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Published in Mint on 27 July 2015, Written by Kapil Mehta
The Mint Mediclaim Ratings (MMR) rate individual health insurance products across age and sum assured categories, and are tracked by industry and insurance buyers. Readers write in with detailed queries, often commenting on product specifics. Insurers with A-rated products prominently display these on their websites; some use the ratings in internal trainings. Insurers with B or C ratings push for change in the underlying data and sometimes the rating criteria.
The ratings are fact-based. Core data is taken from insurers’ websites and public disclosures. There are over 10,000 data points that we collect. This information is cross-checked with insurers. Sometimes there are discrepancies and, in those cases, we prefer to stay with public information. The rating weightages reflect a buyer’s perspective of health insurance: product features, premium and claims performance.
We take industry and consumer feedback seriously and each version of MMR moves several steps forward. This MMR is no different.
The three broad suggestions we received were to have product ratings for senior citizens; to include health insurance products by life insurers; and to exclude group insurance claims. We’ve addressed the first two completely but met with partial success in getting more specific claims information.
Regulations require insurers to offer health insurance products that can be bought up to the age of 65 and for them to be renewable for life. But if someone over 65 wants to buy health insurance, there is a problem—limited options and high premiums. Ratings help senior citizens make a choice, and nudge insurers to launch more A-rated products. Consider this, at the age of 35, there are over 30 products that offer a sum insured of Rs.10 lakh. At 70, there are eight. At 35 years, there are 11 A-rated products; only two at 70 years. I was tempted to lower the bar for a senior citizen’s product to be rated A, but held back. There’s no rationale to set lower standards for senior citizens. A year from now, we should be able to report more A-rated products for them.
In the past we have not rated products by life insurers because their claim information was not published in a manner comparable to general insurers, and their health insurance claim base was small. This time around we’ve taken claim details directly from life insurers, made sure they are reasonable and then rated products. This has brought three new insurers into the ratings, with 19 product offerings across our categories.
Excluding group insurance claims from the analyses was the hardest suggestion to factor in. We use claims information drawn from mandatory public disclosures published on an insurer’s website. Earlier this year, an insurer, with comparatively low ratings, argued that individual health insurance claims should be segregated from overall data and then used. I agree. Overall claims combine group and individual businesses. Group business has significantly better claims approval, which means insurers with large group businesses will get better claim scores even if their individual business is poorly performing.
To address this, we reached out to 26 insurers for a detailed claims breakdown—only 15 got back. The insurer who made the initial suggestion didn’t give details. Why? Because individual insurance claim rejection rates are far higher than published overall claim rejection. I appreciate the openness of insurers that provided details, but we chose to use public information.
There are other complications: published numbers include government schemes and claims shared with other insurers. Some insurers requested that claims where they share risks be removed. We couldn’t do that because there is lack of clarity on how these claims are accounted for. If they get removed from one insurer then we need to be sure they are added elsewhere. All of this creates some subjectivity in assessing claims performance and goes against fact-based ratings.
I urge the insurance regulator to mandate product-wise claim information be made public. Until then, we have reduced the weightage of claims payment rates from 20% to 15% and introduced a new parameter, the number of claim complaints per 10,000 claims, with 5% weight. This ensures that our claims assessment is not overly dependent on one parameter and helps distinguish signals from noise. Claim complaints have been taken from public sources and pertain to all claims and not just health-related complaints.
Compared to the January ratings, the current MMR has 12 new products. A few previously A-rated products have fallen to B, but more satisfyingly some insurers that earlier had C-rated products now have new A-rated versions. Some features that were hard to get a few years ago, are now market standard.
Last month, the Chinese insurance regulator announced its intention to rate insurers on service standards. Ratings make performance transparent and simplify decision-making. This makes for a case to introduce more ratings into insurance. Critical illness and top-up plans could be next.