Page 23 - The Insurance Times September 2022

the experience of many customers that in the event of claims but if individually retail segment is considered, it cannot be
they get reimbursement of almost entire hospitalisation very encouraging. Under the circumstances such strategy
expenses with very nominal deductions. Yes, at the time of of limiting the scope of coverage by capping and various
claim, if there is a violation on the part of policyholder for limitations under the policies and particularly adopting PPN
non-disclosure or suppression of any material fact is system for indemnity will turn out to be suicidal in long run.
detected, the insurers have invariably not only deny the It appears that authorities of PSU believe that as because
entire claim but also have cancel the policies. only few cases of grievances are received by them, perhaps
they feel that by resolving such small number of grievances,
Aggressive selling by private insurers, particularly by it still leaves majority of claim settlement cases with limited
standalone insurers is capturing health insurance portfolio settlement, which helps in controlling losses. If this is their
in substantial manner and attractive reward schemes for strategy, they are failing to realise that more and more
the intermediaries are also helping them in growth of this policyholders will become disgruntled.
portfolio. It is not that the PSU Companies are lacking in
offering attractive reward schemes for their intermediaries Such policyholders may not be knowing how to make
and also they have made revisions in their products by grievances or they may not be getting proper guidance for
inclusion of many new and attractive features including fighting their cases but when better options are available,
many meaningful ADD-ON covers with better underwriting they would prefer to shift their policies to private companies.
procedures, however because even after bringing new and In the long run retail health insurance portfolio of PSU
revised product with better underwriting guidelines and companies will drastically be affected and they will be
attractive reward schemes but still keeping indemnity based saddled with more loss-making policies of old age insured
on capping and various sub-limits and particularly settlement persons, who cannot, for obvious reasons, shift their policies,
of claim under PPN system and it's unreasonable use under as PSU authorities have believed in these disastrous
the 'Reasonable and Customary Clause' has not made strategies of loss minimisation.
situation any comfortable for customers of Public Sector
Policyholders, particularly when they get much better and Overall, this is the defeat of objective with which those who
attractive options elsewhere. had designed the mechanism of PPN. They only workout this
system in theory by which agreements with hospitals and
Intermediaries of public sector insurers, in many cases are fixing of PPN rates for various procedures for controlling
so apprehensive that selling of these products sometimes losses were designed but had no clue how it will work and
force them to think that they will have to face the ire of particularly failed to set strict controlling system against
the customer in the event of claim. Particularly, violation of agreement by hospitals and nursing homes.
intermediaries, those who are controlling substantial
business from clients in other departments are afraid that Rather, without realising the consequences, PSU companies
the dissatisfaction in the event of claim under health policies, allowed the TPAs to settle claim on PPN rates, even if there
sold to such client, will affect their other businesses also. is violation and they force the insured to bear extra charges.
Objective of PPN was that the insured will get medical
As has been mentioned earlier that profitability under this services at fixed rates for various procedures as per the
portfolio is a challenging issue for any insurer, it appears agreement but in large number of cases, it has not
clearly that private insurers, including standalone health happened and thus has defeated the very objective of PPN
insurers are adopting strategy of 'expanding premium base system, by which it has also turned out to be a clear case of
of portfolio to the maximum' which, despite offering BREACH OF PRINCIPLE OF INDEMNITY UNDER THE
maximum coverage and despite mitigating claims under full CONTRACT OF INSURANCE.
coverage provision, can absorb the claims and cost of
procuring business and hoping to make profits. As against this Sad part is that hospitals and nursing homes have got scot-
the PSU companies considered that by limiting the coverage free under the very agreement, they have signed with the
by various limitations including Room rent clause as well as insurers. The need of the hour is that authorities at all four
adopting PPN system can curtail losses and make profit. PSU companies should anylise the system thoroughly and
take corrective steps immediately to save the situation.
Health portfolio for PSU companies consists of retail as well Also, regulatory authority IRDA should take stock of the
as from Group and Government sponsored businesses, as situation and issue appropriate directives, so that insuring
such overall results may still be within manageable limits, public does not face injustice anymore.

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