Page 285 - Ebook health insurance IC27

Sashi Publications

schemes cover booth inpatient and outpatient coverage) have much lower
average claims payout. So, having the premium subsidized by the Government
and low average claims payout generally do not require any surplus or quota
share reinsurance.

However, at the portfolio level, a stop loss cover for the entire Government
sponsored Health Insurance scheme is useful to the insurer to manage its books.

Q4. Write short notes on :
(a) White Labeling - This refers to a structure where the reinsure designs the entire

insurance product , i.e, pricing, underwriting and claims management process,
and the insurance company acts as a distributor for the product . Usually, such
arrangements are on quota share basis. These are popular in some markets such
as Singapore and Malayasia. They make the market accessible, which would
have not been possible otherwise.
(b) Employers Stop Loss (ESL) - This is a Stop Loss cover sold to very large
companies (specially with > 50,000 employees), where the reinsurer undertakes
to pay for medical insurance claims beyond the stop loss trigger, but may or may
not offer administration services up to the loss limit. These stop loss covers are
also bundledwith third party administrationservices, i.ethe healthinsurancebenefits
for the employees are managed by a TPA.
The point to note is that there is no insurance company involved here. The
reinsurance company sells its risk transfer service to the corporate, and the scheme
is administered by a TPA or equivalent company. Large corporates often find that
their claim ratios are often predictable, so they require risk diversification only at
the portfolio level. In India, the regulations around ESL are unclear, though it is
likely that a corporate can purchase a high deductible cover, which is effectively
reinsurance, but directly from an insurer.

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