Health Insurance is a long-term product. Non-Life Insurers mindset is short-term. They are used to annual policies. They have inability to price long-term. They believe that even if their pricing is wrong, they can correct it an annual renewal. This mindset is dangerous for individual health insurance.
The number of times in the last two decades, health insurance products have been withdrawn from the market by different insurers is something not acceptable. When a customer buys a product, he buys it for long-term. How can an insurer be allowed to withdraw a product? In most developed world, it is very difficult to withdraw a product.
Similarly, there have been many instances when insurers have increased the pricing. Increase in price midterm through a product is not allowed by regulators in developed world unless there is very strong reason. Increase in price may be allowed once in the lifetime of a product, that too after lots of warnings from the regulator.
If a customer buys health insurance at 30 years age, how much does it cost him at that age should be of not much significance. He should be bothered what is the payable premium when he turns 60 years (when he retires with no regular income). He should know what his premium will be at 70 years. I know of some friends, who have health insurance product for over two decades, never made a claim and at 70 years are paying over Rs 1 lakh premium for a Rs 5 lakh cover.
Non-Life insurers are not in the habit of sharing the filed premium for each age band. Even if they share, it makes no meaning since these premiums would be revised every few years or worst still, this product is withdrawn and customer forced to opt for another product and another pricing.
A policy is bought in 2009. A limit for cataract surgery was Rs 20,000. Insurer revised the price but did not bother to revise the limits set one and half decades back. This is not the mindset expected of a long-term product seller.
Are Life-insurers better at all above aspects? The answer is a clear yes. The Life regulator is also used to enforcing these aspects.
Life-Insurers can introduce level premium health insurance, younger years subsidising the premium of older years. They can introduce Health insurance plus Investment products-what was called as “Health Saver”.
Is there no draw back with Life Insurers? The biggest drawback is their attitude towards claims settlement. They tend to look at every claim with suspicion. Investigation is more prevalent. Non-Life insurers have much better attitude in claim settlement.
Better grievance redressal mechanism and dis-allowing non-life insurers from selling individual health insurance, in my view, is the best solution.
Blog by Atmaram Cheruvu
