Insurance Project

A PROJECT REPORT ON

“Study of flow of activities for

Policy underwriting

In private & public sector companies”

BY

DR. NEHA S. MAINDE

II yr. MHA &M

([email protected])

Submitted in partial fulfillment of

Master’s Degree in Hospital Administration & Management

Under the guidance of Mr. MURALI RAO for

Datta Meghe University of Medical Sciences, Nagpur

mailto:[email protected]

CERTIFICATE

This Is to Certify That the Work on dissertation Entitled -

“STUDY OF FLOW OF ACTIVITIES FOR POLICY UNDERWRITING IN

PRIVATE & PUBLIC SECTOR COMPANIES”

has been done by dr. Neha S. Mainde under my personal guidance and

supervision. All the investigations relating to this study were carried out by

the candidate herself. Her Approach To The Subject Is Sincere, Scientific,

And Analytical.

This work in partial fulfillment is recommended for the award of Post

Graduate Degree In Hospital Administration & Management from Datta

Meghe institute of Medical Sciences University (DMIMSU).

Mr. Murli Rao Mr. Vikas MishraInternal Guide FacultyCentre Head DMIMSUWockhardt Hospital, Nagpur

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CERTIFICATE

This to certify that Dr. Neha S. Mainde has successfully completed her final

dissertation work for the partial fulfillment of master’s degree in Hospital

Administration & Management, here at branch office of Star Health & Allied

Insurance Company Ravi Nagar, Nagpur under my guidance.

She has done her dissertation work with full sincerity and dedication. The

information here is true to the best of my knowledge. I wish her all the success

and progress which she deserves in her future ventures.

Date :- Mr. Sanjay MakodePlace:- Nagpur Branch Manager,

Star Health and Allied Insurance Company, Ravi Nagar, Nagpur

DECLARATION

I hereby declare that this dissertation titled -

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“STUDY OF FLOW OF ACTIVITIES FOR POLICY UNDERWRITING IN

PRIVATE & PUBLIC SECTOR COMPANIES”

is the result of my own research work and that the same has not been

submitted by me or anyone else prior to this to any other examination of this

university or any other university.

Place:

Date: Dr. Neha Mainde

(Management Trainee, Nagpur)

ACKNOWLEDGEMENT

I express my gratitude to Mr. Murali Rao, Center Head, Wockhardt Hospital, Nagpur

for his immense cooperation and guidance throughout my training.

Special thanks to Mr. Sanjay Makode, Branch Manager, Star Health & Allied

Insurance Company, my project coordinator for his support and guidance in the successful

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completion of the Project assigned to me in the company and and Mr. Shrikant ane, New

India Assuarance Company,, for their support and co-operation.

Mr. Pankaj Vaishampayan, Marketing Department, wockhardt for his kind

support and cooperation. I would also like to thank all others who left their mark in the project

and help me in spite of their busy schedules and hectic work place.

I extremely grateful to Dr. Mrs. Gode (Director) and Mr. Vikas Mishra (Faculty)

for their best support in my learning throughout the course and project period.

Last but not the least I acknowledge the unwavering moral support of my parents, family

members and friends during my Dissertation.

Dr. Neha Mainde

(Management Trainee, Nagpur)

EXECUTIVE SUMMARY

Study Period :- 01 January to 12 march 2009.

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Place of Study :- Star Health & Allied Insurance Company

As the nation is developing at a much higher speed than what was expected

nearly 2 – 3 decades ago, is bringing in sedentary life style giving rise to obesity related

disorders. So the demand for proper tertiary care hospitals is also going up. This brings with

them high amount of out-of pocket expenses.

In the light of present healthcare cost it is impossible to bear the cost out-of

pocket, which gives a major set back in terms of financial burden to the earning member of the

family. So insuring healthcare is the best possible way out.

Around a decade earlier healthcare portfolio was not given much importance.

Even the general insurance companies think it as a bleeding portfolio. But now people are

more aware of its benefits and are opting for it. As the awareness is going up malpractices are

also going up, cases of moral hazards are very common and hence there is as need of strict

medical & non medical underwriting guidelines which will be user friendly and compatible with

today’s fast moving world, which can be enhanced through web services and alerts.

My project mainly focuses on the comparison between underwriting guidelines of

different product lines in a private sector (only health insurance Company) and a public sector

company (general insurance company). Their SWOT analysis pertaining to the restricted

geographical area. Ways and means through which the workflow can be enhanced taking the

help of web services and alerts.

Major Findings:-

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1. There is a vast difference in underwriting guidelines of the two

companies.

2. There is much scope to improvise in the underwriting guidelines of both

the companies making them more users friendly.

3. The companies should be more vigilant regarding the disbursement of

claims as malpractices are very common in this sector.

4. More stress should be given on even distribution of risk amongst

population both in rural and urban area by effective campaigning and

creating awareness.

5. There is vast gap between the demand and need of the health insurance

in the society which should be supplied effectively.

6. People tend to avail health insurance in second half of their life. Younger

age group should be encouraged more and more to avail this facility

instead of a relatively aged group.

7. A proper health care system should be implemented nationwide by

taking examples of other nations.

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TABLE OF CONTENTS

Background

Introduction to Insurance

Health Care Insurance Scenario

Star Health & Allied Insurance Company

Objectives of the study

Methodology

Limitations of Study

Review of literature

Key Findings during study in Star Health Insurance & Allied Company

Key Findings during study in New India Assurance Company

Key Findings during interviewing the selected policy holders

Some general Interpretation

SWOT Analysis

Recommendations & Suggestions

Conclusion

Annexure-

A- Questionnaire for selected policy holders

B- Brochures explaining policy benefits to customer

C- Questionnaire for sales managers

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Introduction to Insurance

Definition:-

Insurance is defined as the equitable transfer of the risk of a loss, from one entity to

another, in exchange for a premium, and can be thought of as a guaranteed small loss to

prevent a large, possibly devastating loss.

Insurance appears simultaneously with the appearance of human society. We know of

two types of economies in human societies:

Money Economies

With markets, money, financial instruments and so on........

Non-Money Or Natural Economies

Without money, markets, financial instruments and so on........

The second type is a more ancient form than the first. In such an economy and

community, we can see insurance in the form of people helping each other. For example, if a

house burns down, the members of the community help build a new one. Should the same

thing happen to one's neighbor, the other neighbors must help Otherwise, neighbors will not

receive help in the future. This type of insurance has survived to the present day in some

countries where modern money economy with its financial instruments is not widespread.

For Example:- Countries in the territory of the former Soviet Union.

Turning to insurance in the modern sense (i.e., insurance in a modern money economy,

in which insurance is part of the financial sphere), early methods of transferring or distributing

risk were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd

millennia BC, respectively. Chinese merchants travelling treacherous river rapids would

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redistribute their wares across many vessels to limit the loss due to any single vessel's

capsizing. The Babylonians developed a system which was recorded in the famous Code of

Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing merchants. If a

merchant received a loan to fund his shipment, he would pay the lender an additional sum in

exchange for the lender's guarantee to cancel the loan should the shipment be stolen.

Achaemenian monarchs of Iran were the first to insure their people and made it official

by registering the insuring process in governmental notary offices.

The Greeks and Romans introduced the origins of health and life insurance in 600 AD

when they organized guilds called "benevolent societies" which cared for the families and paid

funeral expenses of members upon death.

Insurance as we know it today can be traced to the Great Fire of London, which in 1666

devoured 13,200 houses. In the aftermath of this disaster, Nicholas Barbon opened an office to

insure buildings. In 1680, he established England's first fire insurance company, "The Fire

Office," to insure brick and frame homes

Insurance, in law and economics, is a form of risk management primarily used to hedge

against the risk of a contingent loss. An Insurer is a company selling the insurance; an

Insured is the person or entity buying the insurance.

Premium:-

The insurance rate is a factor used to determine the amount to be charged for a certain

amount of insurance coverage, called the premium.

Indemnity:-

The technical definition of "indemnity" means to make whole again. There are two types of

insurance contracts;

1. an "indemnity" policy and

2. a "pay on behalf" or "on behalf of” policy.

The difference is significant on paper, but rarely material in practice. An "indemnity" policy will

never pay claims until the insured has paid out of pocket to some third party. Under the same

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situation, a "pay on behalf" policy, the insurance carrier would pay the claim and the insured

both. Most modern liability insurance is written on the basis of "pay on behalf" language.

Insurers make money in two ways: (1) through Underwriting, the process by which insurers

select the risks to insure and decide how much in premiums to charge for accepting those risks

and (2) by investing the premiums they collect from insured parties.

Claims: - Finally, claims and loss handling is the materialized utility of insurance; it is the

actual "product" paid for, though one hopes it will never need to be used.

Commercially insurable risks typically share seven common characteristics:-

Limited risk of catastrophically large losses.

Calculable Loss

Affordable Premium

Large Loss

Accidental Loss

Definite Loss

A large number of homogeneous exposure units

Health Care Insurance

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Definition :-The term health insurance is generally used to describe a form of insurance that pays

for medical expenses.

A health insurance policy is a contract between an insurance company and an

individual, By estimating the overall risk of healthcare expenses, a routine finance structure

(such as a monthly premium or annual tax) is developed, ensuring that money is available to

pay for the healthcare benefits specified in the insurance agreement. The type and amount of

health care costs that will be covered by the health plan are specified in advance, in the

member contract or Evidence of Coverage booklet.

The concept of health insurance was proposed in 1694 by Hugh the Elder Chamberlain

from the Peter Chamberlain family. Accident insurance was first offered in the United States by

the Franklin Health Assurance Company of Massachusetts. This firm, founded in 1850, offered

insurance against injuries arising from railroad and steamboat accidents. Before the

development of medical expense insurance, patients were expected to pay all other health

care costs out of their own pockets, under what is known as the fee-for-service business

model. During the middle to late 20th century, traditional disability insurance evolved into

modern health insurance programs.

Today, most comprehensive private health insurance programs cover the cost of

routine, preventive, and emergency health care procedures, and also most prescription drugs,

but this is not always the case.

The basic concept of health insurance is population solidarity. There are inherent risks

in a population but the population absorbs the cost of risks to an individual by spreading the

impact of incurred costs amongst the insured population. However, if the population is split into

insured and uninsured groups, or into selectively groups (as with private insurance with pre-

insurance selection either by the insurance company or the insured) the concept of population

solidarity breaks down. The insurance balances costs across a large, random sample of

individuals. For instance, an insurance company has a pool of 1000 randomly selected

subscribers, each paying Rs.100 per month. One person becomes very ill while the others stay

healthy, allowing the insurance company to use the money paid by the healthy people to pay

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for the treatment costs of the sick person. However, when the pool is self-selecting rather than

random, as is the case with individuals seeking to purchase health insurance directly, adverse

selection is a greater concern. Insurance systems must then typically deal with two inherent

challenges: adverse selection and ex-post moral hazard.

Because of adverse selection, insurance companies employ medical underwriting, using

a patient's medical history to screen out those whose pre-existing medical conditions pose too

great a risk for the risk pool. Before buying health insurance, a person typically fills out a

comprehensive medical history form that asks whether the person smokes, how much the

person weighs, whether the person has been treated for any of a long list of diseases and so

on. In general, those who present large financial burdens are denied coverage or charged high

premiums to compensate.

Moral hazard occurs when an insurer and a consumer enter into a contract under

symmetric information, but one party takes action, not taken into account in the contract, which

changes the value of the insurance. A common example of moral hazard is third-party

payment—when the parties involved in making a decision are not responsible for bearing costs

arising from the decision. An example is where doctors and insured patients agree to extra

tests which may or may not be necessary. Doctors benefit by avoiding possible malpractice

suits, and patients benefit by gaining increased certainty of their medical condition. The cost of

these extra tests is borne by the insurance company, which may have had little say in the

decision. Co-payments, deductibles, and less generous insurance for services with more

elastic demand attempt to combat moral hazard, as they hold the consumer responsible.

Insurance companies like to compare buying health insurance after being diagnosed

with a serious medical condition like HCV to trying to buy fire insurance on a burning house.

That sounds really logical….except….most fire insurance policies are never used as most

houses don’t burn down. Everyone has medical problems, however, at one time or another.

To prevent a person from buying health insurance only when they need it, the insurance

industry uses a procedure called “medical underwriting.” Loosely translated into plain English,

it means “discriminating against anyone we feel may cost us money.” And this type of

discrimination against people with health problems is perfectly legal.

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The French model of health insurance has been ranked by the World Health Organization as

the best in the world, because it permits a high quality of care and nearly total patient freedom.

. It was a compromise between Gaullist and Communist representatives in the French

parliament. The Conservative Gaullists were opposed to a state-run healthcare system, while

the Communists were supportive of a complete nationalization of health care along a British

Beverage model. The resulting programme was profession-based. All people working were

required to pay a portion of their income to a health insurance fund, which mutualised the risk

of illness, and which reimbursed medical expenses at varying rates. Children and spouses of

insured people were eligible for benefits, as well. Each fund was free to manage its own

budget and reimburse medical expenses at the rate it saw fit.

Health Care Insurance Scenario In India

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The health care system in India is characterized by multiple systems of medicine, mixed

ownership patterns and different kinds of delivery structures. During the last 50 years India has

developed a large government health infrastructure with more than 150 medical colleges, 450

district hospitals, 3000 Community Health Centers, 20,000 Primary Health Care centers and

130,000 Sub-Health Centers. On top of this there are large number of private and NGO health

facilities and practitioners scatters though out the country. Over the past 50 years India has

made considerable progress in improving its health status.

Public sector ownership is divided between central and state governments, municipal

and Panchayat local governments. Public health facilities include teaching hospitals,

secondary level hospitals, first-level referral hospitals (CHCs or rural hospitals), dispensaries;

primary health centres (PHCs), sub-centres, and health posts. Also included are public

facilities for selected occupational groups like organized work force (ESI), defense,

government employees (CGHS), railways, post and telegraph and mines among others.

The private sector (for profit and not for profit) is the dominant sector with 50 per cent of

people seeking indoor care and around 60 to 70 per cent of those seeking ambulatory care (or

outpatient care) from private health facilities.

India spends about 6% of GDP on health expenditure. Private health care expenditure

is 75% or 4.25% of GDP and most of the rest (1.75%) is government funding. At present, the

insurance coverage is negligible. Most of the public funding is for preventive, promotive and

primary care programes while private expenditure is largely for curative care. Over the period

the private health care expenditure has grown at the rate of 12.84% per annum and for each

one percent increase in per capital income the private health care expenditure has increased

by 1.47%. Number of private doctors and private clinical facilities are also expanding

exponentially.

Indian health financing scene raises number of challenges, which are:

1) Increasing health care costs,

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2) High financial burden on poor eroding their incomes,

3) Increasing burden of new diseases and health risks and

4) Neglect of preventive and primary care and public health functions due to

under funding of the government health care.

Around 24% of all people hospitalized in India in a single year fall below the poverty line

due to hospitalization (World Bank, 2002). An analysis of financing of hospitalization shows

that large proportion of people; especially those in the bottom fourincome quintiles borrow

money or sell assets to pay for hospitalization (World Bank, 2002).

Given the above scenario exploring health-financing options becomes critical. In light of

the fiscal crisis facing the government at both central and state levels, in the form of shrinking

public health budgets, escalating health care costs coupled with demand for health-care

services, and lack of easy access of people from the low-income group to quality health care,

health insurance is emerging as an alternative mechanism for financing of health care.

Health insurance is very well established in many countries. As global insurance

premiums grew by or 5% in real terms to reach $3.7 trillion due to improved profitability and a

benign economic environment characterized by solid economic growth, moderate inflation and

strong equity markets. Advanced economies account for the bulk of global insurance. The top

four countries accounted for nearly two-thirds of premiums in 2006. The U.S. and Japan alone

accounted for 43% of world insurance, much higher than their 7% share of the global

population. Emerging markets accounted for over 85% of the world’s population but generated

only around 10% of premiums. But in India the health insurance market is very limited covering

about 10% of the total population. It is a new concept except for the organized sector

employees. In India only about 2 per cent of total health expenditure is funded by public/social

health insurance while 18 per cent is funded by government budget. In many other low and

middle income countries contribution of social health insurance is much higher.

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Table 1

Percentage of total health expenditure funded through public/social

insurance and direct government revenue

COUNTRY Social Health

Insurance

Government Budget

Algeria 37 % 36%

Bolivia 20 % 33 %

China 31 % 13 %

Korea 23 % 10 %

Vietnam 2 % 20 %

India 2 % 18 %

It is estimated that the Indian health care industry is now worth of Rs. 96,000 crore and

expected to surge by 10,000 crore annually. The share of insurance market in above figure is

insignificant. General Insurance Corporation (GIC) and its four subsidiary companies and Life

Insurance Corporation (LIC) of India have various health insurance products. These are

Ashadeep Plan II and Jeevan Asha Plan II by Life Insurance Corporation of India and various

policies by General Insurance Corporation of India as under: Personal Accident Policy, Jan

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Arogya Policy, Raj Rajeshwari Policy, Mediclaim Policy, Overseas Mediclaim Policy, Cancer

Insurance Policy, Bhavishya Arogya Policy and Dreaded Disease Policy (Srivastava 1999) Etc.

Of the various schemes offered, Mediclaim is the main product of the GIC. The Medical

Insurance Scheme or Mediclaim was introduced in November 1986 and it covers individuals

and groups with persons aged 5 – 80 yrs. Children (3 months – 5 yrs) are covered with their

parents. This scheme provides for reimbursement of medical expenses (now offers cashless

scheme) by an individual towards hospitalization and domiciliary hospitalization as per the sum

insured. There are exclusions and pre-existing disease clauses. Premiums are calculated

based on age and the sum insured, which in turn varies from Rs 15 000 to Rs 5 00 000.

Star Health & Allied Insurance Company

Star Health and Allied Insurance Co. is a joint venture between Oman

Insurance Company, Mr. Syed Mohamed Salahuddin,Mr. Essa Abdullah Al Ghurair,leading

Indian industrialists and business houses. It is thier endeavor to provide dedicated, affordable

and quality health insurance that preserves and values human lives. This company aim to be

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the most favored brand in the health insurance segment. We offer a wide range of health

insurance services and related products at affordable prices. Our prime objective is to offer

services in the health segment that enable you to manage stressful situations.

Star Health and Allied Insurance Company Limited (Star Health) has a capital

base of Rs.108 crores, more than what is adequate to form a General Insurance Company.

However, Star Health has chosen to be in the field of Health and was the First stand-alone

Health Insurance Company in India and deals in Personal Accident, Mediclaim and

Overseas Travel Insurance.

Mr. V. Jagannathan, Chairman cum Managing Director. He is a doyen of the

Insurance industry with over 40 years of experience in Insurance. He has held various

positions of authority, including that of CMD of one of India's largest Public Sector insurance

companies.

BOARD OF DIRECTORS

Mr. Syed Mohamed Salahuddin - Chairman - Emeritus. Managing Director of ETA ASCON

and ETA STAR group of Companies in Dubai, U.A.E

Mr. Essa Abdullah Al Ghurair was educated in San Diego, USA. The Al Ghurair family has

business interests in Banking, Food & Beverages and Real estates.

Dr. M. Y. Khan is currently the Chairman of the Banking and Advisory council of YES Bank

Ltd.

Mr. D. R. Kaarthikeyan is currently a visiting professor in many prestigious institutions.

Mr. V.P. Nagarajan is the Executive Director of ETA ASCON and ETA STAR group of

Companies headquartered in Dubai, UAE.

Mr. Mohammed Hassan is a prominent educationalist and industrialist and has wide

knowledge in the respective fields for over three decades.

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Star Health & Allied Insurance Company :-

Is the first stand alone health insurance company in India. It specializes in Health Insurance, provides quality service at the best rates, and commits itself to the service of the insured.

Offers hassle free cashless settlement to the insured. There is no Third Party Administrator involved, which means better service, in shorter time and no hassles... at all!

Provides a No Claim Discount - one that has never been offered before in the country.

Has a round-the-clock GP service, which provides counseling and advice . When necessary the insured will be guided to the Company's large network of doctors in different localities.

Provides periodic health check ups for the clients. Has a range of policies suited to every age group, different health aspects and concerns.

# And last but not the least, STAR HEALTH is first and foremost, a dedicated insurer who cares for your health...in every way!

Exclusive Features :

Cashless service without TPA intervention the USP of the Company

Direct tie-up with hospitals on all India basis

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24 hours General Practitioner's advice and medical counseling

24x7 in-house Call Center

Toll free telephone assistance

Complete knowledge backed website to offer medical information, including health tips.

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Our Vision

Protecting Health Promoting Health

Our Mission

Ultimate Customer Satisfaction

Trust and Ethics

We believe honesty and integrity

are essential to our success.

Conducive work environment

To create an environment that is conducive to

Customer Satisfaction, Innovation and Belongingness.

Commitment

We are committed to become a STAR in health and

related insurance.

Introduction to study

This study focus on understanding the underwriting Guidelines / Procedures practiced in two

different companies from two different sectors mainly focusing on Private Sector Company

1. Star Health & Allied Insurance Company Ltd.(Private Sector Company)

2. New India Assurance Company (Public Sector Company)

The study will have following types of insurance policies :-

1. Mediclaim Policy

2. Accidental Insurance

3. Overseas Mediclaim

Objectives

1. To study the underwriting Guidelines/procedure of selected policies which are being

practiced in the insurance company.

2. To calculate & suggest possible ways to decrease the turn around time in the

underwriting procedure for each policy.

3. To do a SWOT analysis for the purpose of comparison.

4. To study the existing web services & alerts for the purpose of policy underwriting & post

policy services.

FLOW CHART FOR UNDERWRITTING

THE MEDICLAIM POLICY

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Sales Manager /Agent

Submits the Proposal to Underwriter

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Underwriter checks all the Mandatory fields filled in the Proposal Form

Proposals below50 yrs. Of age are Proceeded for

underwriting

Proposals above 50 yrs. Of age are sent for Pre-medical examination

Improperly filled forms are sent back for

upgradation

Properly filled forms are preceded for underwriting

According to the proposal with/without loading on premium policy is

underwritten and issued to the proposer.

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UNDERWRITTING

The most complicated aspect of the insurance business is the underwriting of policies. There

are 2 different methods of application that anyone looking for personal health insurance must

be aware of. These are

1. Full Medical Underwriting (FMU)

2. Moratorium (MOR).

Underwriting in relation to health insurance basically involves the disclosure of certain

information to an insurance company which they can then access to decide when pre-existing

conditions should be excluded from cover. With some policies one will be required to complete

an application form that details full medical history where as with a moratorium policy your

medical history will only become an issue at the point you need to make a claim.

Policies requiring a medical history declaration, or full medical underwriting, require the

applicant to complete an application form that details the full medical history for each applicant.

Private health insurance companies consult an applicant's GP in order to verify conditions or to

investigate an applicant's medical history further. Having submitted medical history a decision

will be made by the health insurance company as to whether or not they will cover any

previous medical conditions.

The rules surrounding ‘Duty of Disclosure' when applying for personal health insurance

are quite strict. It is one’s duty to disclose any fact or circumstance about your health that is

known to you at your time of application. The main reason behind this disclosure is to identify if

you have any pre-existing conditions that will be excluded from treatment from your health

insurance policy.

Most health insurance providers will not pay benefits for any conditions that you have

been treated for in the past or have arranged treatment for prior to taking out your medical

insurance policy. This also includes any chronic conditions that have been diagnosed before

the health insurance policy was granted. If you fail to disclose details of any illness at the start

of your health insurance application then you could be denied a future claim or your personal

health insurance could be deemed invalid.

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Some health insurance providers may agree to cover pre-existing conditions in

exchange for additional premiums, but this will depend entirely upon the condition in question

and its severity, how long you have had it and what treatment you have had or are still having

for that condition. Again, each health insurance company is different with different policies so

make sure you always do your homework with regards to what is and what is not included.

If you opt for a policy that requires full medical underwriting then all your medical history

will be available to your insurers up front enabling them to make an informed judgement before

confirming your policy. A moratorium policy is however a little bit different as this type of

application process does not require disclosure of medical history when joining. Instead any

illness is assessed at the point of making a claim.

With moratorium you do not need to fill in a health questionnaire. Instead, pre-existing

conditions for which you (and any dependant included in your application) have received

treatment and/or medication, or asked advice on, or had symptoms of (whether or not

diagnosed), during the four years immediately before your private health insurance cover

started will automatically be excluded from cover.

However, if you do not have any symptoms, treatment, medication, or advice for those

pre-existing conditions, and any directly related conditions, for two continuous years after your

policy starts, then insurers may reinstate cover for those conditions.

When choosing a personal health insurance provider it is vital that you understand the

differences between policies and which one is best suited. With any insurance company

though it is always better to be honest from the outset to avoid any disappointment or hefty

medical bills further down the line. With Full Medical Underwriting the boundaries are perhaps

clearer as everything will be documented from the outset and assessed by your insurer before

the policy is approved leaving you with a clear understanding of exactly what your personal

health insurance covers you for. Using a wide assortment of data, insurers predict the

likelihood that a claim will be made against their policies and price products accordingly. To

this end, insurers use actuarial science to quantify the risks they are willing to assume and the

premium they will charge to assume them. Data is analyzed to fairly accurately project the rate

of future claims based on a given risk. Actuarial science uses statistics and probability to

analyze the risks associated with the range of perils covered, and these scientific principles are

used to determine an insurer's overall exposure. Upon termination of a given policy, the

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amount of premium collected and the investment gains thereon minus the amount paid out in

claims is the insurer's underwriting profit on that policy. Of course, from the insurer's

perspective, some policies are winners (i.e., the insurer pays out less in claims and expenses

than it receives in premiums and investment income) and some are losers (i.e., the insurer

pays out more in claims and expenses than it receives in premiums and investment income).

The business model can be reduced to a simple equation:

Profit = earned premium + investment income - incurred loss - underwriting expenses.

Insurers make money in two ways:

Through underwriting, the process by which insurers select the risks to insure and

decide how much in premiums to charge for accepting those risks.

By investing the premiums they collect from insured parties.

Insurance companies also earn investment profits on “float”. “Float” or available

reserve is the amount of money, at hand at any given moment, that an insurer has collected in

insurance premiums but has not been paid out in claims. Insurers start investing insurance

premiums as soon as they are collected and continue to earn interest on them until claims are

paid out.

Some insurance industry insiders, most notably Hank Greenberg, do not believe

that it is forever possible to sustain a profit from float without an underwriting profit as well, but

this opinion is not universally held. Naturally, the “float” method is difficult to carry out in an

economically depressed period. Bear markets do cause insurers to shift away from

investments and to toughen up their underwriting standards. So a poor economy generally

means high insurance premiums. This tendency to swing between profitable and unprofitable

periods over time is commonly known as the "underwriting" or “insurance cycle”

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Medial Underwriting:-

On receiving an application from an individual for health insurance, the insurance

company carefully scrutinizes the applicant's medical history and other factors to decide

whether to offer coverage or not and if yes, then on what rate and on what conditions. Each

insurance company develops its own underwriting guidelines to outline the characteristics the

company considers desirable and those that make an applicant ineligible for coverage. Health

insurers avoid individuals or groups that they think may be likely to make claims, either

because of poor health or because the person or company is financially unstable. Insurance

companies use the term "adverse selection" to describe the tendency for only those who will

benefit from insurance to buy it. Specifically when talking about health insurance, unhealthy

people are more likely to purchase health insurance because they anticipate large medical

bills. On the other side, people who consider themselves to be reasonably healthy may decide

that medical insurance is an unnecessary expense; if they see the doctor once a year and it

costs Rs.250/-, that's much better than making monthly insurance payments of Rs.40/-

(example figures).

Because of adverse selection, insurance companies employ medical underwriting,

using a patient's medical history to screen out those whose pre-existing medical conditions

pose too great a risk for the risk pool. Before buying health insurance, a person typically fills

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out a comprehensive medical history form that asks whether the person smokes, how much

the person weighs, whether the person has been treated for any of a long list of diseases and

so on. One large industry survey found that roughly 13 percent of applicants for

comprehensive, individually purchased health insurance who went through the medical

underwriting in 2004 were denied coverage. Declination rates increased significantly with age,

rising from 5 percent for individuals 18 and under to just under a third for individuals aged 60 to

64. Among those who were offered coverage, the study found that 76% received offers at

standard premium rates, and 22% were offered higher rates.

The premium structure is not designed for the extra risk assumed by insuring persons

who drink intoxicants to excess, who are victims of drug habits, who are reckless in their

manner of living or choice of associates or who have questionable reputations. Such persons

are not eligible for health insurance." All companies selling individual major medical insurance

policies examine the medical history of every applicant, using questions on the application,

follow-up phone calls, Medical Information Bureau reports, paramedical exams, and blood and

urine samples. Medical underwriting manuals are extensive and include detailed discussions of

known illness for each of the body's systems (circulatory, nervous, reproductive, etc.)

Moral hazard occurs when an insurer and a consumer enter into a contract under

symmetric information, but one party takes action, not taken into account in the contract, which

changes the value of the insurance. A common example of moral hazard is third-party

payment—when the parties involved in making a decision are not responsible for bearing costs

arising from the decision. An example is where doctors and insured patients agree to extra

tests which may or may not be necessary. Doctors benefit by avoiding possible malpractice

suits, and patients benefit by gaining increased certainty of their medical condition. The cost of

these extra tests is borne by the insurance company, which may have had little say in the

decision. Co-payments, deductibles, and less generous insurance for services with more

elastic demand attempt to combat moral hazard, as they hold the consumer responsible.

Underwriting is a way of determining the insurability of the client by reviewing his/her

medical and financial details using various risk classification models. This practice can be

dated back to 1800 B.C, when undertaking risk, or underwriting risk, of ships with goods was

done. From those days, underwriting has evolved greatly and is presently categorized into life

and non-life underwriting, both including financial underwriting. Life underwriting can be further

30

divided technically into medical and non-medical underwriting.

Here are a few tips for prudent medical underwriting:

1. Use your analytical mind - Ask, “Does it make sense”

Always ask yourself whether the data given makes sense. In most of the cases the data

presented can be manipulated or it can be false positives. For example, a client can take a

hypoglycemic drug and go for a fasting blood glucose test or the value of nine given can be

HbA1, when a HbA1c test was to be performed.

2. Read between the lines

Analyze what is not given in the data provided or find the potential risks the medical reports

point to. For example, a 44-year-old female undergoing tooth extraction was also asked to

undergo an electrocardiogram and fasting blood sugar test. This data created a doubt and

when further investigated revealed diabetes mellitus.

3. Study medical history and genetic susceptibility

Carefully analyze the medical history as it can give you a lot of information about the client’s

current health status and possible endothelial damage, which must have occurred in their

body. For example, in the case of diabetes, hypertension along with the date of diagnosis can

provide a clear idea on the risks involved. Also some disorders are genetically manifested, for

example arthritis, thallassemia, diabetes, arthritis and obesity to name a few. Hence

understanding the medical history of the client and his first line relatives can provide

substantial data for classifying the risk to him.

4. Do not look from a clinical point of view

Remember insurance medicine is different from clinical medicine. You as medical underwriter

are not required to identify the root cause of the disease, but to identify the pathology and

analyze how much risk it presents to the life of the client and also within how much time the

31

client is going to suffer from that expected disease.

5. Use probability principles

Use probability principles to evaluate the chances of death or susceptibility to critical illnesses

covered by the health insurance product proposed within that span of the coverage by the

company.

6. Do not think long term

A medical underwriter should not think from a long-term point of view. Remember you should

only be interested up to the extent of the duration of the plan proposed. In addition, you need

to evaluate if the risk coverage money (premium) is recovered within the first few years of the

plan. Then you should evaluate the risk and underwrite, taking into consideration only that

duration of time.

7. Correlate all findings

Human body mechanisms are complex and interrelated processes. Try to find the correlation

between the different pathologies and sum them up to find the total risk presented by the

client. For example, a person with diabetes mellitus and smoking presents a higher risk than

that presented by the person with only diabetes mellitus.

8. Apply Cost Benefit analysis

A medical underwriter is also required to have an understanding of financial terms like cost

benefit analysis and use them prudently to evaluate the risk.

Key Findings in Star Health & Allied Insurance Company Ltd

It is the first stand alone health insurance company in India. It specializes in Health

Insurance, provides quality service at the best rates, and commits itself to the service of the

32

insured.The Company is led by a group of leading industrialists and business houses in the

subcontinent.

Oman Insurance Company is one of the leading Insurance Companies in the Middle

East. Mr. Essa Abdullah Al Ghurair hails from the prominent Al Ghurair family in the U.A.E.

With a net worth of USD 3.7 billion, the family has been ranked as one of the world's richest by

Forbes magazine...

The company has it’s Head Office in Chennai, Corporate Office in Mumbai &

Regional Office in Pune from last three years. Looking at the potential of vidarbha region the

company started its branch office in nagpur in october 2008.

The organisational structure for this branch is as follows:

PolicyUnderwrite

r

The company has very strong financial backup & very good leadership which two are

the most important factors for any company to become successful. The company has recorded

itself as the fastest growing company with 400% of growth rate.

33

Branch Manager

SalesManagers

Variable Sales Managers

AdvisorsAdvisors

Medical Officer

Looking at the indian scenario of Health insurance, which remained highly

underdeveloped and a less significant segment of the product portfolios of the nationalized

insurance companies in India, There was need of such type of company dealing only in health

insurance. Therefore there is overwhelming response from the consumers. Only in nagpur

from last 3 – 4 months over 400 policies are sold which comes around 4 – 5 policies per day.

Here comes the role of an underwriter as Health sector policy formulation, assessment

and implementation is an extremely complex task especially in a changing epidemiological,

institutional, technological, and political scenario. Further, given the institutional complexity of

our health sector programmes and the pluralistic character of health care providers.

Though policy underwriting is done in the branch office for those not requiring medical

examination as they are below 50 years of age, those proposers who are above 50 years of

age, their medical underwriting is done at regional office pune.

The work load here is though not much as the company is in its cradle phase still the

underwriter confirms the policy underwriting in minimum time which varies from half hour to 4

hours for policies not requiring medical underwriting, & those requiring medical underwriting

may vary from 24 hours to 15 days. The major factor here of concern is delay from the

proposer in submitting medical documents. If time phase is considered from the submission of

medical reports to the issuing of policy it comes to around 12 hours to 48 hours.

UNDERWRITTING GUIDELINES FOR VARIOUS PRODUCTS

34

1. Medi-Classic Individual

2. Family Health Optima

3. Senior Citizens’ Red Carpet

4. Accident Care

5. Overseas Health Insurance

1. Medi-Classic Individual :-

Medi Classic Insurance from Star Health is a policy that aims to provide reimbursement

of hospitalisation expenses incurred as a result of illness/disease/sickness and/or

accidental injuries.

Any persons aged between 5 months and 80 years, residing in India,can take this

insurance.

Premium Range between :-

SumInsured(in Rs)

5 months - 35 yrs

36 - 45 yrs 46 - 55 yrs56 - 65

yrs66 - 70

yrs71 - 75

yrs 76 - 80

yrs

35

50000 575 700 1320 NA NA NA NA

100000 1200 1350 2447 3000 4547 4872 6029

150000 1800 2000 3400 4200 6717 7284 9284

200000 2350 2600 4583 5300 8768 9574 12420

250000 2800 3150 5548 7200 10696 11744 15433

300000 3300 3650 6170 8200 12625 13914 18449

350000 3750 4150 7408 10196 14434 15964 21341

400000 4200 4500 8700 11451 16242 18015 24236

500000 4900 5400 10700 13958 19859 22113 30023

Hospital Cash:Provides for payment of Rs.500 for each completed day of

hospitalisation. Premium ranging from Rs.200 to Rs. 350 per person, depending upon

the age.

Patient Care:Available for persons above 65 years. It pays for the attendant charges

after discharge from the hospital @ Rs 400 per day to a maximum of 5 days per

hospitalization. Premium Rs 300 per person.

New Born Baby cover:Available with Family package plan and provides for your new-

born from birth up to the expiry of the policy period. The sum insured is restricted to

10% of the sum insured in respect of the mother. Premium 10% of policy premium.

36

Hospitalisation Cover : In-patient hospitalisation expenses for a minimum of 24

hours.Includes room rent and boarding @2% of sum insured,subject to a maximum of

Rs.4000/- per day.

Nursing expenses.

Surgeon's fees,Consultant's fees,Anaesthetist's and Specialist's fees.

Cost of medicines and drugs.

Emergency ambulance charges for transporting the insured patient to the hospital upto

a sum of Rs 750/- per hospitalisation and overall limit of Rs 1500/- per policy period.

Pre-hospitalisation medical expenses upto 30 days prior to date of admission.

Post-hospitalization - a lumpsum calculated at 7% of the hospitalisation(excluding room

charges)subject to a maximum of Rs.5000 is payable

Non-allopathic Treatments upto Rs.25,000/- per occurence, subject to a maximum of

25% of sum insured per policy period.

Hospital Cash:Provides for payment of Rs.500 for each completed day of

hospitalisation. Premium ranging from Rs.200 to Rs. 350 per person, depending upon

the age.

Patient Care:Available for persons above 65 years. It pays for the attendant charges

after discharge from the hospital @ Rs 400 per day to a maximum of 5 days per

hospitalization. Premium Rs 300 per person.

New Born Baby cover:Available with Family package plan and provides for your new-

born from birth up to the expiry of the policy period. The sum insured is restricted to

10% of the sum insured in respect of the mother. Premium 10% of policy premium.

Premium paid by cheque or credit card for this insurance is eligible for relief under

Sectin 80D of the Income Tax Act.

Exclusions :-

Expenses for the treatment of any illness/disease/condition,which is pre-existing 37

Treatment of illness/disease/sickness contracted by the insured person during the first 30

days from the commencement date of this policy

First Two Years Exclusions: Cataract,Hysterectomy for Menorrhagia or

Fibromyoma,Replacement surgery for knee and/or joint(other than caused by an

accident),Prolapse of intervertibral disc (other than caused by accident), Varicose Veins

and Varicose Ulcers

FirstYearExclusions:Benign Prostate Hypertrophy,Hernia,Hydrocele,Fistula in

anus,Piles,Sinusitis and related disorders,Congenital internal disease/defect,removal of

gallstones and renal stone

Naturopathy treatment

Expenses which are purely diagnostic in nature with no positive existence of any disease

Treatment of Cogential external disease/defects/anomalies

Expenses which are mainly cosmetic in nature

2. Family Health Optima :-

38

Family Health Optima from Star Health is a health insurance plan that gives protection

for the entire family on the payment of a single premium under a single sum insured.

The sum insured floats among the family members insured. It’s just one more way to

tighten the family bonds.

Any person aged between 5 months and 60 years residing in India can take this

insurance

A: Adult C: Children upto 25 yrs. NA: Not Available

Sum Insured : Rs. 1,00,000

5 Months - 45 Yrs 46 Yrs- 55 Yrs 56 Yrs- 60 Yrs

2A 1765 NA NA

1A + 1C 1515 NA NA

1A + 2C 1640 NA NA

1A + 3C 1785 NA NA

2A + 1C 1890 NA NA

2A + 2C 2025 NA NA

2A + 3C 2165 NA NA


5 Months - 35

Yrs36 Yrs- 45 Yrs 46 Yrs- 55 Yrs

56 Yrs- 60 Yrs

2A 2890 3140 5535 6400

39

1A + 1C 2715 3005 5265 6120

1A + 2C 2835 3075 5410 6225

1A + 3C 3085 3415 5715 6645

2A + 1C 3295 3555 5925 6965

2A + 2C 3455 3675 6450 7360

2A + 3C 3625 4060 6795 7820


5 Months - 35


56 Yrs- 60 Yrs

2A 3985 4360 7605 10030

1A + 1C 3710 3940 6930 9185

1A + 2C 3825 4110 7160 9725

1A + 3C 4125 4440 7630 10095

2A + 1C 4190 4830 7865 10625

2A + 2C 4310 5110 8400 11090

2A + 3C 4615 5320 8710 11755


5 Months - 35


56 Yrs- 60 Yrs

2A 5195 5565 10510 13515

1A + 1C 4750 5070 9660 12730

40

1A + 2C 4910 5250 10150 13210

1A + 3C 5365 5725 10980 13755

2A + 1C 5295 5775 11270 14290

2A + 2C 5645 6240 11870 14890

2A + 3C 6025 6540 12585 15815


5 Months - 35


56 Yrs- 60 Yrs

2A 5920 6525 12010 15855

1A + 1C 5370 5955 11550 15225

1A + 2C 5630 6285 11865 15645

1A + 3C 6035 6770 12390 16275

2A + 1C 6345 7045 12815 16750

2A + 2C 6875 7675 13210 17450

2A + 3C 7260 8195 13860 18105

Age of the oldest family member covered should be taken for premium calculation

Service tax extra

Hospitalization Cover: Protects the insured person for in-patient hospitalization

expenses for a minimum of 24 hours. These expenses include room and boarding

charges as per policy conditions

41

Nursing expenses

Surgeon's fees, Consultant’s fees, Anesthetist’s and Specialist's fees

Cost of medicines and drugs

Emergency ambulance charges for transporting the insured patient to the hospital upto

a sum of Rs.750/- per hospitalization and overall limit of Rs.1500/- per policy period.

Single Sum Insured

Coverage for entire family

Single Premium

Considerable saving in premium as the family is covered under one policy

Pre-hospitalization medical expenses upto 30 days prior to the date of admission

Post-hospitalization calculated at 7% of the hospitalization expenses (excluding room

charges),subject to a maximum of Rs.5000 is payable.

Proposer, spouse, dependent children upto 25 years those who are economically

dependent on their parents.

A discount of 10% on Premium is allowed on renewal of the policy if there is no claim in

the immediately preceding year of the policy. This discount is not cumulative.

Payment by cheque for this insurance is eligible for relief under Section 80D of the

Income Tax Act.

Exclusions:-

42

Expenses for the treatment of any illness/ disease/condition which is pre-existing

Treatment of illness/disease/sickness contracted by the insured person during the first

30 days from the commencement date of the policy

First Two Years Exclusions:Cataract,Hysterectomy for Menorrhagia or

Fibromyoma,Replacement surgery for knee and/or joint (other than caused by an

accident),Prolepses of intervertebral disc(other than caused by accident),varicose veins

and varicose ulcers

First Year Exclusions:Benign Prostate Hypertrophy,Hernia,Hydrocele,Fistula in

anus,Piles,Sinusitis and related disorders,congenital internal disease/defects, removal

of gallstones and renal stone

Naturopathy treatment

Expenses which are purely diagnostic in nature with no positive existence of any

disease

Expenses incurred for non-allopathic treatment

Treatment of external Congential disease/defects/anomalies

Expenses which are mainly cosmetic in nature

43

3. Senior Citizens’ Red Carpet :-

Turning sixty is a major milestone and for people,a time to start being more careful

about their health.It is a matter of concern that insurance policies are hardly available to

address this critical requirement.STAR Health is proud to introduce India's first health

insurance policy aimed specifically at senior citizens.It provides cover for anyone over

the age of 60 and permits entry right up to the age of 69 with continuing cover after that.

It is our way of caring for a generation that has done so much to build the country.

For people aged between 60 and 69 years

Guaranteed renewals beyond 69 years

No pre-insurance medical test required

Treatment at network hospitals only

All pre-existing diseases are covered from first year,except those for which treatment or

advice was recommended by or received during the immediately preceding 12 months

from the date of proposal

Disease for which treatment or advice was recommended by or received during the

immediately preceding 12 months from the date of proposal will be covered from

second year onwards

44

Sum Insured Premium

100000 5000

200000 9500

Disease Sum Insured Limit of company’s Liability

Cerebro Vascular Accident / Cardio Vasular Disease

100000 75000

200000 150000

Renal Complications

100000 75000

200000 150000

All Other major Surgeries

100000 60000

200000 120000

Policy Premium – Including service tax

Hospitalization Cover: In-patient hospitalization expenses for a minimum of 24

hours.Includes room rent and boarding @1% of sum

ICU expenses per day @ 2% of sum insured

Nursing expenses

Surgeon's fees,consultant's fees,Anesthetist's and specialist's fees,per illness @ 25% of

sum insured

Cost of blood,oxygen,pacemaker

Cost of drugs and diagnostic tests @ 50% of sum insured per hospitalization

Treatment for Cardiovascular Diseases / Cerebrovascular Accident/Cancer and

breakage of Bones : upto Rs.75,000/- where the sum insured is Rs.1,00,000/- and upto

Rs.1,50,000/- where the sum insured is Rs.2,00,000/-

Cataract (both eyes included), up to Rs.15,000/-

Renal Complications : upto Rs.75,000/- where the sum insured is Rs.1,00,000/- and

upto Rs.1,50,000/- where the sum insured is Rs.2,00,000/-

45

All other Major Surgeries : upto Rs.60,000/- where the sum insured is Rs.1,00,000/- and

upto Rs.1,20,000/- where the sum insured is Rs.2,00,000/-

Emergency Ambulance Charges for transporting thhe Insured Person to the Hospital

@Rs.600/- per Hospitalisation and Rs.1200/- per Policy period

Post-hospitalization - a lumpsum calculated at 7% of the hospitalization

expenses(excluding room charges),subject to a maximum of Rs 5,00o is payable.

A discount of 10% of the above premium will be allowed if the Proposer produces the

following documents to the satisfaction of the Company

Stress Thallium Report*

BP report*

Sugar (blood & urine)*

Blood urea & creatinine*

Self-declaration or certification that surgeries related to Heart / Brain / Cancer has /

have not been done in the past *The tests should have been taken not before 45 days

from the date of proposal.

Premium paid by cheque or credit card is eligible for relief as provided under Section 80

D of the Income Tax Act.

Exclusions:-

Treatments currently availed or availed during the previous 12 months from date of

proposal

Any expenses incurred for treatment of illness/disease/sickness contracted by the

insured person during the first 30 days from the commencement date of the policy

First Two-year exclusions : Hernia, Piles, Hydrocele, Congenital Internal disease/defect,

Sinusitis, Gall Stone/Renal Stone removal and Benign Prostrate Hypertrophy

46

Two-Year Exclusions:Hysterectomy,Cataract,Joint/Knee Replacement surgery(other

than caused by an accident),Prolapsed Intervertebral Discs,Varicose Veins,Ulcers

Naturopathy treatement

Expenses which are purely diagnostic in nature with no positive existence of any

disease

Expenses for treatments that are mainly cosemtic in nature

50% co-payment applicable for pre-existing diseases conditions

30% co-paument applicable for all other claims.

1. Accident Care :-

An accident can put anyone’s future at risk. While an accident can be sudden, guarding

against them can be a conscious deliberate decision. STAR Health Accident Care

Insurance provides compensation in the event of death, permanent disability and

injuries suffered due to accidents

Accidental death

Permanent disability – total or partial – following an accident

Temporary total disablement – the Insured Person is eligible for a weekly benefit at 1%

of Capital Sum Insured (following an accident) subject to maximum of Rs.5000/- per

week for a for 100 weeks

Educational grant to children (1 Child – Rs.5000/-, 2 Children– Rs.10,000/-)

Transportation expenses of mortal remains (Rs.3000/-)

Travel expenses of one relative (Rs.1000/-)

47

Cumulative Bonus of 5% accrues to the Insured Person for every claim free year,

subject to a maximum of 50%

For Individuals :-

Coverage / Risk Group Group I Group II Group III

Table I 0.45 per mille 0.60 per mille 0.80 per mille

Table II 0.80 per mille 1.30 per mille 1.75 per mille

Table III 1.25 per mille 1.75 per mille 2.00 per mille

For Groups :-

Group Size% of discount on Premium

(excluding add-on covers & service tax)

2 - 100 Persons 5%

101 - 1000 10%

1001 - 5000 12.5%

5001 - 10000 15%

> 10000 20%

48

Policy can be extended to cover Medical Expenses on payment of Additional Premium

For purpose of rating, persons proposed for insurance are classified under three risk

groups

Risk Group I – Persons engaged primarily in administrative functions

Risk Group II – Persons engaged in manual work other than what is specifically

provided for under Group III

Risk Group III – Persons working in explosives industry, mines workers, high tension

electric supply, horse racing including jockeys, athletes and occupations of similar

hazards

The Insurance may be renewed under mutual consent

Exclusions

Expenses incurred on events occurring before the commencement of the cover or

otherwise outside the Period of Insurance

Any claim in respect of Pre-existing condition

Any claim if the insured acts against the advice of a physician

Any claim arising out of Accidents that the Insured Person has caused intentionally or

by committing a crime or as a result of drunkenness or addiction (drugs, alcohol, etc)

Any claim arising out of mental disorder, suicide or attempted suicide self inflicted

injuries, or sexually transmitted conditions, anxiety, etc

Participation in Hazardous Sport/Hazardous activities

Persons who are physically and mentally challenged unless specifically agreed and

endorsed in the policy

49

2. Overseas Health Insurance :-

Star Corporate travel Protect :-

50

Star Corporate travel Protect

Star Family Travel Protect

Star Student Travel Protect

Star individual Travel Protect

Globalization and business expansion have increased the need for traveling between

countries. People who travel also hold positions of high responsibility in their

organizations. While all risks cannot be avoided, STAR Health protects corporate

executives during their travel by covering them against most risks arising out of travel so

they can focus on the job at hand and accomplish their objectives.

Features

Emergency medical expenses whilst you travel/stay abroad

Emergency medical transportation to India

Repatriation of mortal remains

Any dental emergency expenses following an accident

Compensation following accidental injuries

Cost of loss of traveler's checked-in baggage

Reasonable expenses incurred for obtaining new passport

Expenses on emergency purchase of consumables due to any delay in handing over

traveller's checked in baggage by the carrier for more than 12 hours

Delay in flight

Expenses relating to travel and accommodation incurred due to missed

departure/connection

Hijack distress

Any legal liability that may be fastened upon the travellers, if he/she causes any bodily

injury or property damage to any third party whilst on an insured trip

Any travel expenses incurred in sending a substitute employee following the covered

sickness/accidental injuries of the insured employee

Eligibility

51

All Corporate Executives residing in India aged between 18 and 70 years traveling

abroad on business purposes can take this insurance

Is it necessary to undergo medical tests?

Generally not required. However any proposal with adverse medical history, irrespective

of the age should be accompanied by an ECG, Fasting and Postprandial Blood Sugar,

Urine Strip Test and Cholesterol Profile reports duly certified by a cardiologist.

Plan and Trip options

The insurance is available for Travel worldwide including USA and CANADA, for sum

insured limits of USD 1,00,000, USD 2,50,000 and USD 5,00,000.

Star Student Travel Protect :-

Students traveling abroad are already on their own and need help if they are ever laid low by

an illness. STAR Health has a specially designed Student Travel Protect Insurance that

protects them during a crucial phase because medical treatment abroad can be prohibitively

expensive in most cases.

Medical Benefits

Emergency medical expenses

Emergency transportation back to India 52

Repatriation of mortal remains

Dental emergency expenses following an accident

Travel Related Benefits

For injuries caused by accidents

For checked in baggage

Compassionate Benefits

Visit of one immediate family member, in case of hospitalisation

Repatriation due to medical reasons or death of family member, resulting in interruption

in study

Reimbursement of tuition fee for the balance period in the event of death of the sponsor

Legal Claims

For bodily injury to third parties or damage to their property, if you happen to be the

cause

Cost of bail bond following false arrest or wrongful detention.

Star Student Travel Protect:-

These days a lot more families vacation abroad. While this is the perfect opportunity for

enjoyment, there is a clear need to protect the family from risks that may be merely

inconvenience, like the loss of a passport or something more serious like a member of the

family falling ill and needing hospitalization. To be prepared for any crisis STAR Health offers

financial protection under Family Travel Protect Insurance Policy

Eligibility

53

All Indian Nationals and their families - aged between 6 months and 60 years, traveling

abroad on holiday can avail this insurance

Family consists of insured person, spouse and two dependent children (Children below

18 years)

Additional children can be covered on payment of extra premium at 25% additional

premium per child up to a maximum of two additional children

Claims Procedure

54

Inform the ID number for easy reference on toll free number

In case of planned hospitalization, it should be informed 24 hours prior to admission into hospital

KEY INTERPRETATIONS

There is still much scope to explore the market as the city population is above

30,00,000 & only 2 – 5% of population is covered under any kind of health insurance

coverage.

Various marketing activities are done to promote the company.

Underwriting procedures are done cautiously for overall risk assessment & if found out

of the box full efforts are taken to cover that person under some different plan.

Personal freedom is given to the Sales Managers to explore his / her talent and

generate business by his / her innovative ideas.

Underwriting guidelines are user friendly and fitted into the software called PREMIA.55

In case of emergency hospitalization, information to be given within 24 hours after hospitalization

In non-network hospitals, payment must be made upfront and then reimbursement will be effected on the

submission of documents.

After checking of the full documents & field visit report the claim settlement department settles the

claim.

The Medical Officer will personally visit the hospital for overlooking & taking proper follow up of the claim

& fills the field visit report

The software sometimes becomes trouble creator due to inefficiency of either internet

connectivity or continuous power supply.

Medical underwriting is taken care by qualified doctors at Pune due to under load of

work.

Company possesses reminder software which generates alerts before expiry of the

policy after one year for renewal.

There is a fixed prototype of policy underwriting due to software in which changes can

only occur through higher centers.

This branch up till now has underwritten 420 policies in 4 months

Therefore :- 432 / 4 = 108

Therefore :- 108 / 26 = 4 – 5 policies / day

Every policy takes on an average 5 – 6hrs. To be underwritten.

The major time is taken by the policies requiring medical underwriting i.e.

proposers above 50 yrs. Of age. As it requires prompt action from the proposer

side after giving advanced receipt.

Otherwise policies not requiring medical underwriting are getting underwritten

even in 1:00 – 1:30 hrs.

56

Some Suggestions for considerations:-

Still rigorous marketing activities can be undertaken for grabing attention of the market.

As the work load goes up unedrwritting procedures should be more cautiously done for

not accepting doubtful cases so the repudiation rate of the claims can also be reduced

thereby reducing disappointment for the policy holders.

Medical underwriter can be appointed after the workload exceeds limit of around 12 -15

cases per day reduce the turn around time required for policy issuing.

57

Non-network hospitals should be empanelled as soon as possible after confirming their

genuiness to reduce incidences of moral hazards.

The company totally depends on web services for their underwriting, there should be

some backup if the system fails to continue the work.

Web services and alerts can be more rigorously used for post policy services by giving

additional features as follows :-

To gather and enlist the data base of all policy holders.

Those having mob.no. can be provided with either weekly / every fortnight.

Health tips, Health Alerts for social outbreaks.

Alerts about new health care schemes and benefits.

One can make people aware about extra benefits like tax exemptions etc.

SWOT - Analysis

STRENGTHS WEAKNESSES

58

Stand alone health insurance company inthe field.

Experience, expertise and support of Big financial group.

Latest Technology and Infrastructure to support & fasten the services.

All the range of health products under one roof.

Cashless service without TPA intervention i.e. in-house claim settlement.

24 hours General Practitioner's advice and medical counseling

24x7 in-house Call Center Toll free telephone assistance Complete knowledge backed website to

offer medical information, including health tips.

Large range of premiums through different products for every class of people.

Direct discount on premium for no claim benefit

Welcome discount for the proposers shifting from other company with all the continuation benefits.

Innovative products even for chronic non-curable diseases like diabetes, AIDS etc.

Availability of tailor made policies.

Upcoming private health companies offering health insurance.

Well established public sector companies.

Lack established infrastructure at branch offices.

OPPORTUNITIES THREATS

59

Ability of local people to pay for good services.

Non-availability of any major health insurance service provider.

Willingness of Corporates to have a tie-up with the company.

Large sector of the population not covered under health insurance & even is unaware of the benefits.

Increasing population going abroad and hence availing Overseas policies.

Inceasing number of road side accidents & increased cost of healthcare facilities

.

Established general insurance companies having brand name.

From the malpractices being regularly done in this form of insurance practices.

Unwillingness of people to buy health insurance thinking of wastage of money.

More no. Of proposals from senior age group.who are in real need of health care expenses.

Resistance among people as they have mindset of availing policies from public

sector companies.

Key Findings during study in

New India Assurance Company

stablished by Sir Dorab Tata in 1919, New India is the first fully Indian owned insurance

company in India.

With a wide range of policies New India has become one of the largest non-life

insurance companies, not only in India, but also in the Afro-Asian region.

60

New India was a pioneer among the Indian Companies on various fronts, right from

insuring the first domestic airlines in 1946 to satellite insurance in 1980. The latest addition

to the list of firsts is the insurance of the INSAT-2E.

Our Mission :-

To develop general insurance business in the best interest of the community.

To provide financial security to individuals, trade, commerce and all other segments of

the society by offering insurance products and services of high quality at affordable cost

Our Values :-

Highest priority to customer needs.

High standards of public conduct.

Transparency in operations.

The company has many branch offices in Nagpur for different regions of Nagpur. The

focus of the company is more on vehicle, fire etc. type of insurances. Health

insurance though having all type of portfolios under the umbrella of the company is

still a less concerned issue for them.

There is common underwriter for all type of insurance policies. Medical underwriting

is done on advice of the authorized diagnostic centers in the city. They don’t have in-

house claim settlement department. On their behalf third party administrators do the

job for them for which they get 6% of the premium amount.

The team of their sales managers are also neglecting health care portfolio.

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Other private insurance companies are providing them with more benefits and much

more upgraded services.

There is much scope for either improving or implementing the underwriting

guidelines.

There is much difference in premium charged for the said coverage in private

companies and New India Assurance Company.

Other benefits like no claim benefit, cumulative bonus, continuation benefits should

be more emphasized on while explaining to the proposer.

The company has divided whole India in three zones according to the health costs of

those particular areas for reimbursements.

mediclaim policy :-

This insurance is available to persons between the age of 18 years to 60 years.

Children between the age of 3 months to 18 years can be covered provided parents are

covered simultaneously. The persons beyond 60 years can continue their insurance

provided they are insured under Mediclaim policy with our Company without any break.

The policy covers hospitalisation expenses for the treatment of illness/injury provided

hospitalisation is more than 24 hours. Pre-hospitalisation expenses for 30 days and post

hospitalisation expenses for 60 days are also payable.

Day-care treatment - The Medical expense towards specific technologically advanced

day-care treatments / surgeries where 24 hour hospitalisation is not required.

Ambulance Charges for shifting the insured from residence to hospital are covered up to

the limits specified in the policy.

Ayurvedic / Homeopathic and Unani system of medicine are covered to the extent of

25% of Sum Insured provided the treatment is taken in the Government Hospital.

Pre-existing diseases are covered only after 4 continuous and claim free renewals with

our Company.

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Pre-existing conditions like Hypertension, Diabetes, and their complications are covered

after two years of continuous insurance on payment of additional premium.

Exclusions:-

1. Diseases contracted within 30 days of insurance

2. Dental treatment except arising out of accident.

3. Debility and General Run Down Conditions.

4. Sexually transmitted diseases and HIV (AIDS)

5. Circumcision, Cosmetic surgery, Plastic surgery unless required to treat injury or illness

6. Vaccination and Inoculation

7. Pregnancy and child birth

8. War, Act of foreign enemy, ionising radiation and nuclear weapon.

9. Treatment outside India

10.Naturopathy

11.Domiciliary Treatment

12.Experimental or unproven treatment

13.All external equipments such as contact lenses, cochlear implants etc

Following is the chart for their mediclaim policy :-

Sum

insured

3

mnths

Over

5 yrs.

Over

35

Over

40

Over 45 yrs.

Over 50 yrs.

Over 55 yrs.

Over 60 yrs.

Over 65 yrs.

63

to

5yrs.

To 35

yrs.

yrs.

To 40

yrs.

yrs.

To 45

yrs.

To 50 yrs

To 55 yrs

To 60 yrs

To 65 yrs

To 70 yrs

100000 1315 1250 1480 1850 2500 2810 3260 3650 4110

125000 1695 1615 1860 2280 2990 3530 4010 4510 5060

150000 2015 1920 2210 2715 3770 4240 4840 5450 6060

175000 2305 2195 2530 3100 4340 4880 5660 6360 7090

200000 2595 2470 2845 3490 4910 5660 6420 7310 8210

225000 2850 2715 3130 3830 5440 6270 7110 8260 9180

250000 3105 2955 3405 4175 5960 6880 7810 9070 10120

275000 3360 3200 3685 4520 6480 7490 8500 9840 10920

300000 3615 3445 3970 4865 6990 8090 9200 10540 11820

350000 4065 3870 4460 5470 7950 9210 10480 12030 13440

400000 4510 4295 4950 6070 8910 10340 11780 13530 15030

450000 4960 4725 5470 6735 9860 11460 13070 15040 16790

500000 5410 5150 5935 7275 10820 12580 14350 16520 18460

Special Features :-

1. Discount in premium for family cover

2. Loyalty Discount

64

3. Good Health Discount

4. Cumulative Bonus

5. Cost of Health Check up

6. Income Tax Benefit under Section 80D of IT Act.

Claims are administered through Third Party Administrators (TPA) whose contact

particulars appear on the policy document. Insured can opt for cashless or

reimbursement facility for their claims. The proposer has the option to avail TPA

services, which is cashless or direct service by Policy issuing Office, which is on

reimbursement basis.

Personal Accident Policy:-

This policy offers compensation in case of death or bodily injury to the insured person,

directly and solely as a result of an accident, by external, visible and violent means.

65

The policy operates worldwide and is a 24 hours cover.

Different coverages are available ranging from a restricted cover of Death only, to a

comprehensive cover covering death, permanent disablements and temporary total

disablements.

Family Package cover is available to Individuals under Personal Accident Policy

whereby the proposer, spouse and dependent children can be covered under a single

policy with a 10% discount in premium.

Group personal accident policies are also available for specified groups with a discount

in premium depending upon the size of the group.

This policy is basically designed to offer some sort of compensation to the insured

person who suffers bodily injury solely as a result of an accident which is external,

violent and visible. Hence death or injury due to any illness or disease is not covered by

the policy.

The following types of coverage’s are offered under a Personal Accident policy:-

Table D

1. Death cover wherein 100% of the capital sum insured is payable.

Table C

1. Coverage under Table D

2. Loss of two limbs / both eyes / one limb and one eye wherein 100% of the capital sum

insured is payable.

3. Loss of one limb or one eye wherein 50% of the capital sum insured is payable.

4. Permanent Total Disablement other than above e.g. paralysis due to an accident,

wherein 100% of the capital sum insured is payable.

Table B

66

1. Coverage under Table C

2. Permanent Partial Disablement i.e. where a part of the body becomes permanently

disabled due to an accident, e.g. total and irrevocable loss of use of a finger due to an

accident. In such cases, a percentage of the capital sum insured as specified in the

policy is paid.

Table A

1. Coverage under Table B

2. Temporary Total Disablement i.e. where the insured person becomes temporarily

disabled from undertaking any work as a result of an accident for e.g. fracture of legs. In

such cases, a weekly payment of 1% of the capital sum insured subject to a maximum

limit, is paid for the number of weeks or part thereof (maximum 100 weeks), during

which the insured person is totally disabled.

The insured can claim only under any one of these sections as a result of any one

accident.

The policy also covers expenses incurred for carriage of dead body from place of

accident to the residence subject to a limit of 2% of the capital sum insured or Rs.2,500

whichever is less. Under an Individual Personal Accident policy or Family Package

Policy, an education fund is payable for a maximum of 2 dependent school going

children, in case of death or permanent total disablement of the insured person.

The company issue several types of personal accident policies such as :-

Individual Personal Accident policy.

Group Personal Accident policy.

Passenger Flight Coupon - Covering personal accident risk whilst traveling as a

passenger on a scheduled flight.

Gramin Personal Accident Policy - for persons residing in rural areas where benefits as

per Table C mentioned above are covered for a capital sum insured of Rs.10,000/-.

67

Janata Personal Accident policy - where benefits as per Table C mentioned above are

covered for a maximum sum insured of Rs.1,00,000/-. Long Term Policies can also be

issued upto 5yrs.

Student Safety Insurance - for schools and colleges, covering students against Personal

Accident benefits as per Table B mentioned above for a capital sum insured of

Rs.10,000/-.

Raj Rajeshwari Mahila Kalyan Yojna - for women in the age group of 10 to 75 years.

where benefits as per Table C mentioned above are covered for a capital sum insured

for Rs.25,000/-. In case of death of an unmarried woman due to an accident,

Rs.25,000/- is payable to the nominee or legal heir. In case of a married woman, if the

husband dies due to an accident, Rs.25,000/- is payable to the wife but if the wife or

insured dies no compensation is payable.

Bhagyashree Child Welfare Policy - for girl child in the age group of 0 to 18 years.

whose parents age does not exceed 60yrs. In case of death of either or both parents

due to an accident, a sum of Rs.25,000/- is deposited in the name of the girl child with a

financial institution named in the policy which will disburse amounts as specified for the

benefit of the girl child to the living parent or to the nominated guardian. Group policies

can also be issued.

Selection of Sum Insured:-

It is very difficult to put a value to a human life. Hence the principle of indemnity cannot

be applied in this policy. However it becomes necessary to apply some yardstick for

fixing the sum insured so that human lives are not overvalued for ulterior motives.

Hence the capital sum insured is restricted to 72months income from gainful

employment. This means that income from property, shares etc. will not be taken into

account. For non working spouse, the sum insured is restricted to 50% of the sum

insured of earning spouse subject to a maximum of Rs.1,00,000/- and for dependent

children to 25% of the sum insured of earning parents subject to a maximum of

Rs.50,000/-. In case of Gramin Personal Accident, Student Safety, Raj Rajeshwari,

Bhagyashree policies the sum insured is fixed.

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In Individual Personal Accident policy, facility of cumulative bonus is given whereby the

capital sum insured is increased by 5% every year on claim free renewals subject to a

maximum of 50%. This cumulative bonus is available only under tables A,B & C.

In the event of an accident giving rise to a claim the following steps should be

taken:-

In case of death claim :-

1. Assignee under the policy should immediately notify the policy issuing office.

2. Submit the claim form alongwith death certificate, post mortem report, police report and

original policy.

In case of injury claim :-

1. Notify the policy issuing office immediately.

2. Submit Police report if any.

3. Submit claim form alongwith medical certificate certifying the disablement.

4. In case medical expenses extension has been taken, then the prescription alongwith

bills are to be submitted.

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Overseas Mediclaim Policy

Highlights :-

Premium payable in Rupees and Claims settled abroad in foreign Currency.

Policy available for frequent corporate travelers

Medical expenses incurred by the insured persons, outside India as a direct result of

bodily injuries caused or sickness or disease contracted are covered.

Eight Plans available under the policy:

PLAN A-1) For travel to countries excluding USA & Canada for business and holiday

limited to USD 50,000.

PLAN-A-2) Same as (A-1) above except that benefits stand increased to USD 250000.

PLAN B-1) For travel worldwide including USA & Canada for business and holiday

limited to USD 1,00,000.

PLAN B-2) Same as (B-1) above except that benefits stand increased to USD 5,00,000.

PLAN C) For travel to countries excluding USA & Canada for employment and studies


PLAN D) For travel worldwide including USA & Canada for employment and studies


PLAN E-1) For travel worldwide including USA & Canada for corporate frequent

travelers limited to USD 1,00,000.

PLAN-E-2) Same as (E-1) above except that benefits stand increased to USD 5,00,000.

70

CFT Cover is available for Executives Of Corporate clients and Partners of registered

firms annually subject to the duration of any one trip not exceeding 60 days.

ADDITIONAL Add-on benefits:-Besides the above additional add-on benefits are

available under Business & Holiday and CFT cover(Except Plan C and Plan D)

1. Personal Accident

2. Loss of checked in Baggage

3. Delay of checked in Baggage

4. Loss of passport

5. Personal Liability

Premium: Depends on Age-band, Trip-band and Country of visits.Coverage: Initially cover

upto 180 days is provided under Business & Holiday Plan ..Extension allowed on original

policy for further period of 180 days subject to declaration of good health

Age Limit: 6 months and above upto 70 years.

Policy is to be taken prior to departure from India.

Travelers over 60 years of age and for those traveling to USA & Canada over 40 years

the following Medical reports (from an MD Cardiologist) need to be submitted along with

the proposal form:

ECG

Fasting Blood Sugar or Urine Strip test

These reports are required if the travel period exceeds 60 days and above.

In case of travellers unable to submit the above Medical reports cover stands restricted

to USD 10,000.

Major Exclusions:-

All pre-existing disease/illnesses are not covered (known and unknown).

Traveling against Medical advice or for Medical treatment including routine check-up.71

First USD 100 of all claims are to be borne by the traveller.

Please refer to Policy for further details.

SWOT - Analysis

STRENGTHS WEAKNESSES

One of the biggest general

insurance company

Latest Technology and Infrastructure

to support & fasten the services.

24 hours General Practitioner's

advice and medical counseling

Toll free telephone assistance

Complete knowledge backed website

to offer medical information,

including health tips..

Effective Pan India Presence.

first fully Indian owned insurance

company in India.

Already established brand name.

Large amount of skilled and

experienced manpower.

Very strong financial back up.

All the range of general insurance

products under one roof.

Cashless service with TPA

intervention hence loose

personal touch with the

consumer.

Lack of qualitative and result

oriented leadership in health

insurance.

Under-utilisation of all the reources

like manpower, technology,

infrastructure etc.

Unavailability of rigorous training

sessions for knowledge

upgradation.

Unavailability of cross checking

mechanism for claim settlement.

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OPPORTUNITIES THREATS

Ability of local people to pay for good

services.

Willingness of Corporates to have a

tie-up with the company.

Large sector of the population not

covered under health insurance &

even is unaware of the benefits.

Increasing population going abroad

and hence availing Overseas

policies.

Can provide all sort of general

insurance portfoiio under one roof as

a comprehensive service provider.

.

From the malpractices being

regularly done in this form of

insurance practices.

Unwillingness of people to buy

health insurance thinking of

wastage of money.

More no. Of proposals from senior

age group.who are in real need of

health care expenses.

Fraud claims getting approved.

From fastly growing private sector

companies providing good services.

.

Annexure 1

Quistionnaire for Sales Managers

Name :- ______________________________

o Why you chose to be a Star’s Sales Manager?

73

___________________________________________________________________________

___________________________________________________________________________

o How do you approach a prospective consumer ? for ex.

Previous contacts or relatives

Directly to unknown person

Any other (Please specify)

_________________________________________________________________________

__________________________________________________________________________

o Which policy you stress more on & for how much of coverage?

___________________________________________________________________________

o What do you mean by pre-existing disease please define?

___________________________________________________________________________

o What is the procedure for claim please give details?

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

o What are our toll fre no. For our region ?

__________________________________________________________________________

o What are the Queries customer raises while you explain them the proposals?

__________________________________________________________________________

__________________________________________________________________________

74

o What is the maximum limit of time for renewal of the policy ?

__________________________________________________________________________

o In totality how many forms of policies STAR have in it’s portfolio?

__________________________________________________________________________

__________________________________________________________________________

___________________________________________________________________________

o What do you explain to customer while explaining the policies like PED, exclusions, benefits, renewals etc.?

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

Please except my sincere thanks for co-operating me in my project work.

Regards

Dr. Neha Mainde

Quistionnaire for Policy Holders

75

1. From where you got the information about Star Health & Allied Insurance company?

________________________________________________________________

2. How you find post policy services of the company?

________________________________________________________________

3. Have you ever claimed for your healthcare services?

________________________________________________________________

4. If yes how was the experience?

________________________________________________________________

5. Are you satisfied by the premium amount this company charge for?

________________________________________________________________

________________________________________________________________

76

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