Page 32 - Insurance Times January 2023

test checked in NIACL and UIICL, Authorization Letter was Health insurance business is the second largest line of business
not available in the claim files. However, cashless claim of the PSU insurers (the first being motor insurance) having
payments were recommended and settlement done. NIACL gross direct premium of Rs.1,16,551 crore during the five-
replied (January/October 2021) that they will take up with year period from 2016-17 to 2020-21. The performance of
the TPA during review and shall initiate appropriate action, if
PSU insurers in health insurance business is at present not
found deficient and added that it advised TPAs to strictly follow
profitable and they have suffered a revenue loss of
the provisions of SLA and ensure that all authorization letters
Rs.26,364crore during five years ended 31 March 2021. In
are put in the claim file.
health insurance business, TPAs are engaged to have better
expertise, specialization in provider interface, medical
The losses of health insurance business of PSU insurers either
adjudication of claims and technologically driven customer
wiped out/decreased the profits of other lines of business or
services.
increased the overall losses. The losses were on account of
group health insurance policies where premium charged was
The Audit was taken up with objectives of ascertaining
less and claim outgo was more in comparison to retail policies.
whether: (i) the PSU insurers managed the health insurance
The Combined Ratio for group health insurance segment of
portfolio in a sustainable manner and the performance
PSU insurers ranged from 125-165 per cent, which was much
parameters were optimal; (ii) the PSU insurers have laid down
higher than the ceiling of 100 per cent prescribed by the
a system for empanelment of Third Party Administrators
Ministry of Finance.
(TPAs), enrolment of hospitals and monitoring of services
rendered by TPAs; (iii) there existed a suitable system for
The PSU insurers carried out empanelment of TPAs but
processing and settlement of claims in line with IRDAI
allocated business to non-empanelled TPAs also. PSU insurers
regulations, guidelines, rules, circulars, policies, and
incorporated their own TPA (Health Insurance TPA-HITPA)
agreements with various parties and; (iv) risk underwriting
but the allocation of business to HITPA by them was minimal.
PSU insurers took the initiative to have their own network of of health insurance policies was done in a prudent manner
hospitals by forming Preferred Provider Network (PPN) but and appropriate internal control mechanisms were in place
even after 10 years, enrolment of hospitals under PPN to protect revenue.
coverage was inadequate.
To prevent incorrect processing of claims and excess payments
The IT systems lacked appropriate validation checks and beyond the scope of cover, PSU insurers have to enforce
controls which has resulted in lapses such as multiple deterrents through levy and timely recovery of penalties.
settlement of claims, excess payment over and above the PSU insurers need to design and implement a robust fraud
sum insured, excess payments due to ignoring waiting period management policy to prevent fraud and should take
clause for specific diseases, non-application of co-payment appropriate action regarding cancellation of policy and de-
clause, breaching of capping limit for specific diseases, empanelment of hospital in fraudulent cases.
incorrect assessment of admissible claim amount, irregular
payments on implants, non-payment of interest on delayed
References:
settlement etc.
1. https://www.business-standard.com/article/economy-
Implementation of underwriting policy through test check of policy/four-psu-insurers-lacked
188 group insurance policies revealed non-adherence to 2. https://theprobe.in/why-indias-public-sector-general-
outgo calculator and non-loading for adverse claim insurance-companies-are-losing-out
experience resulting in undercharging of premium of
3. h t t p s : / / w w w . l i v e m i n t . c o m / M o n e y /
Rs.1,548.19 crore in 155 policies and excess discount of Rs.9.28
Degw7xq8PHo8xQU7LKIJ3M/best-health-insurance
crore in 3 policies. PSU insurers incorporated their own TPA
4. https://www.financialexpress.com/money/insurance/
(Health Insurance TPA or HITPA) but the allocation of business
cag-report-psu-general-insurers
to HITPA by them was minimal. The four PSU insurers have
5. HEALTH INSURANCE FRAUD DETECTION Co-authored by
preferred provider network (PPN) agreements with only
Jasmine Kaur Gill and Shaun Aghili
2,552 hospitals, much lower than 9,900 in the network of
Star Health Insurance, and 10,000 hospitals of HDFC Ergo 6. IRDAI Annual Report 2020-21
General Insurance Company. 7. Newspapers & Journals

28 January 2023 The Insurance Times