Page 283 - Ebook health insurance IC27

Sashi Publications

So, for a typical general insurance company, the average payout per claim for
Fire, Marine Cargo and Marine Hull are high, their claims frequency usually varies
from medium to high. So typically these risks would be reinsured using quota
share structure. For Motor and Health Insurance, claims payouts are of low to
medium range, however the claims frequency is of high range. So, typically these
risks are reinsured using portfolio reinsurance structure.

Q3. How different segments in health insurance industry reinsure their
business?

Ans. There are different segments in Health Insurance Industry, as follows:
(a) Indemnity Health Insurance - The insurance cover pays for the actual cost of

the health episode. In India, this product, generally called ' Mediclaim' usually
have an average sum insured of Rs. 100,000 and they cover cost of hospitalization
episodes only.
(b) Critical Illness Insurance - This covers not only the cost of the ailment or
disease but also the loss of earnings for the same. The number of ailments/surgeries
and disease covered are small in numbers, but tend to be clinically and financially
intensive, e.g, Cancer, Heart Attack, Stroke, Kidney Failure etc. In other words,
these are conditions which have an impact on the long term earning capacity of the
customer, hence the cover also pays for the loss of earnings due to that disease.
(c) Fixed Benefit Covers - These are similar to indemnity health insurance as they
cover inpatient hospitalizations. However, they pay a fixed amount for each
category of surgery that the patient undergoes.

The fixed benefits and and indemnity health insurance covers usually have similar
patterns of claims incidence. Payouts for fixed benefits are smaller than those of
indemnity health covers. Both these products fall into the high frequency, low

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