Showing posts with label Foundation Course IV. Show all posts
Showing posts with label Foundation Course IV. Show all posts

Tuesday, 29 November 2022

INSURANCE NOTES / FOUNDATION COURSE IV (INSURANCE) NOTES

 1. An Introduction to Life Insurance
















Friday, 12 March 2021

SPECIAL POLICIES OF FIRE INSURANCE

These are of different types based on the insurance hazards, insured risk, business type, policy rules.

Valued policy: The value of the prospectus to be insured, here, the insurer pays the total admitted value irrespective of the market value of the properties. The amount fixed may be greater or less than the actual market value of the property destroyed by fire at the time of loss. It is used for insuring especially pictures, sculptures, works of art, jewelry articles, etc. it is beneficial to the insured because he/she is relieved of proving the value of the property at the time of loss by searching for invoices and receipts. The valuation is revised at frequent intervals. The insurer will have to pay more than the actual loss if the market price of the property has gone down.

Valuable policy: is that policy where claim amount is to be determined at the market price of the damaged property. This policy represents the doctrine of indemnity.

Floating policy: is useful to cover fluctuating stocks in different localities. It is taken to cover one or more kinds of goods at one time under one sum assured for one premium, the physical and moral hazards are also varying. These kinds of policies are specifically taken by big manufacturers or traders whose merchandise might be lying in parts at the warehouse, port, or railway station. The average rate of Premium is ascertained by taking into account the total premium payable had the property been insure by specific policies. It contains ‘average’ and ‘marine’ clauses. It can be taken only on stocks and not on immovable property.

Excess policy: The stock of a businessman may fluctuate from time to time, so the insured in this case can purchase two policies, one is the ‘loss policy’ and the other is the ‘excess policy’. The minimum level of stock can be found out from the past experience and for the other portion of stock which exceeds the minimum limit. The actual value of the excess stock is declared every month. The average clause also applies to this policy.

Specific policy: Specific sum is insured upon a specific property in case of a specified period, the whole of the action loss is payable provided, but won’t exceed the insured amount. The insured sum sets a limit upto which the loss can be made good.

Average policy: Policy containing ‘average clause’ is called an Average policy. The amount of indemnity is referred to the value of the property insured. If the policy holder has taken policy for a lesser amount than the actual value of the property, the insured will be deemed to be his own insurer for the amount under insurance. The average clause is operative only. It is ineffective when the property is insured for the full value as in that case the insured is protected to the extent of his total loss.

Comprehensive policy: This policy undertakes full protection against risk of fire combined with burglary, riot, civil commotion, theft, lightning. This policy is beneficial to the insured and the insurer. The insurer can set higher premium and the assured is protected against losses due to specified perils.

Sprinkler leakage policy: This policy insureds the destruction or damage to by water accidentally discharged or leaking form automatic sprinkler installation in the insured premises.

Add on covers policy: An insured may like to cover his prospectus against to delete some of the exclusions. The additional cover is effected is included specific perils also. For example earthquake. Add on the cover is mid-term inclusion but the annual premium has to be charged and not short period premium. No refund of premiums for the cancellation will be allowed unless the entire policy is cancelled.

SOCIAL SECURITY | INDIA

 SOCIAL SECURITY

Social security is the protection which society provides for its members through a series of public measures. It is against economic and social distress.

It could be caused by the stoppage of substantial prediction of earning resulting from sickness, maternity, unemployment, old age, etc.

The main feature of social security are:

To solve the problems of insecurity

To protect the workers from various contingencies of life

It is a collective effort of employee, employer and government

It is an idea to provide social justice.

 

The Workmen’s Compensation Act, 1923

This is one of the important social security legislations. It aims to provide financial protection to workmen and their dependents in case of accidental injury by means of payment of compensation by the employees.

The workmen’s compensation supports dependents like widows, minor legitimate or adopted son and unmarried daughter.

It considers for the disability of the workers to be total where if in capabilities a worker for all work he was capable of doing at the time of the accident resulting in such disablement.

 

Employee’s State Insurance Act, 1948

Provide medical facility and unemployment insurance to industrial workers during their sickness.

It is compulsory and contributory in nature.

It is applicable to all factories that employ more than 20 workers. It has the benefits of medical, sickness, maternity, disabled and dependent benefits.

 

Maternity Act, 1961

It is to protect the dignity of motherhood by providing complete and health care to woman and her child.

It gives her the assurance that her rights will be looked after while she is at home to care for her child.

Provisions of the Act entitle maternity leave even to women engaged on casual basis or on muster role basis on daily wages.

Cash benefits will be 84 days leave with pay before/after delivery.

A medical bonus of Rs. 1000/-

An additional leave will pay upto one month (proof of illness required)

 

Payment of Gratuity Act, 1972

The Payment of Gratuity Act, 1972 applies to factories and other establishments employing more than ten or more persons.

Every factory, mine, oil field, port and Railway Company.

Employee means any person employed on wages in an establishment to do any skilled, semi skilled, unskilled, supervisory, etc.

According to Sec.4(1) of the Payment of Gratuity Act, 1972, gratuity is paid after termination of employee after rending continuous service not less than 5 years on his superannuation or his retirement or resignation or on his death or disablement due to accident or disease.

Gratuity = Monthly salary X 15 days X no. of years of service/26

 

The Employee’s Provident Fund and Miscellaneous Provisions Act, 1952

The institutions should compulsory contribute provident funds, pension and insurance for employees i.e.

a.   Employee’s Provident Funds Scheme, 1952

b.   Employee’s Deposit Linked Insurance Scheme 1976

c.   Employee’s Pension Scheme, 1995.

It is to extend the reach and quality of publicly managed old age income security programs.

Eligible for provident fund in for an employee of the company to whom the employee’s basic salary and DA should be more than Rs. 15,000/-

Employee’s deposit linked insurance is basically a ‘Life Insurance’ for all covered employees under EPF MP Act, 1952.

Here deposit means average deposit in EPF A/c. when an employee dies while in service his or her family will get some compensation based on deposit in EPF Account.

On behalf fo Employees, the employer has to pay @0.50% of (basic+DA) or more upto Rs.15,000/- as  its monthly contribution with total contribution which makes eligible employee’s nominee to get the claim in the case of death while in service.

The amount received as the employer’s contribution and also the Central Government’s contribution to the ‘Insurance Fund’ under sub-section 2 and 3 of Sec. 6C shall be credited to an account called the ‘Deposit-Linked Insurance Fund Account’.

 

Social security benefits and welfare measures

Medical care or sickness benefit scheme

Employment injury benefit scheme

Maternity benefit scheme

Old age benefit including pension

Housing schemes

Educational schemes

Integrated insurance schemes

Survivor’s benefit scheme, etc.

 

TYPES OF RISK

Pure risk: Pure risk is a situation that holds out only the possibility of loss or no loss. For e.g. if you leave your house in the morning and leave for office by motorcycle you cannot be sure whether or not you will be involved in an accident, that you are running a risk. There is the uncertainty of loss. If you are involved in any one of these situations, you will suffer loss.

Types of pure risks:

Personal risk: Is the risk which affects an individual directly. It involves the likelihood of sudden and complete loss of income or assets or gradual reduction of income. This risk can be classified into four main types:

Risk of Premature death: It is generally believed that the average life span of human beings is 70 years. Anybody who dies before 70 years could be regarded as having died prematurely. A family breadwinner who dies prematurely has children to educate, dependents to support, mortgage loan to pay, etc.

Risk of old age: Post retirement, older people do not get sufficient income to meet one’s financial needs. Even some of the workers who plan for the future and make sufficient savings for old age may face the effect of inflation on savings. Higher rate of inflation can cause great financial and economic distress to retired people as it may reduce their real incomes.

Risk of poor health: Poor health can bring serious financial and economic distress to an individual. Without good health, nobody can plan for their future savings and can’t maximise their economic income. Poor health resulst in loss of earned income and high medical expenses.

Risk of unemployment: Unemployment is a situation where a person who is willing to do and is looking for work to do cannot find work to do. It always brings financial insecurity to people. In these cases, the person would lose his/her earned income. He may suffer from financial hardships. It may fully deplete his savings and expose himself to financial insecurity.

Speculative risk: is a risk where both profit and loss are possible. It is not normally insurable. It is common in business undertakings. It is a risk which faces break-even situations. For e.g. it includes taking part in exporting to a new market, betting on horse races, etc.

Property risk: Property owners face the risk of having their property stolen, damaged or destroyed by various causes. A property may suffer direct loss, indirect loss, losses arising from extra expenses of maintaining the property or losses brought about by natural disasters.

Natural disasters such as floods, earthquakes, storms, fire, etc. bring enormous property losses as well as affect human lives.

Liability risk: means that the person will be responsible for an injury to another person or their property. For e.g. if you injure your neighbor or damage his/her property, the law would impose fines on you and you may have to pay heavy damages. The risk amount under this risk doesn’t have any maximum upper limit. For e.g. If you ride a motorcycle valued Rs. 50,000 and negligently cause serious bodily harm to another person, that person can sue you for any amount of money… Rs. 70,000 and above, depending on the nature of the injury. If the motorcycle is fully damage by you then you are supposed to pay the actual value of the motorcycle. In this case your financial and economic security will be greatly endangered.

Fundamental risk: is a risk which is non discriminatory in its attack and effect a group risk cause by bad economy, inflation, unemployment, war, political instability, flood, drought, earthquake, etc.

This affects a large population and the risk lies with the society rather than the insurance. This can be handled by social insurance.

Particular Risk: affect only the individual and not everybody in the community. For e.g. if a bicycle is stolen the full impact of the loss of the bicycle is felt by you. The theft of a bicycle is a particular risk. Particular risks are the individual’s own responsibility and not that of the society of community as a whole. The best way to handle particular risk by the individual is the purchase of insurance cover.

Static risk: is a risk that involves losses brought by irregular action of nature of mistakes of man. It is an unchanging economy. For e.g. if all economic variables remain constant, some people with fraudulent tendencies would still go out, steal, abuse their positions, etc. it involves destruction of assets or change in their possession as a result of dishonesty. Example of static risk includes theft and bad weather.

Dynamic risk: is mainly speculative risk in changes in price level, income, taste of consumers, technology, etc. which can bring about financial losses to members of the economy. It is beneficial to the society. For e.g. technological changes which brings higher production at a cheaper price. It affects large number of individuals.

Tuesday, 9 March 2021

LOGISTICS INSURANCE

The Insurance taken for logistic business is known as Cargo Insurance / Marine Cargo Insurance which covers risks involved in transporting good by all modes of transport and at every stage of the movement.

The primary benefit of purchasing cargo insurance to protect the value of goods and coverage of goods in transit during land, sea or air transportation.

It provides the insurance cover in respect of loss or damage to cargo during transit by rail, road, sea or air. It covers the export and import shipment by ocean, trans-shipments, consignments sent by rail, road and air, articles sent by post, etc.

The insured must have an insurance interest in the goods at the time of loss. The insurable interest or obligation to take out insurance is usually determined by a term of delivery.

The marine cargo insurance usually covers:

Loss of damage to cargo during transit

Expected profit from sale of goods at place of destination.

Financial losses attributed to delay in start-up caused by loss or non-delivery of insure cargo.

 

IMPORTANCE OF CARGO INSURANCE

The primary benefit of purchasing cargo insurance is to protect the value of goods.

It normally provides indemnity against loss of or damage to merchandise caused by fire or explosion, collision, sinking, capsizing, washing overboard and general average sacrifice.

Cargo may be exposed to a variety of risks while in transit with damages or losses occurring during storage.

In the event of emergency, a cargo ship may voluntarily sacrifice part of its cargo.

Cargo policies will indemnity against loss or damage to goods being shipped as a result of an even insured against in that policy.

 

HAZARDS IN LOGISTICS

Hazards means loss or risk; a threat of damage, injury, abilities, loss or any other occurrence that is caused by external or internal vulnerabilities.

All businesses have some level of risk and the task of business to minimize the risk and maximize profit. In most cases risk is addressed through insurance, initially physically insurance such as fire, theft, public liability, etc.

Hazards of shipping goods by sea

-Weather and geographical hazards

It includes natural calamities like typhoons, cyclones, which pose a serious threat to the sea freight and can cause serious damage to your cargo vessel.

A marine transit insurance policy can give coverage like earthquake, lightening, washing overboard, entry of sea or river water into the vessel, etc.

-Man made hazards

Risk happens due to the fault of people on the ship. Many a times, losses or damages occur while loading into or unloading goods from craft or vessel.

Packaging hazards

Goods get damaged despite the proper packing, damaged due to improper packaging, owner can refuse to take the delivery of goods and file a case against you. In this case, marine insurance company can agree to cover your losses or damages which may arise due to improper packaging.

The marine insurance policy covers the loss or damage to property caused due to:

Natural disasters like cyclone, lightening, earthquates, etc.

Man-made disasters like theft, violence and piracy of ships

Collision, overturing of land conveyance, sinking of ships

Expenses such as survey fees, forwarding cost, etc.

 

Hazards of Logistics by roadways

Passenger lawsuits: Common automobile accident case involves two vehicles. With the driver of one calming the driver of the other was responsible. Sometimes only one vehicle is involved. In this case, the passenger in the vehicle may claim injury as a result of his own driver’s negligence eve if the driver is a close friend.

Major hazards due to problems by road transportation

Most of the Indian roads are not suitable for use of vehicular traffic.

Mixing of traffic

Multiple check posts, toll, etc

Low attention on road safety and traffic laws

Transport infrastructure risk

Risk of theft

Risk of overloading

Risk of drunken drivers

Weather conditions

Political and government related risk

Technological risk

Driver shortage risk

 

Protection – Types of Cargo Insurance Policies

Cargo insurance

Marine cargo insurance also known as freight insurance covers the risks of loss or damage to goods and merchandise while in transit by sea, rail or air. Examples:

Manufacturing: bringing raw materials and distributing finished products

Agriculture: ranging from grains and fruits to livestock transport

Wholesalers: moving goods from producers to retailers

Retailers: moving stock from warehouses and stock transfers

Mining: Importing and Exporting raw materials and shipments

 

Hull insurance:

Insurance of vessel and its equipment are included under hull insurance. It is also known as boat insurance that covers damage to a boat, its machinery and its equipment. This type of marine insurance is mainly taken by the owner of the ship in order to avoid any loss to the ship in case of any mishaps occurring

Liability insurance:

This protects an individual or business from the risk that they may be used and held legally liable for something such as malpractice, injury, etc. Business owners may purchase liability insurance that covers them if an employee is injured during business operations. Some of the liability insurance are:

Employer’s liability and workers compensation – type of mandatory coverage for employers which protect the business against liabilities arising from injuries of the death of an employee.

Protect liability insurance protects against lawsuits arising from injury or death caused by their products.

Indemnity insurance provides coverage to protect a business against negligence like resulting from mistakes or failure to perform.

 

Freight insurance:

Cargo insurance provides protection against all risks of physical loss or damage to freight form any external causes during shipping, whereby land, sea or air. It also covers options to insure from ‘warehouse to warehouse’. The freight insurance policy will cover the goods from the full value declared. It can be purchased directly from a shipper or from a third party insurer also called as cargo insurance.


COMMON CAUSES OF ACCIDENTS IN LOGISTICS

Some common causes of accidents in warehouses:

Fork lifts

Hazard communication

Mechanical power transmission

Electrical works

Respirator protection

Lockout / tagout

Portable fire extinguisher

 

Some common causes of travelling accidents

Drive fatigue

Debris on highway

Hitting a stopped vehicle from behind

Driving off the side of the road

Speeding

Poor road conditions

Loss of control

Mechanical failure

Shifting cargo

Lane driving

Friday, 5 March 2021

VEHICLE / MOTOR INSURANCE - DETERMINANTS | CLAIM PROCEDURE | RELEVANT TOPICS

DETERMINANTS OF MOTOR INSURANCE

Determinants of Risk Premium for Motor / vehicle insurance are as follows:

Cubic capacity of the engine: The vehicle which  runs on diesel, normal high premium will be changed due to its higher IDV (insured declared value) and also the capacity of the engine influences the premium rate.

Age of vehicle: The year of manufacturing of the vehicles is one of the factors to determine the premium amount. If the age of the vehicle is more, then premium amount will be lesser.

Geographical zone: The geographical location where the person lives and buys an insurance policy is one of the factors on premium rates. It the person resides in metros / big cities, normally the premium will be high and vice versa.

Type of model: High end cars available in the market will also be insured at a higher premium because of the cost involved in maintaining and repairing cars in case of any eventuality.

Insured declared value (IDV): IDV is calculated on the basis of the manufacturer’s listed selling price of the vehicle including price of accessories after deducting the depreciation for every year as per the schedule provided by the Indian Motor Tariff. This IDV is one of the factors considered when calculating premium.

Other factors: Other factors like personal factors, types of coverage, security systems installed also influence the premium amount.

CASHLESS SYSTEM AND CLAIM PROCEDURE

Cashless:

The first step: The accident / breakdown should be reported to the company.

Insurance companies provide cashless repairs across a wide network of garages in order to ensure a smooth ride and free pick-up, towing facilities, wash benefits at selected garages.

Loss assessment survey of vehicle within 4 hours by dedicated Relationship Manager provided the company is informed before 2 pm on a working day. This facility is not provided on Sunday and National holidays.

Six month quality assurance on all repairs provided subject to maximum usage of upto 6000 kms post such repairs.

If the vehicle is serviced in a garage outside the network, the same can be reimbursed from the company.


In case of accident:

Note the number of the other vehicles involved in the accident

Note the name and contact details of witnesses if any.

Inform the insurance company

Representatives from the company will inform you about the next step i.e. documents needed for claim and preferred cashless garage.

File an FIR in the nearest police station in case of accident, theft, and major damages.

After the registration of claim, company’s Customer Service Manager (CSM) will contact you within 24 hours. He will verify the document and after the estimation give spot approval for repair and claim.


Documents

In case of accident claim, following documents are required:

-      Claim form duly signed

-      RC copy of the vehicle

-      Copy of driving license

-      FIR Copy/Police Copy

-      Original repair bill

-      Any other document as required to investigate the claim.


In case of theft claim:

Along with the above documents, RTO transfer papers duly signed along with Form 28, 29, 30 and 35 and final report

 

Documents required for Third Party Claims

-      Claim form duly signed

-      FIR copy / Police copy

-      Copy of driving licence

-      RC copy of the vehicle

Further documents may be required according to the claim.

 

RELEVANT TOPICS

Road side assistance – One of the services provided by certain companies is road side assistance(RSA)

Breakdown support over phone

Minor repairs

Flat tyre

Battery jump start

Arrangement of keys

Towing on breakdown / accident

Arrangement of rental vehicle

Arrangement / supply of fuel

Message relay

Arrangement of accommodation

 Garage cash plan: If the vehicle is under repair after an accident, the insurance company will give a fixed daily allowance to the policy holder for the period that the vehicle will be in the authorized garage for repair, or for number of days as mentioned in the schedule, whichever is less. In case of total loss of the vehicle, a lump sum amount as mentioned in the schedule shall be paid.

Long Term Two Wheeler Insurance (LTTW): The IRDA has introduced a long term policy for two wheelers which means, the policy holders do not need to renew the policy annually. Instead of one year, he / she can opt for three years. This insurance taken for three years is called the LTTW Insurance.

No claim bonus (NCB): It is a benefit accrued to an insured for NIL claims during previous policy period. As per the current norms, it ranges from 20% to 50% on the own Damage Premium based on successive claim free years. If a claim is made during the policy period, then NCB is lost in the subsequent policy period. NCB is given to insured (policy holders) and not to the insured vehicle, which means, if vehicle is transferred to other person, then the insurance policy can be transferred to the new owner but NCB cannot be transferred. However, the original car owner can use NB for his / her newly purchased car.

Tuesday, 2 March 2021

DETERMINANTS OF HOME RISK PREMIUM | CLAIM PROCESS | CATASTROPHES

DETERMINANTS OF HOME RISK PREMIUM

Home risk premium is calculated based on various factors. The factors that majorly influence the determination of premium are:

Location: The location / area of the home is an important factor. Based on the postal code, insurance companies can track claims made in that location and use that information to calculate premium.

Amount and type of coverage: If insurance coverage is purchased for a higher amount, then premium will also be high. The premium amount also depends on the type of coverage taken by the policy holder.

Add on coverage: Different insurance companies provide different add on coverage with building and content. This also has an impact on the premium amount.

Replacement cost: Value of home and content - The premium also depends on the amount required to rebuild the home in the event of a total cost. This includes cost of structure, replacement of contents and covers additional living expenses.

Age of building: The risk associated with old buildings is high. Usually low premiums are charged to the newest buildings and high premium is charged to old building due to the high risk factor. If the old building is in a renovated condition, this will be considered when calculating premium.

Let-out: If the policy holder lets out the home on rent, the premium will be expensive. This is because insurance providers believe that tenants are less likely to look after the property as well as the owners.

Claims history: Claim history of the policy holder is one of the deciding factors of the premium amount. If the policyholder has made a claim in the past, he / she is more likely to claim in the future too and thus the insurance provider increases the premium amount.

Other factors: Other factors like how close or far the house is to the fire station, type of wiring, use of marble / granite stone, valuables, interiors, etc. also play a role in deciding premium amounts.

 

HOME INSURANCE CLAIM PROCESS

Intimation of damage: The first step upon damage due to peril, is to immediately inform the insurance company about the same.

Providing information: The policyholder has to provide all information and policy details

Authentication: After that authentication of the claim message will be communicatied to the applicant by the insurance company.

Appointment of Surveys: A survey is appointed usually in the next 48 hours. The applicant has to submit all the relevant documents to the surveyor

-      Duly completed and signed claim form

-      Photocopy of policy

-      Copy of FIR

-      Final Report of policy

-      Copy of all invoices, price lists and repair estimates.

FSR: The surveyor submits the Final Survey Report (FSR) to the company along with the documents. This happens within 7 days of the incident.

Settlement: The claims department process the claim within 7 days from date of receipt of FSR

 

CALCULATION OF SUM INSURED

The value called ‘reconstruction value’ is considered while calculating the value of the home for insurance. Market value of the home is not taken into consideration when assess the value of the home.

The sum insured will be calculated by multiplying the built-up area of the home with the construction value per square feet. Rate of construction can be revised due to expensive material like marble flooring, garden surrounded by wall, etc.

E.g. Square feet of home is 1000 and construction rate is 2000 per sq ft. the sum insured for the home structure thus is Rs. 2000000 (1000 x 2000).


CATASTROPHES & HOME INSURANCE

Insurance protects homes from natural disasters like earthquake, floods, hurricanes, man-made disasters, etc. Generally, insurance polices exclude these risks and hence the policy holder has to take catastrophe insurance to protect the home from these risks.

Catastrophe insurance is different from other types of insurance as it is difficult to estimate the total potential cost of insured loss in the event of a catastrophe. Reinsurance and retrocession are used along with catastrophe insurance to manage catastrophe risk.

Reinsurance is also known as insurance for insurers or stop-loss insuranceReinsurance is the practice whereby insurers transfer portions of their risk portfolios to other parties by some form of agreement to reduce the likelihood of paying a large obligation resulting from an insurance claim.

Retrocession is the reinsuring of a risk by a reinsurer. Reinsurance companies cede risks under retrocession agreements to other reinsurers, for reasons similar to those that cause primary insurers to purchase reinsuranceRetrocession is the reinsuring of a risk by a reinsurer.


Friday, 26 February 2021

TYPES OF HEALTH INSURANCE

TYPES OF HEALTH INSURANCE COVERAGE

Types of health insurable or the fundamental policies issued by the insurance companies aiming to meet the requirements of general public are:

Medical expenses insurance: Basic hospitalization expenses are reimbursed. It covers payment of expenses related to hospitalization and the services rendered by the doctor and nursing home/hospital. Under these insurance schemes, the amin benefit is that predetermined number of days stay and hospital costs are covered.

Disability income cover: is primarily aimed at providing for the lost income during the disability period or during the treatment period. It tries to replace the income that cannot be earned due to sickness of the assured. The benefit is usually paid as a percentage of the capital sum insured and is paid weekly. The period for such compensation is short.

Long term care insurance: covers expenses related to major surgery or operations due to serious illness or disease. Major medical coverage continues protection after basic medical expenses insurance benefits have exhausted. It may add some benefits for services which is not covered by medical expenses cover. Insurance companies provide long term insurance in two major categories: Nursing home care and Community care. In community care, long term care policy provides benefit payments for the insured individuals who require assistance and stay in their homes.

Some of the popular policies are:

Individual Mediclaim Policy: also called as Hospitalization Benefit Policy. It provides reimbursement of medical expenses incurred towards hospitalization anywhere within India in case of sudden illness or accident and extends to pre-hospitalization of 30 days and post hospitalization of 60 days. This policy is available to any person in the age group of 5 to 80 years. However, children below 5 years but not below the age of 3 months can also be covered as long as one or both of the parents are covered at the same time. reimbursement is not commonly used as a claim settlement system in Mediclaim, and permitted only when the treatment is taken at a hospital or that meets the criteria prescribed in the policy

Group Mediclaim Policy: is available to any corporate association, institution and group of people provided they form the minimum number of persons to be covered under the policy. The policy holder of this type of insurance is the group itself and the premiums are payable by the group.

Overseas Mediclaim Policy: is particularly tailored to protect persons undertaking genuine overseas trips for business or holidays or studies or employment purpose. The benefit of the policy is that premium is payable in Indian currency while claims abroad are payable in foreign currency. Originally introduced in public sector general insurance companies in 1984 the policy was modified in 1991 and revised Videsh Yatra Mitra Policy was introduced in 1998. The final version of the policy covers several aspects of foreign travel that go beyond the ordinary such as loss of passport, personal accident, etc.

Other covers are:

Jan Arogya Bima Policy

Cancer Insurance

Bhavishya Arogya Policy

Hospital cash daily allowance policy, etc

 


TYPES OF HEALTH INSURANCE SCHEMES / PROGRAMS IN INDIA

Government or State based System: The largest system of health care is financed and managed by the central and state government of India. It delivers health care to the public through the diverse network of hospital, government hospitals, primary health centres, community health centers, dispensaires and speciality facilities. These facilities are officially available to the entire population either for free or for nominal charges. The central Government has been the main source of funds for primary health care facilities, whereas the states bear the major responsibility of recurrent costs, especially the costs of running hospitals, CGHS and ESIS as part of government schemes.

Central Government Health Scheme (CGHS): was introduced in 1954 as a contributory health scheme to provide comprehensive medical care to the Central Government employees and their families. Separate dispensaries are maintained for the exclusive use of the central government employees covered by the scheme. The list of beneficiaries includes all categories of current as well as former government employees, members of parliament and so on.

Employees State Insurance Scheme (ESIS): was introduced in 1948. This is an insurance system which provides both the cash and the medical benefits. It is managed by the Employees State Insurance Corporation (ESIS), a wholly government owned enterprise. It was made as a compulsory social security benefit for the workers I the formal sector. Now it includes all such factories which are not using power and employing 20 or more persons. Mines and plantations are excluded under this scheme.

Market Based System

General Insurance Corporation (GIC) Mediclaim Coverages: The GIC holds a major share in the market based health insurance segment. It introduced the Standard Mediclaim health insurance scheme in 1986, and became operational in 1987. This product was later on modified I 1997 to allow for premium differentials for various age groups meant for both individuals and groups. It provides various products like Mediclaim / Hospitalization Benefit Insurance Policy and Bhavishya Arogya Insurance Policy.

LIC Coverage: The Life Insurance Corporation of India introduced a special insurance programme in 1993 which covered medical expenses only from critical diseases. The plan provides health insurance against certain specified health risks and offers a great financial support during an urgent need or demand. Following are the key features of this plan,

-      Substantial Financial Protection in case of hospitalization or surgery

-      Lump sum benefit irrespective of actual medical costs

-      Increased health cover every year

-      No claim bonus

-      One can choose various flexible benefits

-      One can also choose various premium payment options

This health insurance plan provides various benefits like Hospital Cash benefit, day care procedure benefit, major surgical benefit, other surgical benefit, ambulance benefit and premium waiver benefit.

Private Insurance Company: The insurance sector was opened for private participation in 2000. Now, private players have largely existed in group health market. The private sector today provides nearly 80% of outpatient care and about 60% of inpatient care. Some private insurance companies are Star Health Insurance, Apollo Munich Health Insurance, Cigna TTK, Reliance General Insurance Co, etc. These companies provide various health insurance plans to the public.

Employer Provided Insurance System: Employer managed health facilities and the reimbursement of health expenses by employers are the other means of health insurance in India. Generally, the public sector undertakings and big industrial houses have their own hospital and provide medicines etc., across the counter, normally, within the company premises / township. In addition, there are various medical reimbursemnte plans offered by employers for private medical expenses in the private sector like commercial bank, autonomous institutions, etc. Some organizations may have self-insurance system known as medical benefit or medical allowance system. Insurance coverage under this system vary according to the employee’s salary or designation. Overall, the performance of this system in India has been satisfactory.

NGO System: In India, health facilities are also provided by voluntary and charitable or non-governmental organizations (NGOs) like Self-Employed Women’s’ Association (SEWA), Child in Need Institute (CNI) etc. The health care facilities offered by these organizations is a part of their main objectives. Most of the time they create awareness and associate themselves wit the major health insurers.  

IRDA REGULATIONS | HEALTH INSURANCE

 IRDA REGULATIONS

The Government of India in April 1993, appointed the committee of Reforms in Insurance sector with Shri. R. N. Malhotra, who was a former Governor of RBI. As per the committee reocmmendations, the government set up a regulatory body known as ‘Insurance Regulatory Development Authority (IRDA). IRDA was formed by an Act of Indian Parliament known as IRDA Act 1999.

The main aim of IRDA is ‘to protect the interest of the policy holders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto’.

IRDA Health Insurance Regulations 2016

Pilot Products: IRDA’s new regulations governing health insurance now allow health insurance companies to offer pilot product. The products will be offered to policy holders for a maximum period of 5 years, after the expiry of the period, the products will go back to functioning as regular health insurance product.

Data disclosure: In addition to repeated claims, which include claims that couldn’t be paid back due to incomplete documentation / failure on the policy holder’s part to follow up with the insurer. This helps to improve transparency.

Discounts: In order to motivate and increase awareness regarding the importance of health insurance, people who purchase health insurance early in life and have regular renewals will get the benefit of discounts in premium and / or on medical services like diagnostics, consultations etc.

Credit linked health insurance: The benefit provided by these plans is dependent on the condition that upon the death of the inusred, their nominee can utilize the claim amount of the policy to pay back the loan. As per the new regulation, the insurance companies offering credit linked group health insurance products for maximum of five years.

Portability: As per the new regulations, insurance agents will not get any commission if customers choose health insurance portability. They will continue to get commission when a policy holder renews the same insurance policy regularly.

Combi plan: the new regulations allow the health insurance companies to offer combi plans which can be a hybrid of any health and life (like endowment, money-back, ULIP) plan.