National Insurance policyholders are bitter at their insurers'' insensitivity to their needs reports Venkatachari Jagannathan.

Chennai: The dawn of new fiscal 2006-07 does not augur well for the mediclaim policyholders of National Insurance Company Limited, especially if they happen to be senior citizens.

Not only has this government-owned insurance company jacked up its premium rates by 100 per cent but has even restricted policy benefits by introducing various inner limits for several expense heads subject to the overall sum insured or the policy value. The company has also scrapped the "domiciliary hospitalisation" or the home treatment benefit.

Responds a high official not wanting to be named, "It has been nine years since the premium rates were last revised. During this period there has been an all round increase in healthcare costs. The hospitals have jacked up their room rent, the doctors their fees and the pharma companies the drug prices. The rate revision and cover restrictions are necessitated owing to 130 per cent claims ratio. In other words, the company has been paying out Rs130 for every Rs100 premium collected."

Adding further, "As per our survey 56 per cent of our total claims outgo is towards hospital room rent. Hence we brought in inner limits for various heads." According to him post introduction of the mediclaim policy, it is only the hospitals that have flourished not the insurers or the policyholders.

It is not just National Insurance Company that has hiked its mediclaim premium rates. Last year another government owned non life insurer Oriental Insurance Company Limited increased its rates which was followed by New India Assurance Company Limited. According to M K Garg, chairman cum managing director, United India Insurance Company Limited, the company is awaiting Insurance Regulatory and Development Authority''s (IRDA) for a rate hike. (See: Public sector non-life insurers discriminate against senior citizens)

When queried about the possibility of region/city wise premium as in the case of motor/earthquake insurance he says, "That needs huge data and the insurers do not have the data."

The all new mediclaim
Under the revised scheme, the minimum policy value has been raised to Rs50,000 from Rs15,000 with further increases allowed only in multiples of Rs25,000 against the earlier Rs5,000.

Moreover, the new conditions stipulate that the insurance cover provided to all adults in a joint policy for a family will compulsorily have to be of the same sum insured. Under the old mediclaim scheme the sum insured could vary depending on the needs and health condition of individual family members, provided the sum insured for the primary policyholder was the highest or at least equal to that of the other members. Only in the case of children the company provides the option of a lower insurance cover of up to 50 per cent of the insured valued of the primary policyholder.

Under the new scheme, fresh enrolments are not permitted for those who are over 59 years of age. However, if a person has been taking a mediclaim policy with National Insurance for a continuous period of five years prior to attaining the age of 80, then as a special case, and that too with the approval of regional manager, the policy could be renewed.

For those above 60 years who join afresh for a mediclaim cover, the company has a product called Varishta mediclaim at the same the premium, but with a different set of conditions and compulsory medical tests.

Further, the company has decided to restrict the cumulative bonus (ie the increase in benefit at the time of renewal if the policyholder has not made a claim in the previous year) if a policyholder from any of the other three government-owned insurers changes over to National Insurance, he would immediately forfeit his past cumulative renewal benefits.

Pre acceptance health check-up is mandatory at age 50 years and above for policyholders seeking insurance cover for the first time or where there is a break in insurance or increase in sum insured on renewal. The cost of such checks has to be borne by the proposer whereas some companies like Star Health and Allied Insurance Company Limited bear the cost when the proposal is accepted for insurance.

However, if the insured has been covered under any of the company''s health insurance policies without a break for the last three years, then the pre acceptance medical check up is waived.

While the premium hike is steep for those over 45, National Insurance Company has good news for the youth. It has bifurcated the single age slab of 0-35 under the old scheme into two ie up to 25 and from 26 to 35 years and reduced the premium rates for those in the younger age bracket.

Freedom from TPA terror
The company also gives the choice to the proposer to opt in or opt out of a third party administrator (TPA). TPAs are the company appointed claims processing agents for whom the policyholders have to pay 6 per cent extra of their premium. Earlier the company did not provide this option to its policyholders. However, policyholders do not have the choice of selecting a TPA and are compelled to avail the services of the TPA with whom the insurer has a tie up.

Interestingly, that there is an all round dissatisfaction with the functioning of TPAs. The policyholders who pay 6 per cent extra are the silent sufferers at the hands of TPAs whose agents are often rude and indifferent. In many cases payments are denied for the most peculiar reasons.

For instance one of the National Insurance Company''s TPA denied a Chennai policyholder around Rs7,000 towards cost of medicine under the specious plea that the pharmacist''s bill did not contain the manufacturing batch number and the expiry date of the medicines.

Funnily enough the TPA approved other expenses incurred by the policyholder like the hospital room rent, doctor''s fees in connection with a stomach operation. After a delay of several months and a complaint to the regulator, the claim was finally settled in favour of the policyholder.

Some policyholders have complained of having been issued bouncing cheques by their TPAs.

Hospitals and the doctors, too, have complained of TPAs delaying their payments. As a result some hospitals and doctors do not entertain TPAs or ask the policyholders to pay in advance and claim their reimbursements from the insurance company.

An official of National Insurance Company voices his dissatisfaction with TPAs saying that they have not been effective in reducing the claims cost to insurance companies.