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When it comes to Premium, the Indian market is very competitive compared to the world market and is driven more by prior year premium rather than claims experience. As a result, organizations/employers have a good ride, as they can pass the risk to insurance companies and enjoy a great range of benefits without getting impacted by high claim ratio.  Insurance companies have been facing claim ratios of more than 120%.

Now, since most of the coverage is the indemnity, insurers have tried to control costs by various methods like:

•    Identifying fraud investigation

•    Network restrictions

•    Putting sub-limits

What we need right now is to focus on managing the indemnity care where the insurers can manage the healthcare delivery. With the unavoidable rise in premiums in the future, It is important that the employers explore some alternate strategies like:

•    High deductibles: Deductibles means the cost which the insurance company will not pay. The claimant is supposed to bear that cost and over and above that falls under the insurance coverage

•    Stop-loss arrangements like co-payment, disease-wise caps

•    Introduction of waiting periods for pre-existing diseases, etc. (benefits restriction)

All being said, however, there is a catch to it, if not communicated properly these changes in policy terms are perceived negatively by employees. Consequently, many employers either simply bear the cost of an increased premium year after year or face the risk of diminished employee satisfaction. There is an urgent need to develop long-term measures and metrics which would help in containing costs and ensuring the effective management of health benefits.

Companies should consider a flexible benefits strategy and the kind of structure that would be most appropriate in the context of employee satisfaction, expense control, and revenue growth. That brings us to the next crucial part, claim control. Let’s see what we can do to control and manage that part!

How to exercise claim control

Certain restrictions can be built into policy to avail and optimize the premium to coverage benefit of the policy, restrictions like:

Room Rent Clause: Room rent is generally restricted by linking limits to the percentage of sum insured. Instead, it would be appropriate to customize a room rent clause for considering the private room or sharing room.

Co-payment Clause: Since a certain amount will also be paid out of pockets of employees, they will be aware and will question the hospital for treatment and charges. Percentage of co-payment by an employee shall be nominal. A normal co-payment of 10% of claim can reduce the claims of the company by more than 15% to 20% at the end of the year.

Disease Wise Cap: This will minimize the claim and those who need financial support for serious ailments will get timely support. It is recommended that a limit of the average cost of treatment is applied to the most common ailments like Cataract, Piles, Hernia, Hysterectomy, Gall Bladder, Kidney stones etc.

Maternity Cap: An appropriate segregated limit will save the claims. Normal limit for maternity cover is 50,000 per claim both for a normal and C-section delivery.

Deductibles: It is advisable to apply this clause to those claims where co-payment is not applied. To restrict small value claims and thereby reduce the premium of the next year deductibles, this clause must be appropriately designed. It’s a clause where a flat nominal amount of say Rs 1000 or Rs 2000 is applied as deductibles per claim.

Preferred Hospital Network:  Some insurers have a pre-negotiated tariff with the top hospitals which is less than the average cost of the treatment elsewhere. Overall, claims can be drastically brought down by encouraging members of the policy to opt for the preferred hospitals, which can be encouraged by removing the co-payment or the deductible clause with respect to the treatment in the preferred hospitals. The company can work with the insurer or its broker to arrange the cashless treatments in the preferred hospitals. Increasing the room tariff limit in the preferred hospitals is also one more way of encouraging the employees to opt for preferred hospitals.

Now let’s see what extra covers can be added:

Corporate Buffer: Corporate buffer is very helpful in high-value claims arising out of the accidents or any major illness (including pre-existing). This can be limited to any member of the family or with per incident limit or restricted to only critical illness.

Outpatient treatment can be covered:  There are insurers who offer claims for outpatient treatment as well. However, one must know that the premium for outpatient treatment is as high as 80% of the sum insured. Hence, it is advisable to review the overall benefits offered before opting for outpatient treatment and should opt only in rare cases.

Exclusion of Internal congenital can be waived off: This is a very important aspect to be considered while negotiating the premium. Normally this exclusion is a part of the standard exclusions. So, it is important to specifically exclude while negotiation.

Worldwide coverage: You can opt in for a worldwide coverage if your employees frequently travel to other countries,

Some other clauses to be noted are:

Premium payment in installments: Some insurers allow the option to pay the premium in two or four installments.

Three-year policies: Some insurer allow the possibility of fixing up the premium for three years to avoid negotiations every year.

Portability from group to retail: Some insurers allow the possibility of porting the benefits to a retail policy when the employee resigns. This will enable him not to lose the continuity benefits when he shifts to an individual plan

Apart from that, the times we live in it is better to go for a terrorism cover as well. Ensure that the policy is clear on the hospital admission arising because of any unforeseen terrorist attack! On that note, we hope we were able to provide some insights on this topic. For any more information, feel free to contact Ethika.in

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