The Hindu Business Line : `Disputes show mediclaim plans need overhaul'

MR B.D. Banerjee's shelves are neatly decked with books on medical processes as well as terminology. This former CMD of Oriental Insurance Company and current Ombudsman of the Maharashtra and Goa region has to be well versed with the human anatomy, as well as insurance. The reason: 70 per cent of the disputes stem from the area of health insurance.

The function of the 12 Ombudsmen spread across the country is to redress the problems of the insured. In the Maharashtra and Goa region, the number of complaints registered has increased from 944 in 2002-03 to 1,577 in 2004-05. Of the 1,577 complaints, 568 were resolved by awards while 594 were disposed of through withdrawal or settlement via the arbitration of the ombudsman.

The glaring statistics however, is that 70 per cent of the complaints in general insurance are with respect to the `mediclaim policy'.

According to Mr Banerjee, the most recurring point of contention between the insured and the insurance company is regarding the clause of `pre-existing illnesses'. There is also a one-year exclusion period for ailments such as cataract, hernia and prostrate. This, like `pre-existing illnesses', becomes the ground for disputes. Companies frequently reject claims on the basis of the insured suppressing information regarding his/her illness. Mr Banerjee says, "While the fault could be on either side, this is the most frequently used clause in a dispute."

"Since hypertension and diabetes are common ailments, my suggestion is that there should be a variation in terms of products, to cater to multiple needs. The premiums can also be upgraded according to the coverage," he adds.

Many insurance companies regard health insurance as an unprofitable business with a high claims-to-premium ratio. The total premium for health insurance mobilised in 2004-05 crossed Rs 1,400 crore, which accounts for just a fraction of the amount spent on healthcare.

Another problem is "over-billing" of patients. Mr Banerjee says, "There should be an appropriate rationalisation and benchmarking of the cost structure across the top hospitals. It might be also be a good idea to introduce a cap for certain ailments."

Yet another clause that frequently gets embroiled in a dispute is that relating to the `need for hospitalisation'. Most health insurance policies insist on a minimum of 24-hour period of hospitalisation and the conflict arises when the insurance company questions the `necessity' of hospitalisation.

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