Health Insurance: Conflicting Data on Claims Ratio in IRDAI and IIB Reports
Health insurance claims ratio for 2012-13 is 68% as per IIB report, but the figures in the IRDAI Annual Report are 103% for government insurers and 79% for private players. Which one is to be believed? 
According to the Insurance Regulatory and Development Authority of India (IRDAI) Annual Report (2013-14), health claims incurred ratio of government insurers is 106% while for private players, the ratio is 88% (claims ratio is total claim paid against the total premiums earned). The figures have increased in comparison to the 2012-2013 data, when the ratio was at 103% for government insurers and 79% for private players. This indicates that government insurance companies are still in losses, and the condition is only getting worse. Private insurers have also witnessed a jump of 9% in claims ratio in a period of just one year.
If insurers are not making profits, will it lead to a further increase in premiums? As such, government insurers have hiked health insurance premium by 20%-25% last year. Many private insurers also have increased premiums after the introduction of new health insurance guidelines in 2013. Another question that arises is about the impact of high claims ratio on future claims. As such, there is no relation between claims ratio and future claims payment. 
A claim should be judged on its own merit for its payment. But, high claims ratio does put pressure on insurers to keep themselves in the business. It means your claim can be scrutinised more than what it would have been in case these insurance companies were making profits. Until recently, United India and New India Assurance had an incentive clause in the Third Party Administrator (TPA) agreement to keep claims ratio within a certain range. This was highly detrimental to the interest of the policyholder whose genuine claims could also be partially paid or rejected just so that the TPA was able to get incentives from the insurance company. New health insurance guidelines issued in 2013 stopped TPA incentives to reduce claims ratio. This was an outcome of a public interest litigation (PIL) filed in Bombay High Court by social activist Gaurang Damani. 
The data in IRDAI’s Annual Report 2012-13 is inconsistent with that presented in the Insurance Information Bureau of India (IIB) Health Insurance Data Analysis Report 2012-13. IRDAI report shows incurred claims ratio of 103% for government insurers and 79% for private players, whereas the IIB report shows claims ratio of 68% for 2012-13 based on data submitted online by all insurers. What is the reason behind this discrepancy? 
The IIB report indicates a whopping 30% reduction in claims ratio when compared to the figures a few years back. What do we incur from this – was this a result of higher claims rejections or partial settlements? Does it mean that it was the consumer, who suffered the losses? 
IIB was established by IRDAI as a single platform to meet data requirements of the insurance industry in 2009. IIB is supposed to fulfil the need for a sector-level data repository and analytics, which would empower stakeholders through provision of accurate, timely, reliable insurance data and analysis. In July 2013, IIB was made independent body by IRDAI, the reasons for which are unclear. The change could have been triggered by IRDAI’s plans to set up a credit bureau for the insurance sector. Read: Why is the Insurance Information Bureau now and independent body
Moneylife had first reported about IIB data discrepancy in 2011. Read Health insurance reports from the Insurance Information Bureau—an IRDA body—are riddled with errors- 
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Saumil Mehta

3 years ago

The data would be meaningful if it is split between Group Mediclaim and individual mediclaim.

It is common knowledge that loss making group mediclaim policies sold to many/most large corporates is very heavily discounted despite adverse claims history - this goes n year after year and then insurance companies claim that health insurance is a losing business.

Wonder why IRDA does not see this cross subsidising?All they have to do is ask all companies to give premium and loss data of each of their top 20 clients and audit this data

B. Yerram Raju

3 years ago

Insurance - particularly health insurance is either unavailable at the age when the problems of health are bound to occur however good one's life style may be. The real health insurance would be when the senior citizens beyond 70 and women who beyond 40 become more vulnerable to unexpected imbalances also get health insurance with easy claim option and easy access to health facility to all those who are not covered under either the government or banks' or public sector undertakings' schemes.


Dayananda Kamath k

In Reply to B. Yerram Raju 3 years ago

Mainly because people do not take health insurance when they are young as they think it is a loss proposal. that is why it becomes costly and not available when it is most needed. if you have taken it early you will get renewal upto 100 years also in some cases.


3 years ago

Heath Insurance can be a profitable business if
1.Agents/customers/insurance officials/hospitals and the intermediators are understanding the need/necessity and the conditions of the policy properly and implement honestly without affecting cmpany's interest which prtect the really genuine claims

SBI Q3 net profit jumps 30% to Rs2,910 crore on other income

During the December quarter SBI’s net profit jumped 30% mainly on increased non-interest income, while its gross NPAs declined by 83 basis points to 4.9%


State Bank of India (SBI), the country's largest lender, on Friday reported a 30% jump in its third quarter net profit mainly on 24% increase in its non-interest revenues.
For the quarter to end-December, the state-run lender, said its net profit rose to Rs2,910 crore from Rs2,234 crore, while its operating profit grew 22% to Rs9,294 crore from Rs7,618 crore, same period last year.
In a statement, SBI said, during the third quarter, its gross non-performing asset (GNPA) ratio declined by 83 basis points to 4.9% from 5.73%, a year ago.
During the December quarter, SBI's net interest and non-interest revenues increased 9.2% and 24.3% to Rs13,777 crore and Rs5,238 crore, respectively, compared with same quarter last year.
Deposits in the Bank recorded a growth of 11.9% to Rs15.1 lakh crore during the reporting quarter. At the same time, saving bank deposit increased by 9.3% to Rs5.1 lakh crore from Rs4.66 lakh crore last year.
At 2.57pm Friday, SBI was trading 7.5% higher at Rs305.6 on the BSE, while the 30-share Sensex was up 1% at 29,117.


Mirach Capital preparing for legal action against Sahara

Mirach Capital said its officers have recognized the recent legal efforts by Sahara as further attempts at scrambling to buy an extension when none is needed


Continuing its war of words with Sahara, US-based Mirach Capital has said it is preparing legal action against the group over "breach of contract" and will submit an affidavit in India's Supreme Court to end the "unfounded, highly publicised defamation campaign."
In a statement, Mirach said it is preparing "legal action against Sahara over issues such as breach of contract, defamation of character, amongst other deal related problems."
In addition, the group is also preparing an official affidavit regarding the transaction with Sahara that will be sent to the apex court in India.
The Subrata Roy-led Sahara group has accused Mirach of "cheating and forgery" in the failed $2.05 billion loan arrangement and said it has initiated legal action against the US-based firm.
Mirach's Indian-origin CEO Saransh Sharma said "the allegations are frivolous, and are wasting time as the 20th February deadline approaches. A simple meta-data test and review of the evidence would dispel any notions of forged documents, prior to consuming the court's valuable time with a lawsuit."
"In an effort to end an unfounded, highly publicised defamation campaign, Mirach Capital Group is currently preparing an official Declaration of Facts Affidavit regarding the transaction with the Sahara Group, to be sent along with detailed evidence to the Supreme Court of India.
"Amidst allegations, Mirach's officers have recognized the recent legal efforts by Sahara as further attempts at scrambling to buy an extension when none is needed," the firm said.
Accusing Roy of indulging in "game-playing", Mirach said it is the "latest causality" of the group's stall tactics and its officers affirm their belief they should be given the first opportunity to close the transaction.
"Mirach further applauds the Supreme Court of India for its suggestion to explore a sale of Sahara's properties."
"While Sahara claims to have additional prospects to replace the loan offer, over 28 previous attempts have failed, with Mirach being the latest causality of stall tactics, blame-shifting, and prideful unwillingness."
"Yet and still, Mirach's investors stand ready, willing, and able to make a purchase of the assets should the court intervene," the company said.
Mirach Capital had offered to help in Sahara's efforts to secure release of its jailed chief. The Court had given time till 20th February for the Sahara-Mirach deal, but the deal fell apart after Bank of America came out with a disclosure that it was not involved in the deal as was being claimed.


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