After standardisation of basic health insurance products, Insurance Regulatory Development Authority of India (Irdai), is planning the standardisation of health services through rating of hospitals for insurance claims.
According to a senior official at Irdai, the regulator is consulting National Accreditation Board for Hospitals & Healthcare Providers (NABH) for rating the hospitals.
Under the rating mechanism, insurers can charge on the basis of grades based on facilities like number of doctors or equipment in the hospital. For example, charges applicable in a three-star hospital would be different from a five-star hospital.
The regulator is already in discussions with insurance firms for the rating mechanism.
“At present, an insurer doesn’t have any control over the hospital ecosystem. To a large extent, rating will be an indication of the quality of its services. The idea is still at a discussions stage, and details on what parameters the rating will be based upon needs to be seen,” said Mayank Bathwal, CEO, Aditya Birla Health Insurance.
“We had some discussions with the regulator on rating of hospitals. It will be quite beneficial for the sector” said Sanjay Datta, Chief, Underwriting, Claims, Reinsurance & Actuary, ICICI Lombard.
Irdai already has a registry of hospitals and medical day-care centres, in the health insurers and Third Party Administrators (TPAs) network, called Registry of Hospitals in Network of Insurers (ROHINI). The database lists approximately 33,000 unique hospitals and medical day-care centres.
IRDAI has been moving towards standardisation of health insurance products for quite some time to make them more accessible to the common man. In September this year, it came out with guidelines on standardisation of exclusions in health insurance contracts.
On Thursday, it issued guidelines on standard individual health insurance, asking the general and health insurers to offer products that can take care of basic health needs of customers with maximum sum insured of Rs 5 lakh and a minimum of Rs 1 lakh. The standard product should have the basic mandatory covers, no add-ons or optional covers are allowed to be offered along with the standard product and the insurer may determine the price keeping in view the covers proposed to be offered subject to complying with Irdai guidelines.
“The health insurance market will open up a lot after this. There is going to be a lot of awareness that will be created around health insurance with this product,” said Amit Chhabra , Business Head, Health Insurance, Policybazaar.com.
During FY20, general and health insurance companies collected Rs 44,873 crore as health insurance premium, registering a growth of about 21 per cent over the previous year.
“At present there are too many products in the market, which is confusing for the customer. Now with a base product, the penetration of health insurance will increase,” said, Anand Roy, Managing Director, Star Health and Allied Insurance.“We had discussions on the issue of ratings of hospitals with the insurer,” he added.
The health insurance sector has been growing annually at the rate of over 20 per cent. Last year, more than 20 million health policies were issued covering close to 472 million people.
“This will lead to deeper penetration of health insurance, and will also lead to more automation. The rating of hospitals will be a huge positive for the industry,” said Priya Gilbile, chief operating officer, ManipalCigna Health Insurance.
“Ultimately we want the awareness of health insurance to grow. And, the standardised approach helps a lot of people to get convinced about the product. This is a kind of financial inclusion. The main aim is to make people participate in health insurance. When there are too many variances, people get confused. And when health is seemingly not a priority, you want a simpler approach for people to buy it. it is a good start and this will also create a minimum standard for healthcare in this country. And, then insurers will innovate and come up with better products on top of this. So, this has a dual advantage,” said Rakesh Jain, Executive Director and CEO, Reliance General Insurance.