The product options that are rated, have increased from 162 in 2013 to 423 this year
Published in Mint Mon, Aug 1 2016, written by Kapil Mehta
The Mint SecureNow Mediclaim Ratings (MSMR) take an enormous effort to be put together. Over 10,000 information bits on health insurance are collated from public sources like websites. These are validated by insurers. A model to convert the information into ratings is developed and, eventually, the results dispatched for publication. During this month-long process, Mint, SecureNow and the insurers exchange dozens of emails and phone calls, pore over policy wordings and clarify product aspects. There is considerable back and forth between the insurers and us, to make sure that the information is correct. If it takes us so much effort to get the facts right, then individual buyers must really have to struggle too. During this process I feel as if I’m back in business school but the responsibility of getting it right takes the fun away.
The product options that are rated, have increased from 162 in 2013 to 423 (from 65 policies) this year. That huge increase reflects the fast pace of the industry’s growth. The proportion of ‘A’ rated products has remained constant at 25%. Several old-timer A-rated products of 2013 remain in the top list this time as well, holding on strongly.
One thing has changed though. In 2014, the insurers requested that their products, which were left out of the ratings, be included. These included products that were either launched after the rating cut-off date, or they were offered by life insurers. This year a few insurers—whose products were included—asked to be left out. Why? Because the spotlight is harsh: about 95 products are rated ‘C’ We still went ahead and rated these because our philosophy is that products with a track record, which can be bought online or in call-centres, should face scrutiny. Participation is not optional. The ratings are fact-based and workings open for inspection.
Product features have the maximum weightage of 45%. The main features measured are: years that pre-existing diseases are excluded, room-rent restrictions, disease-wise waiting periods and no-claim bonuses.
What we did not include
We chose not to rate some features. These include: health check-ups, alternative treatment, international cover, maternity, out-patient expenses or OPD, e-opinions, second-opinions, restore benefits and price discounts on renewals. That’s because many of these features are restrictive in scope and, as yet, there is little evidence that they are used often enough. I learnt this the hard way when I used the free health check-up offered in my insurance. First, the medical tests had to be done in a pre-selected lab determined by the insurer. Second, the tests were limited to the most basic and, third, when I asked for a more complete check-up, I ended up paying the full rack rate. The lab receptionist cheerfully informed me that I would have been better off buying the full package directly from them.
Consider the oft-advertised insurance for alternate treatment. In many cases it covers only hospitalisation in a registered ayurvedic, homeopathic or unani hospital; bars you sometimes from claiming the same disease for allopathic treatment; and, in one case, is limited to Rs.25,000 when the overall sum assured is Rs.10 lakh. So, usage will be limited.
International cover presents similar issues. One insurer excludes the US and Canada; another pays only for accidents overseas; another only for certain critical illnesses; another mandates cashless payment; the other prefers reimbursement. Such wide variance makes it important to get behind the veil and understand what you are really buying.
We did not rate maternity benefits, even though this increases the premium, because it is largely irrelevant to the categories that we have chosen: 35, 45, 65 and 70 years. Just because a feature is offered, does not oblige us to rate it. It must be something that is practical and there must be some meaningful evidence of use.
Claims track record got 25% weight. We would have increased this if the quality of information, publicly available, was better. Over the past three years, I have consistently found mistakes in the public disclosures. Often, the opening and closing claims are inconsistent. Sometimes the claims-closed data is incorrectly clubbed under some other head.
There is no standard accounting for co-insurance claims. In one case, an insurer said that several thousand Rashtriya Swasthya Bima Yojana (RSBY) claims were treated as one claim. We do our best to correct glaring errors, but would appreciate if the regulator or the General Insurance Council steps in to set this right. Claims information should be at a product level, not aggregate. Combining individual, group, RSBY, and government scheme claims into one number obfuscates the product-wise information we need.
What we will continue to include
In future editions we will continue to stay with the benefits that are comprehensive and not restrictive. Consider OPD insurance, a much in-demand feature. The allowed OPD benefits vary substantially across products. One senior citizen plan restricts to Rs.200 per bill, with a maximum amount of Rs.1,000; another allows only dental and accident costs; another excludes dental costs; some insurers restrict claims to be made once a year; in one instance, only post-bite vaccination is covered. Fortunately, no animals are proscribed.
Similarly, there are variations in features such as room type allowed. A single room is defined by some as the “most basic and most economical of all accommodations available as a single room in that hospital” and by others as any room with “single occupancy”. The second definition is better for you.
As we develop the criteria for these ratings, our emphasis is on setting a minimum bar for inclusion. We’ve done that this time for the no-claim bonus, where a minimum 15% annual sum assured increase is required to qualify.
Finally, there are two additional criteria that we will introduce when the information becomes publicly available. The first is issuance rates of a product, measured by the number of insurances issued on standard terms to applications received. Low issuance rates are an issue, particularly at older ages. The second is the speed with which the insurer and hospital turn around a cashless claim payment. It is frustrating for a patient to remain in the hospital hours after she is medically fit to go. The delays are often at the hospital itself because all the documentation is not available but TPAs and insurers can be slow too, particularly on weekends.
Ratings have an important role in the health ecosystem. They keep us away from the world that Bob Mankoff, cartoon editor of the New Yorker, once described in a cartoon: A doctor reading through an insurance contract informs the glum patient, “Uh-oh, your coverage doesn’t seem to include illness.”
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