senior citizen category with specific seniors-related criteria has been introduced. Recommendations for good senior citizen plans is the question that I am asked most often, and the answers are now in this rating.
Premiums have been scored on an average of current and future premiums. This captures the long-term nature of health insurance. Weights have been assigned to product features such as OPD, critical illness cover, maximum no-claim bonus and the sum-assured restore feature. Finally, the definition of a family is more representative: at age 30, we assume a family of three and at age 45, four.
Many aspects of the ratings are unchanged. These include the broad weights assigned to product, premium and claims: 45%, 35% and 20%, respectively. Pre-existing disease exclusion period and room rent limitations remain the two most important features within products.
We’ve consciously left out some benefits, for example: maternity costs, because they are less relevant to the ages we have selected. We had collated information on international covers and personal accident benefits, but decided to leave them out. Most international covers have restrictions, for example: treatment in the US or Canada is excluded; or they allow treatment only in certain countries; or may be used only in emergencies. Just four of 60 products met the standard we had set for international covers.
Finally, I would like to call out five products that have high ratings—a score of over 60%, which means A or a high B—across every category that they are in. In alphabetical order, these are:
1. Complete Health Insurance by ICICI Lombard
2. Easy Health Standard and Exclusive by Apollo Munich
3. Mediprime by Tata AIG
4. Optima Restore by Apollo Munich
5. ProHealth Preferred , Protect and Accumulate by CignaTTK Health Insurance Co. Ltd
There are several other good products in specific categories. For example, at high sum assureds of Rs20 lakhs or more, Max BUPA’s Health Companion is A rated and at sum assureds of less than Rupees 50 lakhs, Religare’s Care does well. I look forward to this list of high quality products growing each year.