MR Microinsurance_2012_03_29.indd - International Labour ...

444 Insurers and microinsurance
For life insurance, product design is often less of a challenge than getting the
product to the target market, which is covered in section 20.3.
20.2.4 Health insurance
Perhaps India’s greatest contribution to the global microinsurance discussion has
been in the area of health. This section highlights some of the innovations emerging
in the critical function of claims administration, and then introduces the
accomplishments of the mass health insurance schemes that are subsidized by the
Government.
Towards better claims management
India’s active and diverse health microinsurance models developed by mutuals,
MFIs and insurers have been widely reported (for example, Radermacher and
Dror, 2006; MicroInsurance Centre, 2009). Although these efforts have pioneered
affordable health microinsurance in India, they have found it difficult to establish
systems and processes to ensure high service quality in claims management and
supervision of hospitals (see Box 20.5).
The partner-agent model, for example, has achieved scale, but has had problems
with service quality. The insurers, as the partner in the model, often worked
with a mainstream third-party administrator (TPA) to serve their rural health
portfolios. However, the limited rural presence of TPAs and their complex claims
management processes did not respond well to the basic health insurance products
offered by MFIs. The resulting client dissatisfaction led some MFIs to move
away from cashless schemes, away from private insurers or away from the partner-agent
model. For example, Bandhan, an MFI with more than three million
members, reverted to reimbursement-based benefits when it began experiencing
loan defaults due to problems with “cashless” claims processing. Claims management
had become cumbersome and faced numerous challenges, including
incomplete documentation provided by clients, clients’ failure to understand
exclusions, and occasional collusion between client and provider.
More recently, new TPAs have started “rural focused” business operations.
Also, mainstream TPAs encouraged partly by vast state-supported health
schemes have modified systems to serve rural clients better. The capacity of the
TPAs should continue to play an important role in helping manage huge volumes
of high-quality health insurance contracts.