Health insurance reports from the Insurance Information Bureau—an IRDA body—are riddled with errors

The media has used data from the Insurance Information Bureau—set up by IRDA—for coming up with various reports, but there are a number of lacunae in the data from the bureau. The bureau’s reports themselves come with a disclaimer about errors and omissions in the data

The Insurance Information Bureau (IIB) was set up by the Insurance Regulatory and Development Authority (IRDA). However, the annual report on health insurance data for 2009-10 has many discrepancies. The report itself comes with caveats like 'There could be errors and omissions', 'Findings are not complete/conclusive' and 'Tables are indicative and contextual'.

It is unclear why these reports are created. Even the brokers that Moneylife contacted find this data to be of no use. In fact, the media has used these reports for different statistical analyses and for identifying trends in insurance, which obviously make these projections completely useless, to say the least.

Here are a few examples:

- The 2009-10 health insurance data report shows massive claims for age band below 1 year. Male babies under one year have 2,89,672 claims, while female babies under one year have 13,064 claims. There is no justification for such a huge difference. The data for 2008-09 seems to be more rational, male and female babies under one year have 15,586 and 12,843 claims, respectively.

-13% of claims records do not have information on gender.

-5% of claims records do not have age information.

- If these reports are to be believed, senior citizens have lesser claims than the younger segment. But the insurance industry has always asserted that senior citizens lodge numerous claims.

-The health data claim analysis on the 'type of payment' report shows hospital classifications under A, B, C, D, and E categories-without giving the criteria for this classification.

-Mumbai is surprisingly shown to be less expensive than many other cities (Bengaluru, Kolkata, Chennai, etc) for most of the procedures.

-If these reports are to be believed, 'cashless' payment is now a whopping 83% more expensive than 'reimbursement'. The 2008-09 report showed the difference to be more realistic at 35%.

Why are there so many discrepancies in these reports?

Moneylife asked M Ramadoss, chairman and managing director, New India Assurance Co Ltd, who is an IIB member (a representative from the non-life insurance sector) on the reasons for the data discrepancy. He replied, "Actual upload is done by IRDA and they are supposed to cross-check the data for obvious errors. You must ask IRDA about this discrepancy."

We tried to contact the IIB office (housed where IRDA is located). According to a highly placed source from IIB, "The data is received from Third Party Administrators (TPAs) and insurance companies (who don't use TPAs). We don't have control over the data, but we do raise questions from time to time if we find problems with the given information." This is an open admission that IIB has absolutely no check on the data-gathering process.

IIB has a function as a single-point official reference for the entire data requirement for the insurance sector. Obviously, the insurance sector cannot rely on the data from these IIB reports for identifying trends in the insurance industry that can be useful for coming up with accurate premiums. Is this a good reason to have an independent agency to build a common insurance database, rather than relying on IIB?

According to Sudhir Sarnobat, managing director, Medimanage Insurance Broking, "There is a need for an independent agency similar to CIBIL (Credit Information Bureau India Ltd) to create a common insurance database. It need not be from the regulator. CIBIL took 10 years (to be formed); an insurance database can be completed in five years. Insurers may have to put in capital to build it. The database, if correctly done with (proper) technology and (correct) structure can give a lot of detailed information. It can be used to come up with correct premium pricing. If a customer is given a unique ID, then there will be ease of access to information without going to a branch or a division of an insurer."

According to Dr Amarnath Ananthanarayanan, chief executive officer and managing director, Bharti AXA General Insurance, "The evolution of a common database across insurers will be of tremendous benefit for insurers as it will be a risk-assessment tool. It will help to understand & access risk and charge the right premium. If the insurer charges a high premium, then they will lose customers; if they price themselves low, then they will suffer losses; if they get the pricing right, then they will get customers. Currently, insurers sometimes play safe in underwriting with exclusions to stay out of risk. With (such a) common database, there will be less exclusions and lower premium for customers who maintain good health."


Pilots’ strike enters 8th day, AI operations crippled

The pilots, who struck work from midnight last Tuesday, have been demanding pay parity with their colleagues of erstwhile Air India, better working conditions and CBI inquiry into alleged withdrawal of flights from profitable routes, aircraft purchase and other issues

Mumbai: Air India (AI) services remain crippled for the eighth day today due to the ongoing pilots’ strike with the ailing airline operating just 10% of its overall flights including 10 each from Mumbai and Delhi, reports PTI.

The operations of the national carrier remained disrupted as the striking pilots refused to budge from their positions.

About 40 flights were in operation today as the airline cancelled almost 90% of its 320 daily services. Air India is suffering a loss of Rs26 crore per day on account of the stir. So far, seven pilots have been sacked and six suspended.

The Delhi High Court yesterday slapped contempt notices on nine office bearers of de-recognised Indian Commercial Pilots Association (ICPA) for disobeying its order to call off the strike, while deciding to take up the matter on 25th May.

The pilots, who struck work from midnight last Tuesday, have been demanding pay parity with their colleagues of erstwhile Air India, better working conditions and Central Bureau of Investigation (CBI) inquiry into alleged withdrawal of flights from profitable routes, aircraft purchase and other issues.

Of the total 1,200 pilots, over 800 belonging to the erstwhile Indian Airlines have gone on strike. The remaining 400, mostly operating international flights, owe allegiance to the Indian Pilots Guild.


Indian stocks likely to see subdued opening: Wednesday Market Preview

Wall Street closed mixed on Tuesday on fears of lower earnings estimates and tracking the decline in the US markets, the ones in Asia opened lower on Wednesday

The local market is likely to see a lower opening today on lacklustre global cues. The market, which settled sharply lower yesterday on the hawkish monetary policy by the Reserve Bank of India (RBI), is expected to be weighed down as investors react to the details of the policy. On the global front, Wall Street closed mixed on Tuesday on fears of lower earnings estimates. Tracking the decline in the US markets, the ones in Asia opened lower on Wednesday. The SGX Nifty was down 23.50 points at 5,539 against its previous close of 5,652.50.

Yesterday, the Sensex and Nifty fell by 2.44% and 2.39%, taking a hard knock from the larger-than-expected rate hike announced by the Reserve Bank of India (RBI) in its annual monetary policy. This is the biggest drop in the market since 25 February 2011. The Sensex plunged 463 points to 18,535 and the Nifty dropped 136 points to 5,565. It is also for the first time since 23 March 2011 that the indices have closed below the 50-day moving average. The support for the Nifty now lies somewhere around 5,300.

Trading was range-bound and hovered about the neutral line in the mid-morning session when it also touched the day's high at about 10.45am. At the high point, the Sensex was up 27 points at 19,025 and the Nifty gained 10 points to 5,711. But as soon as details of the RBI policy trickled in, the indices slipped into negative terrain.

An across-the-board sell-off resulted in all sectoral gauges dipping into the red. In the afternoon, as two of three European benchmarks opened lower and US stock futures indicated a negative trend, the domestic indices continued to reel under pressure. Besides, increasing key rates, the central bank also underlined the need to adopt strong measures that could curb growth in the short term.

US markets closed mixed overnight on concerns of lower earnings estimates and continuing fall in crude prices. Pfizer plunged 2.8% on lower earnings, Chevron tanked 2.01% and Exxon Mobil declined 1.6%. On the other hand, Alcoa advanced 2.6% on rumours that Rio Tinto will make a bid for the metals company. MasterCard gained 2.6% on higher first quarter profit and Avon Products soared 4.5% on improved earnings due to lower costs.

In economic news, factory orders surged 3% to a seasonally adjusted $463 billion in March, as per data from the Commerce Department. The gain was the fifth in a row and beat analysts’ estimates for a 1.9%.

The Dow added 0.15 points to 12,807.51. The S&P 500 shed 4.60 points (0.34%) to 1,356.62 and the Nasdaq declined 22.46 points (0.78%) to 2,841.62.

Markets in Asia were in the red in early trade on Wednesday on lower oil prices and fresh concerns about the European debt issues. The South Korean index was lower on profit taking after recent gains.

Oil prices declined over 2% on Tuesday as gains in the dollar helped spark a technical sell-off. Brent crude for June delivery fell $2.67 to settle at $122.45 a barrel and US crude for June dropped $2.47 to settle at $111.05 a barrel.

Meanwhile, the Shanghai Composite declined 0.96%, the Hang Seng tanked 1.02%, the Jakarta Composite fell by 0.19%, the KLSE Composite slipped 0.48%, the Straits Times retraced 0.77%, the Seoul Composite tumbled 1.10% and the Taiwan Weighted was down 0.59%. The Nikkei 225 remained closed for trade.

Back home, the RBI on Tuesday said the uncertainty over issuing guidelines for new bank licences is likely to continue for some more time as it is in consultation with the government over the draft norms.

The central bank was hoping that the legislation would go through in the Budget session but it got curtailed. There is some uncertainty about the timeframe as some loose ends are still to be tied-up, RBI governor D Subbarao said.


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