Be sure before you insure

Gangadhar Sanghavi, 80, keeps track of his decade-long legal battle to get his mediclaim reimbursement rather grudgingly. Even as the case drags on, Sanghavi, a businessman, cannot discontinue the policy, despite being dissatisfied with it.

Gangadhar Sanghavi, 80, keeps track of his decade-long legal battle to get his mediclaim reimbursement rather grudgingly. Even as the case drags on, Sanghavi, a businessman, cannot discontinue the policy, despite being dissatisfied with it.

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In his south Mumbai office, he rummaged through several files of papers, policy documents and petitions. “Hospitalisation costs have gone up and if anything were to happen to me or my wife, we’ll need some insurance,” Sanghavi said, whose claim on angioplasty was rejected on the grounds that the condition was preexisting. “My premium has more than doubled but what is the option?”

Medical inflation and rising hospital expenses are resulting in more people signing up for medical insurance as well as top up policies, which give additional cover to existing policies. Experts said medical inflation is usually double that of regular inflation and the cost of hospitalisation, treatments and medicines have gone up by 30% to 40 % in the past few years.

“Although the health insurance penetration is only 0.7 % in India, more people are taking policies because of awareness of medical costs,” said RV Bhansali, insurance consultant. “There is no ceiling on how much hospitals should charge for procedures. In the absence of any standardisation, medical costs will continue to rise. Policies of Rs 2 lakh to Rs 3 lakh are also no longer enough.”

“Anything can happen these days,” said Chandarani Kusekar, 38, who took her first mediclaim policy few months ago. Kusekar, who works in a central government accounts department signed up for a family cover for herself and two sons. “It is impossible to raise lakhs of rupees in case of an emergency.” She has not claimed anything yet and is considering renewing it next year.

Agents are also seeing a surge in people signing up for top-up plans. When Hemant Shah’s wife underwent a hysterectomy and several chemotherapy cycles nearly six years ago, he decided to increase the medical cover from Rs 5 lakh to Rs 15 lakh. “Medical costs are simply killing,” said Shah, a lawyer.

“Disease incidence is also going up along with medical inflation, which is normally two to three times higher than regular inflation,” said Karan Chopra, head of retail business group, HDFC ERGO General Insurance Co Ltd. “There is more awareness but every member of the family should be insured for an adequate amount. Also, it is important to standardise the medical costs, otherwise premiums are bound to rise.”

Despite a surge in policyholders, the industry continues to make losses. With claim settlement ratio ranging between 110 % and 98 %, experts said corporate group insurance policies are the biggest claimants. Maharashtra received the highest number of claims, nearly 3 lakh in 2009-10, as per IIB records.

Due to the difference between payments made against “cashless insurance” and “reimbursement claims” insurance companies had temporarily suspended the cashless offer for some time last year. Although there was much discussion about how to put a ceiling on hospitalisation costs, there is no official development on the same.

“It is the patient, who anyway suffers because of the illness and being at the receiving end of medical bills, which are later scrutinised and rejected by the insurer,” said Anand Patwardhan, a consumer lawyer. “The biggest challenges in claims getting refuted are technical reasons and pre-existing medical conditions.”