Rampant malpractices are bleeding public sector insurance companies and they need to restructure their activities so as to bring about change in the sector. Claims ratio is as high as 150 percent and there are too many m

CS Professional · Insurance - Law and Practice · PYQS · December 2020
Rampant malpractices are bleeding public sector insurance companies and they need to restructure their activities so as to bring about change in the sector. Claims ratio is as high as 150 percent and there are too many malpractices in the health sector. The structural inefficiencies are hampering the development of the sector. Insurers need to develop a framework for collecting statistics and databases, develop comprehensive products which are transparent and user-friendly. Health insurance should be made mandatory for all jobs and employees should be encouraged to go in for CGHS schemes as well as policies provided by insurance companies. The health care sector is estimated at ₹80,000 crore and is expected to grow by ₹10,000 crore every year. Expenditure on health insurance is expected to touch six percent of household income up from the current two percent. Government spending accounts for less than 25 percent of expenditure on health while in developed countries the figure is in the range of 40 to 60 percent. Although the insurable population is placed at two million the potential market is placed at 315 million people. Insurance companies are keen to resolve the stalemate as they do not make money from health insurance. Another key area where business is impacted is in the area of mergers and acquisitions. A survey on health insurance was carried out and nearly 37 percent of respondents opined that corruption could impact the valuation of a company thereby denying shareholders of a fair price. Moreover, this could also make it difficult for them to find a suitable business partner, thereby seriously impacting the growth prospects of the business. What are the procedures followed by the insurance companies in close proximate claims cases?

Answer & Explanation:

Close Proximity claims: Generally, a feeling arises that whenever a claim occurs immediately after the assumption of risk, that there is something wrong with the claim. It need not necessarily be a false claim if it occurs immediately after a policy is issued instead of occurring after a gap of 5/10 days and is deemed a pure chance event. However, in the present scenario, there should be a standard procedure as described below to conduct an investigation and clear the doubt. Unfortunately, the insurer is in such a vulnerable position that if he settles such a claim, it may become a matter of vigilance. If he delays, he is open for criticism in the consumer forums and it may turn out to be a grievance as far as the insured is concerned. When a claim arises within 5 days from the date of inception of the cover, the following procedure should be adopted as a matter of routine. The operational office has to appoint an investigator immediately who has to comply with the following guidelines: He has to visit the accident spot immediately and collect the details of persons/vehicles involved. Contact police/transport authorities for obtaining the material evidence as to the nature, cause, exact date and time of the accident. To collect prefix and suffix cover notes issued, if any. To obtain the copy of the proposal submitted, and also to confirm as to whether the subject matter was inspected before the inception of the cover and if so by whom. To get confirmation as to whether any message has been given to operating offices by the development officers/agent immediately after the assumption of the cover.

Topics: Health Insurance

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