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Summer internship program final report

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RagneeChauhan

Aditya Birla Group is one of India's largest conglomerates operating in multiple business sectors including metals, cement, telecom, financial services, textiles, and more. It has a presence in over 34 countries. One of its key financial services subsidiaries is Aditya Birla Capital Limited, which is the holding company for its insurance, lending, asset management, and other financial businesses. This report analyzes Aditya Birla Capital's products and companies, including its health insurance subsidiary Aditya Birla Health Insurance. It discusses the evolution of India's health insurance industry and regulatory framework, as well as the importance of health insurance and factors influencing consumer behavior towards health insurance policies.

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1 SUMMER INTERNSHIP PROGRAM Project Report on Is taxation is a selling tool for health insurance? At Submitted in the Partial Fulfillment of the study of “Masters of Business Administration” Guidance/Accepted by- Mr. Ravi Mishra SUBMITTED BY- Ragnee Chauhan ERP ID- 0181MBA069 DATE- 21/08/2019-31/10/2019
2 CERTIFICATE OF ORIGINALITY (To be filled by the student in his/her handwriting) I _____________________, Enrolment No. ____________ of 2018-2020. I am a full-time bona-fide student of ____________________________________. I hereby certify that this Study report work carried out by me at _________________________________submitted as the per the requirements of the program is an original work of mine under the guidance of the industry guide ______________________ & internal guide (Faculty) _________________________and is not based on or reproduced from any existing work of any other person or any earlier work undertaken at any other time or for any other purpose, and has not been submitted anywhere else at any time. (Student’s Signature) Date: (Internal Guide’s Signature) Date:
3 ACKNOWLEDGEMENT I hereby acknowledge my sincere gratitude to the Doon Business School for giving this opportunity to undergo MBA BASE course to undertake this project work. I express my heartfelt thanks to Mr. Ravi Mishra for whose guidance made this project an enlightening educational experience. I would like to thank _____________________ for giving me the opportunity to associate with such an esteemed organization and gain practical exposure. I am very much obliged and indebted to Prof. Chhavi Prakash Mahto for his approval and guidance during internship and valuable suggestions to take up the project.
4 Contents EXECUTIVE SUMMARY.....................................................................7 OBJECTIVE OF THE STUDY.................................................................................................................8 ADITYA BIRLA GROUP......................................................................9 Values.....................................................................................................................................................10 INTRODUCTION.................................................................................................................................11 GLOBAL PRESENCE .........................................................................................................................11 PRINCIPAL COMPETITORS ...........................................................................................................12 GROUP PROFILE ...............................................................................................................................12 BUSINESS SECTORS..........................................................................................................................13 MANAGEMENT HIERARCHY.........................................................................................................15 BEYOND BUSINESS...........................................................................................................................15 Aditya Birla Capital Limited (ABCL) ................................................16 PRODUCTS...............................................................................................................................................17 Companies in Aditya Birla Capital .........................................................................................................17 PRODUCTS...........................................................................................................................................19 Aditya Birla Health Insurance.............................................................20 KEY ADVANTAGES AND FEATURES...............................................................................................21 TYPES OF PRODUCTS ..........................................................................................................................22 Why Aditya Birla Health Insurance Is Different From Others?..........................................................24 COMPETITORS.......................................................................................................................................25 EVOLUTION OF HEALTH INSURANCE.......................................27 INSURANCE INDUSTRY PROFILE ................................................28 MARKET SIZE ........................................................................................................................................28 INVESTMENTS AND RECENT DEVELOPMENTS..........................................................................29 GOVERNMENT INITIATIVES.............................................................................................................29 HEALTH INSURANCE SCENARIO IN INDIA ..................................................................................30 VARIOUS HEALTH INSURANCE PRODUCTS AVAILABLE IN INDIA- ....................................31
5 Types of Insurance ................................................................................35 Life Insurance............................................................................................................................................35 Types of General Insurance available.....................................................................................................35 TAX LAWS AFFECTING INSURANCE INDUSTRY....................37 Service Tax ................................................................................................................................................37 Tax benefit for tax paid on Insurance premium ....................................................................................37 GST paid on health insurance-................................................................................................................38 Tax Benefits under Section 80C- .............................................................................................................39 Tax Benefits under Section 80CCC-........................................................................................................40 Tax Benefits under Section 80D- .............................................................................................................40 Investments in Tax Saving FDs- ..........................................................................................................44 Investments in PPF (Public Provident Fund)- ...................................................................................44 Investments in EPF (Employee Provident Fund)- .............................................................................45 Investments in NPS (National Pension System)-................................................................................45 Investments in Sukanya Samriddhi Yojana-..........................................................................................46 IMPORTANCE OF HEALTH INSURANCE .......................................................................................47 REGULATORY FRAMEWORK .......................................................48 IRDAI .....................................................................................................48 THIRED PARTY ADMINISTRATION.................................................................................................49 ROLE OF TPA IN HEALTH INSURANCE .....................................................................................49 THE SERVICES PROVIDED BY TPA ARE AS FOLLOWS: .......................................................50 THE SPECIALIZED FUNCTIONS OF THE TPA INCLUDE:......................................................51 CLAIM MANAGEMENT....................................................................52 RESEARCH METHODOLOGY ........................................................53 SAMPLE SIZE..........................................................................................................................................54 STATISTICAL TOOL.............................................................................................................................54 RESEARCH GAPS/LIMITATIONS......................................................................................................54
6 DATA ANALYSIS AND FINDINGS..................................................55 LITERATURE REVIEW.....................................................................65 FINDINGS..............................................................................................66 SUGGESTION/RECOMMENDATION ............................................66 CONCLUSION......................................................................................67 BIBILIOGRAPHY................................................................................68
7 EXECUTIVE SUMMARY This Research work is totally focusing on the consumer behavior towards Health Insurance Policies, and as well as consumer‘s awareness, Preference and consumption patterns, also opinion about the determinants of image of a Health Insurance. This project has been made on the research on “Is taxation is a selling tool for Health Insurance”. Purpose of this project is to identify the characteristics of different variables like tax benefit, health issues and financial planning which are mostly responsible for taking health insurance policy by the people, also the main aim of research work is to find out buying behavior of the people before purchase insurance policy and to find out what are the factor behind it. Health Insurance is Insurance that pays for medical expenses. It is sometimes used more broadly to include Insurance covering disability or long-term nursing or custodial care needs. It may be provided through a government’s Sponsored social Insurance program, or from private Insurance companies. It may be purchased on a group basis (e.g., by a firm to cover its employees) or purchased by individual consumers. In each case, the covered groups or individuals pay premiums or taxes to help protect themselves from high or unexpected healthcare expenses. Similar benefits paying for medical expenses may also be provided through social welfare programs funded by the government. By estimating the overall risk of Healthcare expenses, a routine finance structure (such as a monthly premium or annual tax) can be developed, ensuring that money is available to pay for the healthcare benefits specified in the insurance agreement. The benefit is administered by a central organization such as a government agency, private business, or not for profit entity. The most important thing which is learned from this project is how to conduct a research on a particular problem by using different research methodology techniques. The health insurance market covers very smaller part of the total population (about 10%) in India. Presently, schemes like Voluntary health insurance schemes or Private for-profit schemes; Employer-based schemes; Insurance offered by NGOs / community-based health insurance, and Mandatory health insurance schemes or government run schemes (ESIS, CGHS) are found in India. The Health Insurance market in India is unique and has developed a strong growth potential in the recent years with the entry of many foreign players in the market. Gross premiums in India reached Rs 5.53 trillion (US$ 94.48 billion) in FY18, with Rs 4.58 trillion (US$ 71.1 billion) from life insurance and Rs 1.51 trillion (US$ 23.38 billion) from non-life insurance While the penetration of the Health Insurance market is still quite small, it is one of the fastest growing Industries in India. This Research analyzes this growing industry in its research report Health Insurance Industry in India. The report analyzes the whole industry in terms of growth rate, market segments, and the major players in the industry.
8 The growth will be supported by stand-alone Health Insurance companies and new players entering healthcare market with improved healthcare infrastructure across the country motivating a larger section of population for better healthcare services through various healthcare insurance policies. Currently State-owned health insurance companies constitute about 70% of the market and the rest is occupied by private companies. However private companies are growing fast and aims to occupy a larger hare in the Health Insurance market in near future. This report has attempted to discuss the vital scenario in healthcare and Health Insurance market in India. A brief about global insurance industry in 2019, Indian Insurance industry and Health Insurance industry overview are discussed. Growth drivers and issues of the industry are also covered. Major public and private players are covered in terms of their performance, products and out-look. Future outlook of the industry is also discussed. The report will be useful for insurance companies (both Indian and global), other intermediaries associated with the industry, industry analysts, companies aspiring to be TPAs and students in the field of Insurance. Since the liberalization in 2000, the Insurance industry in India has been growing considerably driven by multiple favorable economic and demographic factors. The Indian health insurance market grew at a CAGR of 24.00%. And expected to grow US$ 372 billion by 2022 register the fastest growth among all the Insurance sectors. Factors such as robust economic growth, changing demographic patterns such as the rise in double income no kids‘ families, increased FDI limits and the expansion of distribution channels are expected to contribute to the market growth in the forecast period. Of the overall healthcare expenditure in India, only 26% comes from the local, state and central government authorities, while nearly 71% is paid by the patient‘s family. Insurance accounts for just 3% of overall healthcare expenditure in India, indicating a substantial opportunity for the Health Insurance sector. The Health Insurance market is dominated by public-sector companies, while the private sector has made gradual progress in the sector. OBJECTIVE OF THE STUDY • To know the preference of individual regarding health insurance. • To evaluate consumption patterns of health insurance. • To assess the effectiveness of company services
9 ADITYA BIRLA GROUP Vision: To be a premium global conglomerate with a clear focus on each business. Mission: To deliver superior value to our customers, shareholders, employees and society at large. Founder: Seth Shiv Narayan Birla Founded: 1857 Headquarters: Mumbai Revenue: 4,830 crores USD (2019) Number of employees: 1,20,000 (2015)
10 Values Integrity-Acting and taking decisions in a manner that is fair and honest. Following the highest standards of professionalism and being recognized for doing so. Integrity for us means not only financial and intellectual integrity, but encompasses all other forms as are generally understood. Commitment-On the foundation of integrity, doing all that is needed to deliver value to all stakeholders. In the process, being accountable for our own actions and decisions, those of our team and those on the part of the organization for which we are responsible. Passion-An energetic, intuitive zeal that arises from emotional engagement with the organization that makes work joyful and inspires each one to give his or her best. A voluntary, spontaneous and relentless pursuit of goals and objectives with the highest level of energy and enthusiasm. Seamlessness-Thinking and working together across functional groups, hierarchies, businesses and geographies. Leveraging diverse competencies and perspectives to garner the benefits of synergy while promoting organizational unity through sharing and collaborative efforts. Speed-Responding to internal and external customers with a sense of urgency. Continuously striving to finish before deadlines and choosing the best rhythm to optimize organizational efficiencies.
11 INTRODUCTION Aditya Birla Group is one of India's largest conglomerates and also claims to be the most international of the country's major corporations. The company acts as a holding company for more than 72 manufacturing and services subsidiaries throughout India, and in Thailand, Indonesia, the Philippines, Malaysia, Australia, China, Egypt, and Canada. Aditya Birla's major subsidiaries include Grasim, the world's leading producer of viscose staple fiber, and a manufacturer of rayon grade pulp, cement, sponge iron, textiles, and chemicals; Hindalco, a leading producer of aluminum and copper; UltraTech Cement, which produces portland cement and related products; Aditya Birla Nuvo, which manufactures clothing, textiles, and carbon black and is India's second largest producer of viscose filament yarn; Indo Gulf, a fertilizer producer; Birla NGK Insulators (a joint venture with NGK of Japan), which is the world's leading producer of insulators; and Idea Cellular Ltd., a mobile service provider jointly owned with fellow Indian conglomerate Tata Industries. The company also produces software and provides IT services, and operates a number of financial products subsidiaries. The company's Birla Sun Life Insurance Co. is the second largest private sector insurance company in India, and its Birla Sun Life Asset Management Co. is the country's fourth largest assets manager. In other areas, the company claims to be the world's eighth largest producer of cement and the world's fourth largest producer of carbon black. These operations combine to generate revenues of nearly $7.6 billion per year. The company is led by Kumar Mangalam Birla, son of Aditya Birla. GLOBAL PRESENCE Australia | Bahrain | Bangladesh | Bolivia | Brazil | Canada | China | Egypt | Germany | Hungary | India | Indonesia Italy |. Ivory Coast | Kenya | Mozambique | Myanmar | Paraguay | Philippines | Russia | Singapore | South Korea Spain | Sri Lanka | Sweden | Switzerland | Tanzania | Thailand | Turkey | UAE | UK | USA | Vietnam | Zambia
12 PRINCIPAL COMPETITORS RPG Enterprises; Tata Sons Ltd.; Murugappa Group; Jaypee Group; Amalgamations Ltd.; Dabur India Ltd.; Balmer Lawrie and Company Ltd.; Escorts Ltd.; HMT Ltd.; Greaves Cotton Ltd.; Bombay Burmah Trading Corporation. GROUP PROFILE A US $48.3 billion corporation Founded in 1857: Seth Shiv Narayan Birla commences cotton trading operations at Pilani, Rajasthan, sets foundation of the Birla Group of Companies Is in the League of Fortune 500 An extraordinary force of over 120,000 employees, belonging to 42 nationalities Over 50 per cent of its revenues flow from its overseas operations spanning 34 countries Named the AON best employer in India for 2018 - the third time over the last 7 years The Group topped the Nielsen's Corporate Image Monitor 2014-15 and emerged as the 'No.1 Corporate', the 'Best in Class', for the third consecutive year Number of companies: 38
13 Companies listed on BSE and NSE: BUSINESS SECTORS Metals- • Aluminum ( Hindalco, Novelis) • COPPER (BIRLA COPPER) Cement- • Ultratech cement Telecom- • Vodafone Idea Limited Financial services- • Aditya Birla Capital Ltd. Textiles- • Grasim Fashion and Retail- • Aditya Birla Fashion and Retail Ltd. Carbon Black • Birla Carbon Chemicals • Aditya Birla Chemicals Insulators • Aditya Birla Insulators Agri-Business • Indo Gulf Mining • Aditya Birla Natural Resources/ Essel Mining
14 Globally, the Aditya Birla Group is 1st in aluminum rolling 1st in viscose staple fibre 1st in carbon black 2nd in telecom 3rd in cement (excluding China) 4th largest producer of insulators In India, the Group leads in several sectors No. 1 fashion (branded apparel) and lifestyle player No. 1 mobile telephony company The 2nd largest player in viscose filament yarn The largest producer in the chlor-alkali sector No. 1 player in grey cement, white cement and concrete A leading player in life insurance and asset management
15 MANAGEMENT HIERARCHY BEYOND BUSINESS Reaches out annually to 7.5 million people through the Aditya Birla Centre for Community Initiatives and Rural Development Works in 5,000 villages globally Runs 56 schools which provide quality education to 46,500 children. Of these 18,000 students belong to the underprivileged segment Merit scholarships are given to 24,000 children from the interiors Its 20 hospitals tend to more than a million villagers Ongoing education, healthcare and sustainable livelihood projects in Philippines, Thailand, Indonesia, Egypt, Korea and Brazil lift thousands of people out of poverty Providing mid-day meals to 74,000 children through Akshaya Patra
16 Aditya Birla Capital Limited (ABCL) Aditya Birla Capital Limited (ABCL) is the holding company of all the financial services businesses of the Aditya Birla Group. Through its subsidiaries and joint ventures, it manages aggregate assets worth more than Rs3000 billion and has a lending book of Rs600 billion (including housing) as of December 31, 2018. ABCL is among the top five private diversified NBFCs in India. It is also one of the largest private life insurance companies, asset management companies and general insurance brokers in the country. The company has undertaken various internal and external sustainability efforts to be a sustainability leader in its sector. Aditya Birla Capital Limited is the holding company of all the following financial services businesses: Aditya Birla Finance Limited Aditya Birla Health Insurance Limited Aditya Birla Housing Finance Limited Aditya Birla Insurance Brokers Limited Aditya Birla Money Aditya Birla My universe Limited Aditya Birla PE Advisors Limited Aditya Birla Sun Life Asset Management Company Aditya Birla Sun Life Insurance Aditya Birla Sun Life Mutual Fund Aditya Birla Sun Life Pension Management Limited Aditya Birla Asset Reconstruction Company Limited
17 PRODUCTS • Insurance • Wealth management • Financing • Advising Companies in Aditya Birla Capital Aditya Birla Finance Limited ABFL offers customised solutions in areas of personal and business loans , corporate finance ,mortgages , capital market- based lending , project loans, structured finance ,wealth management and digital lending, debit market and syndication Aditya Birla Health Insurance Health insurance is a type of insurance coverage that pays for medical and surgical expenses incurred by the insured. Health insurance can return the money insured for expenses incurred from illness or injury, or pay the care provider directly. Aditya Birla Housing Finance Limited “The purpose of a housing finance system is to provide the funds which home-buyers need to purchase their homes that is call housing finance Aditya Birla Insurance Brokers Limited Aditya Birla Insurance Brokers Limited is a leading composite general insurance intermediary, licensed by the Insurance Regulatory and Development Authority of India (IRDA). The company specialises in providing general insurance broking and risk management solutions for corporates and individuals alike. Aditya Birla Money Aditya Birla money provide a range of other products from Aditya Birla money mart limited like company deposits ,mutual funds , insurance, structured products, alternate investment and has a premier wealth management . Aditya Birla My Universe Limited Aditya Birla is an online money management platform, it offering customers an opportunity to manage their financial status Aditya Birla PE Advisors Limited Aditya Birla PE advisor is a wholly owned subsidiary of ABCL. It provides financial advisory and management services with focus on managing venture capital funds and alternate investment fund.
18 Aditya Birla Sun Life Asset Management Company Aditya Birla Sun Life Insurance Life insurance is a form of insurance in which a person makes regular payments to an insurance company, in return for a sum of money to be paid to them after a period of time, or to their family if they die Aditya Birla Sun Life Mutual Fund A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. These investors may be retail or institutional in nature. Aditya Birla Sun Life Pension Management Limited A pension is a type of retirement plan that provides monthly income in retirement. Not all employers offer pensions. Government organizations usually offer a pension, and some large companies offer them and Aditya Birla company one of them. Aditya Birla Asset Reconstruction Company Limited Aditya Birla Asset Reconstruction Company is a specialized Financial Institution That Buys the NPAs or bad assets from banks and financial institutions so that the latter can be clean up their balance sheets. Or in other words. ARCs are in the business of buying bad loans from banks. Aditya Birla Motors Insurance Aditya Birla motor insurance motor insurance is an insurance for cars, trucks, motorcycle and other road vehicles .Its primary use is to provide financial protection against physical damage Aditya Birla Travel Insurance Travel insurance is insurance that is intended to cover medical expenses, trip cancellation, lost luggage, flight accident and other losses incurred while traveling Aditya Birla Life Insurance Aditya Birla life insurance is a contract between an insurance policy hold and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money in exchange for a premium, upon the death of an insured person. Depending on the contract, other events such as terminal illness or critical illness can also trigger payment. The policy holder typically pays a premium, either regularly or as one lump sum. Other expenses such as funeral expenses, can also be included in the benefits. Aditya Birla Wealth Management Wealth management is a high-level professional service that combines financial and investment advice, accounting and tax services, retirement planning and legal or estate planning for one set.
19 Aditya Birla Wellness Good health is a state of physical, psychological, social and spiritual wellbeing. Aditya Birla memorial hospital aim is to create awareness, educate patients and guide them to a healthy life style. PRODUCTS INSURANCE WEALTH MANAGEMENT FINANCING ADVISING
20 Aditya Birla Health Insurance Walk with us towards health, we are with you every step of the way. Purpose : Empower and motivate the families to prioritize their health and live heathy and disease-free lives. Aditya Birla Health Insurance Co. Limited(ABHICL) ,subsidiary of Aditya Birla Capital Ltd (ABCL), is a joint venture between Aditya Birla Group and MMI Holdings of South Africa. ABHICL was incorporated in 2015 wherein Aditya Birla Capital Limited(ABCL) and MMI Strategic Investments (Pty) Ltd. hold 51% and 49% shares respectively. ABHICL commenced its operations in October 2016 and is engaged in the business of health insurance. ABHICL’s current product portfolio includes unique offerings including chronic care and incentivized wellness. ABHICL recorded a gross premium income of Rs. 3,155 Mn in nine months of FY 2018-19 and has covered more than 1.3Mn lives on date. ABHICL has nation-wide distribution presence in over 650 cities through branches and partner offices, 9 bank assurance partners and over 17,100+ direct selling agents. ABHICL serves as an enabler and influencer of health and healthcare choices that customers make, in addition to being a player of healthcare expenses. Thus, ABHICL would act like a much–needed catalyst to grow the prevalent health insurance landscape in India through product innovations and a wider choice of consumer relevant products. ABHICL has invested considerable time and effort to understand existing correlations between good health and individual health choices. ABHICL’s product philosophy aims to combine understanding of this science with an assessment of unaddressed needs of large customer segments, which presently remain unfulfilled.Aditya Birla Capital Limited(ABCL), is the financial services platform of the Aditya Birla Group. With a strong presence across the life insurance, asset management, private equity, corporate lending, structured finance, project finance, general insurance broking, wealth management, equity, currency and commodity broking, online personal finance management, housing finance, pension fund management and health insurance business, ABCL is committed to serving the end-to-end financial services needs of its retail and corporate customers. Anchored
21 by more than 17,000 employees, ABCL has a nationwide reach and more than 2,00,000 agents/channel partners. • Aditya Birla Health Insurance Company was established to bring focus on health as much as insurance. The current healthcare facility in the country needs significant improvement, and this initiative is a moving a step closer towards achieving the goal for a better and healthier India. • Mayank Bathwal, earlier the Deputy CEO of Birla Sun Life Insurance was made the Chief Executive Officer of ABHICL. He has been with the Aditya Birla Group for more than 20 years and has been trusted with the responsibility of taking ABHICL towards success. • ABHICL is entering the Indian health market with a business differentiated model when evaluated with that of any health insurance player existing. They are presenting health insurance to a wider customer set by creating awareness and changing existing consumer approach towards health insurance. KEY ADVANTAGES AND FEATURES Below is a list of the key advantages that ABHICL has over its competitors- Exclusive Focus on Health Insurance: Insurance Regulatory and Development Authority, which regulates, promotes and ensures the growth of the insurance industry in India pointed out that there, are only five private sector general insurers that exclusively deal with health insurance. ABHICL is the first health insurance company to be issued with a certificate of registration. Customization of the plan: The certificate of registration is a mandatory requirement for the amendment of the Insurance Act, 1938 to classify a company specifically for health insurance. When compared to these companies Aditya Birla group has much more customization of the plan and is turning its focus on the retail sector.
22 TYPES OF PRODUCTS Activ Health Essential This plan is aimed at helping customers stay healthy. It provides health rewards for following a healthy lifestyle. Benefits It also has many another optional cover apart from the following: · Inpatient Hospitalization · Pre-hospitalization Medical Expenses · Post-hospitalization Medical Expenses · Day-care Treatment · Domiciliary Hospitalization · Road Ambulance Cover · Benefit for Hospital Room Choice · Second E-Opinion on Critical Illness · Cumulative Bonus · Health Check-up program · Chronic Management Program · Health Returns™ · Wellness Coach · OPD Expenses · Deductible · Maternity, Newborn and Vaccination Expenses · Hospital Cash Benefit Activ Health Enhanced · This plan is a value for money health cover. Benefits- In the Activ enhanced plan apart from the following benefits it also provides a reload of the sum insured.· Inpatient Hospitalization · Pre-hospitalization Medical Expenses · Post-hospitalization Medical Expenses · Day-care Treatment · Domiciliary Hospitalization · Road Ambulance Cover · Organ Donor Expenses · Reload of Sum Insured · Cumulative Bonus · Health Check-up program
23 · Recovery Benefit · Benefit for Hospital Room Choice · Second E-Opinion on Critical Illness · Worldwide Emergency Assistance Services · Chronic Management Program · Health Returns™ · Wellness Coach · OPD Expenses · Deductible · Maternity, Newborn and Vaccination Expenses · Hospital Cash Benefit · Also in this plan, one get zone based premium which ensures that they get the best possible cover. Group Activ Health · This is a highly customizable group premium plan which allows the covers to be tailored to the insured’s needs as it has many optional covers under this plan. ABHICL has ensured that this plan has very simple documentation with benefits of cashless settlements. Group Activ Secure Under this plan for the following cases the company pays a lump sum amount to cover damages to the client or their family: • Accidents • Critical Illness • Hospitalization This plan is a fixed health plan and covers only the above situations. The amount given is based on the premium and other customizations. ABHICL is also planning to introduce a chronic care management program to cater to the unmet needs of a growing Indian population of those suffering from five chronic lifestyle conditions. Reasons to Choose Aditya Birla Health Insurance • Additional benefits such as Wellness Coaching, Health Returns, etc. • Rewards for maintaining a healthy lifestyle • Floater benefit in most insurance policies • Multiple plans (critical illness, hospital cash, personal accident, etc.) under a single brand • Plenty of add-on covers to enhance overall protection
24 Why Aditya Birla Health Insurance Is Different From Others? ADITYA BIRLA HEALTH INSURANCE CO. LIMITED OTHER INSURANCE COMPANIES HOSPITRALIZATION BENEFITS HOSPITALIZATION BENEFITS CASHLESS CLAIMS CASHLESS CLAIMS HEALTH RETURNS ---- CHRONIC MANAGEMENT PROGRAM ---- HOSPITALIZATION BENEFITS: Aditya birla health insurance plans not only to offer free and post hospitalization expenses coverage but also as per your plan you can also avail cover for extra treatments like ICU charges, medical charges, and other patients treatments. CASHLESS CLAIM Cashless is a mechanism wherein if a patient is treated within a hospital which is on the panel of the insurance company, then an insurance company settles either the part of the claim or the entire claim directly with the hospital. This requires a patient not to pay any amount, at the hospital, for the treatment. HEALTH RETURNS At Aditya Birla health insurance, we take special efforts to help our customers maintain good health. Hence we offer policy rewards in the form of health returns to our customers as a motivation to stay fit. Our health returns are monetary rewards that can be accumulated over time and redeemed as per your needs. CHRONIC MANAGEMENT PROGRAM If you or your family member suffer from chronic condition such as ASTHAMA, DIABETES, BLOOD PRESSURE OR CHOLESTEROL, you would know the challenge involved with such chronic disease management. These conditions can be managed well through systematic chronic disease management.To help you manage your chronic condition and to help you live healthy, our team of experts have designed a special chronic care management program called chronic management program. It comes inbuilt with your active health platinum cover and includes coverage for consultation with medical practitioners, diagnostic tests, and medicines.
25 COMPETITORS Apollo Munich Health Insurance Company Limited- Apollo Munich Health Insurance Company had an outstanding record of Incurred Claim Ratio of 92% for the fiscal year 2018-19, and it has brought additional benefits like portability and lifelong renewability options in its existing health insurance plans. Star Health & Allied Insurance Company Limited- Star Health & Allied Insurance Company recorded the Incurred Claim Ratio of 90% for the fiscal year 2018-19. The company has an in-house claim settlement procedure to deal with cashless hospitalization facility. Along with this, Star Health & Allied insurance company comes up with a range of exciting products that offer protection to Diabetes and HIV+ patients. Max Bupa Health Insurance Company Limited- Max Bupa is one of the best-known insurance companies in India, which had an Incurred Claim Ratio of 96% for the fiscal year 2018-19. This company offers its health insurance policies to individuals from all age groups. SBI Health Insurance Company Limited- SBI Health Insurance Co. Ltd is a joint venture between the State Bank of India (SBI) and Insurance Australia Group. SBI holds a 74% stake while 26% stake is held by Insurance Australia Group. It operates out in around 14,000 official branches across the globe. With an Incurred Claim Ratio of 52.93% for the fiscal year 2018-19, SBI Health Insurance Company has issued 198876 policies. Religare Health Insurance Company Limited- Religare Health Insurance Company limited has shown tremendous growth in a short period of time, thereby setting a benchmark in the insurance market of India. It had an Incurred Claim Ratio of 93% for financial year 2018-19. It is being regularly appreciated and promoted by the Fortis Hospitals. Manipal Cigna Health Insurance Company Limited- ManipalCigna Health Insurance Company is comparatively a new player in the Indian insurance market, as it was launched in 2014 only and immediately fell into the category of the best health insurance companies in India. Its Incurred Claim Ratio for the fiscal year 2018-19 is 91%. Bajaj Allianz General Insurance Company Limited- Bajaj Allianz General Insurance Company has some health products that are very beneficial for customers from a particular age group. The 3 major health insurance products are Health Guard, Silver Health, and Star Package. Bajaj Allianz Insurance Company was the first to provide
26 captive TPA services with certain additional benefits. Its Incurred Claim Ratio is 98% for the fiscal year 2018-19. New India Assurance Company Limited- New India Assurance is a fully government-owned entity of India, which has been in operations since 1919. This company is well-known for its Mediclaim policy. The best feature offered under this health insurance policy is that it provides different ratings for major metros. It had an Incurred Claim Ratio of 97% for the fiscal year 2018-19. Oriental Insurance Company Limited- Oriental general insurance is also a government-owned general insurance company that offers a wide range of health insurance products in India. The impressive part of Oriental health insurance is that it doesn’t require a pre-policy medical test up to the age of 60 years, whereas it is mandatory under other health insurance providers to get a medical examination done if you are below 45 years of age. Its Incurred Claim Ratio stood at 89% for the fiscal year 2018-19. National Insurance Company Limited- National Insurance Company Ltd. is a full government entity, which has been serving its customers for more than a century and also provides health insurance coverage. It had an Incurred Claim Ratio of 103.19% for the fiscal year 2018-19. The best health product offered by National General Insurance Company is Varishtha Mediclaim that offers coverage to senior citizens.
27 EVOLUTION OF HEALTH INSURANCE The concept of Health Insurance was proposed in the year 1694 by Hugh the elder Chamberlen from Peter Chamberlen family. In 19th Century “Accident Assurance” began to be available which operated much like modern disability insurance. This payment model continued until the start of 20th century. During the middle to late 20th century traditional disability insurance evolved in to modern health insurance programs. Today, most comprehensive health insurance programs cover the cost of routine, preventive and emergency health care procedures and also most prescription drugs. But this is not always the case. Healthcare in India is in a state of enormous transition: increased income and health consciousness among the majority of the classes, price liberalization, reduction in bureaucracy, and the introduction of private healthcare financing drive the change. Over the last 50 years, India has achieved a lot in terms of health insurance. Before independence, the health structure was in dismal condition i.e. high morbidity and high mortality and prevalence of infectious diseases. Since independence, emphasis has been put on primary health care and we made considerable progress in improving the health status of the country. But still, India is way behind many fast-developing countries such as China, Vietnam and Sri Lanka in health indicators. Health insurance, which remains highly underdeveloped and less significant segment of the product portfolios, is now emerging as a tool to manage financial needs of people to seek health services. The new economic policy and liberalization process followed by Government of India since 1991 paved the way for privatization of insurance sector in the country. The Insurance Regulatory and Development Authority (IRDA) bill, passed in Indian parliament, is the important beginning of changes having significant implications for the health sector. Health Insurance is more complex than other segments of insurance business because of serious conflicts arising out of adverse selection, moral hazard, unavailability of data and information gap problems. Health sector policy formulation, assessment and implementation are an extremely complex task, especially, in changing epidemiological, institutional, technological and political scenario. Proper understanding of Indian Health situation and application of principles of insurance, keeping in view the social realities and national objectives, are important.
28 INSURANCE INDUSTRY PROFILE The insurance industry of India consists of 57 insurance companies of which 24 are in life insurance business and 33 are non-life insurers. Among the non-life insurers there are six public sector insurers. In addition to these, there is sole national re-insurer, namely, General Insurance Corporation of India (GIC Re). Other stakeholders in Indian Insurance market include agents (individual and corporate), brokers, surveyors and third-party administrators servicing health insurance claims. MARKET SIZE Government's policy of insuring the uninsured has gradually pushed insurance penetration in the country and proliferation of insurance schemes. Gross premiums written in India reached Rs 5.53 trillion (US$ 94.48 billion) in FY18, with Rs 4.58 trillion (US$ 71.1 billion) from life insurance and Rs 1.51 trillion (US$ 23.38 billion) from non-life insurance. Overall insurance penetration (premiums as % of GDP) in India reached 3.69 per cent in 2017 from 2.71 per cent in 2001. In FY19 (up to October 2018), premium from new life insurance business increased 3.66 per cent year- on-year to Rs 1.09 trillion (US$ 15.46 billion). In FY19 (up to October 2018), gross direct premiums of non-life insurers reached Rs 962.05 billion (US$ 13.71 billion), showing a year-on-year growth rate of 12.40 per cent.
29 INVESTMENTS AND RECENT DEVELOPMENTS The following are some of the major investments and developments in the Indian insurance sector. • As of November 2018, HDFC Ergo is in advanced talks to acquire Apollo Munich Health Insurance at a valuation of around Rs 2,600 crore (US$ 370.05 million). • In October 2018, Indian e-commerce major Flipkart entered the insurance space in partnership with Bajaj Allianz to offer mobile insurance. • In August 2018, a consortium of WestBridge Capital, billionaire investor Mr Rakesh Jhunjunwala announced that it would acquire India’s largest health insurer Star Health and Allied Insurance in a deal estimated at around US$ 1 billion. • In September 2018, HDFC Ergo launched ‘E@Secure’ a cyber insurance policy for individuals. • Insurance sector companies in India raised around Rs 434.3 billion (US$ 6.7 billion) through public issues in 2017. • In 2017, insurance sector in India saw 10 merger and acquisition (M&A) deals worth US$ 903 million. • India's leading bourse Bombay Stock Exchange (BSE) will set up a joint venture with Ebix Inc to build a robust insurance distribution network in the country through a new distribution exchange platform GOVERNMENT INITIATIVES The Government of India has taken a number of initiatives to boost the insurance industry. Some of them are as follows: • In September 2018, National Health Protection Scheme was launched under Ayushman Bharat to provide coverage of up to Rs 500,000 (US$ 7,723) to more than 100 million vulnerable families. The scheme is expected to increase penetration of health insurance in India from 34 per cent to 50 per cent. • Over 47.9 million famers were benefitted under Pradhan Mantri Fasal Bima Yojana (PMFBY) in 2017-18. • The Insurance Regulatory and Development Authority of India (IRDAI) plans to issue redesigned initial public offering (IPO) guidelines for insurance companies in India, which are to looking to divest equity through the IPO route. • IRDAI has allowed insurers to invest up to 10 per cent in additional tier 1 (AT1) bonds that are issued by banks to augment their tier 1 capital, in order to expand the pool of eligible investors for the banks.
30 HEALTH INSURANCE SCENARIO IN INDIA Health is a human right. It’s accessibility and affordability have to be ensured. The escalating cost of medical treatment is beyond the reach of common man. While well to do segment of the population both in Rural and Urban areas have accessibility and affordability towards medical care, the same cannot be said about the people who belong to the poor segment of the society. Health care has always been a problem area for India, a nation with a large population and larger percentage of this population living in urban slums and in rural area, below the poverty line. The government and people have started exploring various health financing options to manage problem arising out of increasing cost of care and changing epidemiological pattern of diseases. In the light of escalating health care costs, coupled with demand for health care services, lack of easy access of people from low income group to quality health care, health insurance is emerging as an alternative mechanism for financing health care. Indian health financing scene raises number of challenges, which are:
31 • Increase in health care costs. • High financial burden on poor eroding their incomes. • Need for long term and nursing care for senior citizens because of increasing nuclear family system . • Increasing burden of new diseases and health risks. • Due to under-funding of government health care, preventive and primary care and public health functions have been neglected. In the above scenario, exploring health financing options became critical. Naturally, health insurance has emerged as one of the financing options to overcome some of the problems of our system. In simple terms, health insurance can be defined as a contract where an individual or group purchases in advance health coverage by paying a fee called “premium”. Health insurance refers to a wide variety of policies. These range from policies that cover the cost of doctors and hospitals to those that meet a specific need, such as paying for long term care. Even disability insurance, which replaces lost income if you cannot work because of illness or accident, is considered health insurance, even though it is not specifically for medical expenses. Health insurance is very well established in many countries, but in India it still remains an untapped market. Less than 15% of India’s 1.1 billion people are covered through health insurance. And most of it covers only government employees. At any given point of time, 40 to 50 million people are on medication for major sickness and share of public financing in total health care is just about 1% of GDP. Over 80% of health financing is private financing, much of which is out of pocket payments and not by any pre- payment schemes. Given the health financing and demand scenario, health insurance has a wider scope in present day situation in India. However, it requires careful and significant efforts to tap Indian health insurance market with proper understanding and training. VARIOUS HEALTH INSURANCE PRODUCTS AVAILABLE IN INDIA- The existing health insurance schemes available in India can be broadly categorized as: 1. Voluntary health insurance schemes or private-for-profit schemes 2. Mandatory health insurance schemes or government run schemes (namely ESIS, CGHS) 3. Insurance offered by NGOs/Community based health insurance 4. Employer based schemes 1. Voluntary health insurance schemes or private-for-profit schemes: In private insurance, buyers are willing to pay premium to an insurance company that pools similar risks and insures them for health related expenses. The main distinction is that the premiums are set at a level, which are based on assessment of risk status of the consumer (or of the group of employees) and the level of benefits provided, rather than as a proportion of consumer’s income. In the public sector, the General Insurance Corporation (GIC) and its four subsidiary companies (National Insurance Corporation, New India Assurance Company, Oriental Insurance Company and United Insurance Company) provide voluntary insurance schemes. The most popular health insurance cover offered by GIC is Mediclaim policy
32 • Mediclaim policy It was introduced in 1986. It reimburses the hospitalization expenses owing to illness or injury suffered by the insured, whether the hospitalization is domiciliary or otherwise. It does not cover outpatient treatments. Government has exempted the premium paid by individuals from their taxable income. Because of high premiums it has remained limited to middle class, urban tax payer segment of population. • Some of the various other voluntary health insurance schemes available in the market are :- Asha deep plan II , Jeevan Asha plan II, Jan Arogya policy, Raja Rajeswari policy, Overseas Mediclaim policy, Cancer Insurance policy, Bhavishya Arogya policy, Dreaded disease policy, Health Guard, Critical illness policy, Group Health insurance policy, Shakti Shield etc. • At present Health insurance is provided mainly in the form of riders. There are very few pure health insurance policies under voluntary health insurance schemes. Mandatory health insurance schemes or government run schemes (namely ESIS, CGHS0) Employer State Insurance Scheme (ESI):- Enacted in 1948, the employers’ state insurance (ESI) Act was the first major legislation on social security in India. The scheme applies to power using factories employing 10 persons or more and non- power & other specified establishments employing 20 persons or more. It covers employees and the dependents against loss of wages due to sickness, maternity, disability and death due to employment injury. It also covers funeral expenses and rehabilitation allowance. Medical care comprises outpatient care, hospitalization, medicines and specialist care. These services are provided through network of ESIS facilities, public care centers, non-governmental organizations (NGOs) and empanelled private practitioners. The ESIS is financed by three way contributions from employers, employees and the state government. Even though the scheme is formulated well there are problem areas in managing this scheme. Some of the problems are :- • Large numbers of posts of medical staff remain vacant due to high turnover and low remuneration compared to corporate hospitals. • Rising costs and technological advancement in super specialty treatment. • Management information is not satisfactory. • The patients are not satisfied with the services they get • Low utilization of the hospitals • In rural areas, the access to services is also a problem All these problems indicate an urgent need for reforms in the ESIS Scheme.
33 1.Central Government Health Insurance Scheme (CGHS):- Established in 1954, the CGHS covers employees and retirees of the central government and certain autonomous and semi-autonomous and semi-government organizations. It also covers Members of Parliament, Governors, accredited journalists and members of general public in some specified areas. Benefits under the scheme include medical care, home visits/care, free medicines and diagnostic services. These services are provided through public facilities with some specialized treatment (with reimbursement ceilings) being permissible at private facilities. Most of the expenditure is met by the central government as only 12% is the share of contribution. • The CGHS has been criticized from the point of view of quality and accessibility. Subscribers have complained of high out of pocket expenses due to slow reimbursement and incomplete coverage for private health care (as only 80% of the cost is reimbursed if referral is made to private facility, when such facilities are not available with the CGHS). 2.Universal Health Insurance Scheme (UHIS):- For providing financial risk protection to the poor, the government announced UHIS in 2003. Under this scheme, for a premium of Rs. 165 per year per person, Rs.248 for a family of five and Rs.330 for a family of seven , health care for sum assured of Rs. 30000/- was provided. This scheme has been made eligible for below poverty line families only. To make the scheme more saleable, the insurance companies provided for a floater clause that made any member of family eligible as against mediclaim policy which is for an individual member. In spite of all these, the scheme was not successful. • The reasons for failing to attract rural poor are many :- • The public sector companies who where required to implement this scheme find it to be potentially loss making and do not i • Invest in propagating it. To meet the target, it is learnt that several field officers pay the premium under fictious names. • Identification of eligible families is a difficult task • Poor find it difficult to pay the entire premium at one time for future benefit, foregoing current consumption needs. • Paper work required to settle the claims is cumbersome • Deficit in availability of service providers • Set back due to health insurance companies refusing to renew the previous year’s policies. 3. Insurance offered by NGOs/Community based health insurance Community based schemes are typically targeted at poorer population living in communities. Such schemes are generally run by charitable trusts or non-governmental organizations (NGOs). In these schemes the members prepay a set amount each year for specified services. The premia are usually flat rate (not income related) and therefore not progressive. The benefits offered are mainly in terms of preventive care, though ambulatory and inpatient care is also covered. Such schemes tend to be financed through patient collection, government grants and donations. Increasingly in India, CBHI schemes are negotiating with for profit insurers for the purchase of custom designed group insurance policies.
34 • CBHI schemes suffer from poor design and management. Often there is a problem of adverse selection as premiums are not based on assessment of individual risk status. These schemes fail to include the poorest of the poor. They have low membership and require extensive financial support. Other issues relate to sustainability and replication of such schemes. • Some of the popular Community Based Health Insurance schemes are: - Self-Employed Women’s Association (SEWA), Tribuvandas Foundation (TF), The Mullur Milk Co-operative, Sewagram, Action for Community Organization, Rehabilitation and Development (ACCORD), Voluntary Health Services (VHS) etc. 4.Employer based schemes Employers in both public and private sector offers employer-based insurance schemes through their own employer. These facilities are by way of lump sum payments, reimbursement of employees’ health expenditure for out-patient care and hospitalization, fixed medical allowance or covering them under the group health insurance schemes. The Railways, Defense and Security forces, Plantation sector and Mining sector run their own health services for employees and their families. • Increase in health care costs. • High financial burden on poor eroding their incomes. • Need for long term and nursing care for senior citizens because of increasing nuclear family system . • Increasing burden of new diseases and health risks. • Due to under-funding of government health care, preventive and primary care and public health functions have been neglected. In the above scenario, exploring health financing options became critical. Naturally, health insurance has emerged as one of the financing options to overcome some of the problems of our system. In simple terms, health insurance can be defined as a contract where an individual or group purchases in advance health coverage by paying a fee called “premium”. Health insurance refers to a wide variety of policies. These range from policies that cover the cost of doctors and hospitals to those that meet a specific need, such as paying for long term care. Even disability insurance, which replaces lost income if you cannot work because of illness or accident, is considered health insurance, even though it is not specifically for medical expenses. Health insurance is very well established in many countries, but in India it still remains an untapped market. Less than 15% of India’s 1.1 billion people are covered through health insurance. And most of it covers only government employees. At any given point of time, 40 to 50 million people are on medication for major sickness and share of public financing in total health care is just about 1% of GDP. Over 80% of health financing is private financing, much of which is out of pocket payments and not by any pre- payment schemes. Given the health financing and demand scenario, health insurance has a wider scope in present day situation in India. However, it requires careful and significant efforts to tap Indian health insurance market with proper understanding and training.
35 Types of Insurance Risk is everywhere: When you drive your car to work, when you visit a new country, when you ride your bike to a nearby shop, when there’s a new bug going around in town.There are two broad types of insurance: • Life Insurance • General Insurance Life Insurance Life insurance is a contract that offers financial compensation in case of death or disability. Some life insurance policies even offer financial compensation after retirement or a certain period of time. Life insurance, thus, helps you secure your family’s financial security even in your absence. You either make a lump-sum payment while purchasing a life insurance policy or make periodic payments to the insurer. These are known as premiums. In exchange, your insurer promises to pay an assured sum to your family in the event of death, disability or at a set time. Types of General Insurance available 1. Health Insurance 2. Motor Insurance 3. Travel Insurance 4. Home Insurance 5. Fire Insurance Health Insurance This type of general insurance covers the cost of medical care. It pays for or reimburses the amount you pay towards the treatment of any injury or illness.It usually covers: • Hospitalization • The treatment of critical illnesses • Medical bills prior to or post hospitalization • Day care procedures like Cataract operations You can also opt for add-on benefits like: • Maternity cover: Your health insurance covers you for the costs related to childbirth. This includes pre-delivery check-ups, hospitalization during delivery, and post-natal care. • Pre-existing diseases cover: Your health insurance takes care of the treatment of diseases you may have before buying the health insurance policy. • Accident cover: Your health insurance can pay for the medical treatment of injuries caused due to accidents and mishaps.
36 Home Insurance Home insurance is a cover that pays or compensates you for damage to your home due to natural calamities, man-made disasters or other threats. It covers liabilities due to fire, burglary, theft, flood, earthquakes, and sabotage. It not only offers financial protection to your home, but also takes care of the valuables inside the property. Travel insurance A travel insurance compensates you or pays for any financial liabilities arising out of medical and non- medical emergencies during your travel abroad or within the country. Travel insurance usually cover • Loss of baggage • Emergency medical expenses • Loss of passport • Hijacking • Delayed flights • Accidental death Fire Insurance Fire insurance pays or compensates for the damages caused to your property or goods due to fire. It covers the replacement, reconstruction or repair expenses of the insured property as well as the surrounding structures. It also covers the damages caused to a third-party property due to fire. In addition to these, it takes care of the expenses of those whose livelihood has been affected due to fire. Motor Insurance Motor insurance is for your car or bike what health insurance is for your health. It is a general insurance cover that offers financial protection to your vehicles from loss due to accidents, damage, theft, fire or natural calamities. You can also get motor insurance for your commercial vehicles.In India, you cannot drive or ride without motor insurance.Let’s look at the two key types: 1. Car Insurance It’s precious—your car. You paid lakhs of rupees to buy that beauty. Even a single scratch can be painful, forget about bigger damages.Car insurance can reduce this pain for a few thousand rupees. 2. Two-wheeler Insurance This is your bike’s guardian angel. It’s similar to Car insurance.You cannot ride a bike or scooter in India without insurance.As with car insurance, what the insurer will pay depends on the type of insurance and what it covers.
37 TAX LAWS AFFECTING INSURANCE INDUSTRY Income Tax Act, 1961 It is tax on income imposed by Central Government. Residents in India are taxed on their worldwide income. Non- residents are taxed on Indian source of income. The Indian tax rates applicable to non-residents could be up to 40% (excluding applicable surcharge). If the tax payable by any company, including a foreign company taxable in India, is less than 18.5% of its book profits, it will be required to pay Minimum Alternate Tax. Interest received by a non- resident from India on foreign currency denominated loans may be taxable. Payments towards royalty and fees for technical services are taxable. u/s. 10(10D) of the Income Tax Act, 1961 any sum received under a life insurance policy, including the sum allocated by way of bonus on such policies is exempted from income tax. There-fore any claims or maturity proceeds received by the resident policy holder will not be taxable as income. Section 80C of the Act provides for deduction in respect of payments for life insurance premium in computing the total income of an individual or a Hindu Undivided Family. The amount of deduction is subject to the maximum of Rupees one lakh being the aggregate of sums referred to in sub-section (2) of Section 80C.Section 88 of the Act provides for a rebate on life insurance premium paid on the policy to the policyholder. Service Tax Under the current service tax regime, service tax leviable on service provided by an insurance agent is not to be paid by the insurance agent himself but by the insurance company. Life Insurance premium is taxable as per the provisions of Service Tax. Tax benefit for tax paid on Insurance premium Premium paid for life and medical insurance policies can be used to claim tax benefit under Section 80C and Section 80D of the Income Tax Act. Normally, the total amount that a person pays to buy/ keep in force a life or medical insurance policy also includes the GST paid on the premium. The GST is calculated as a percentage of the premium and can often be a substantial amount. So, it becomes important for you to understand how much GST is applicable on life and non-life insurance premiums, and whether the GST paid with the basic insurance premium qualifies for getting tax benefit. "Section 80C and Section 80D of Income tax Act entitles specified taxpayers to claim deduction for the entire amount paid to the insurance company for specified insurance schemes. GST being an indirect tax is charged/recovered by the supplier of services from the recipient with actual value of service. Thereby, a collective reading of income tax and GST laws would echo that entire amount paid to the insurance company including applicable GST would be allowed as a deduction."
38 GST paid on health insurance- GST of 18 per cent is charged on the premium paid for health insurance, as per the prevailing regulations. Tax benefit can be claimed under section 80D of the Income Tax Act for the payment made for health insurance policies. For instance, if you purchase a health insurance policy with a sum insured of Rs 10 lakh at the age of 30 years from Bajaj Allianz General Insurance company, you would have to pay a basic premium of Rs 7,843 and GST of Rs 1,412 (18 percent GST is applied on basic premium). The overall premium will add up to Rs 9,255. Similarly, if someone purchases the same policy at the age of 50, then s/he will have to pay a basic premium of Rs 17,782 and GST of Rs 3,200. The overall premium will come to Rs 20,983. Thus, a substantial amount of GST, which is applicable to the basic premiums, in both the cases, can be claimed for getting tax saving deduction benefit under section 80D. Therefore, in each case, you can claim the total premium of Rs 9,255 or Rs 20,983 under section 80D. This tax saving deduction amount is subjected to an investment limit available under the particular section. It is contractually provided (in the policy document/renewal intimations etc.) that GST would be recovered in addition to the premium. Accordingly, without the payment of GST, the obligation of the policyholder would not be discharged, i.e., the policy will not be active. "As an investor, you should know that the income-tax law is widely worded so as to provide a deduction for any sums paid to effect or to keep in force a contract of insurance on the life of a specified person. Accordingly, a component of GST as an element of the premium is eligible for deduction subject to an overall cap of the Section. Also, principally the logic for section 80D would remain same as for section 80C. Without the payment of GST, the obligation of the assesse would not be discharged Types of product GST applied on GST applied % Total premium* can be claimed for tax benefit (under section) Health insurance Basic insurance premium 18 80D Term insurance Basic insurance premium 18 80C ULIPs Charges like fund, Management Charges and Mortality Charges 18 80C Traditional plans like endowment policy, money back policy, whole-life, policies and pension products First-year insurance premium, Second year insurance premium 4.25,2.2 5 80C *Total premium equals to basic premium plus GST.
39 Tax Benefits under Section 80C Section 80C was introduced by the Finance Act 2005. It provides deduction from total income in respect of various investments/expenditure/payments explained below. The total deduction under this section (along with section 80CCC and 80CCD) is limited to Rs. 1.50 lakhs maximum. Instruments that can give you Section 80C benefits are as follows. • Life Insurance Premium • for an individual, policy must be in self or spouse’s or any child’s name. • For HUF, it may be on life of any member of HUF • Sum paid under contract for Deferred Annuity/Pension Plan • for an individual, on life of self, spouse or any child • Sum deducted from salary payable to Govt. Servant for securing deferred annuity • for self or spouse or child • payment is limited to 20% of salary • Employee’s Provident Fund Scheme contribution • PPF Contribution • Contribution by employee to a Recognized Provident Fund. • Sum deposited in 10 year/15 year account of Post Office Saving Bank • Subscription to any Notified Securities/Notified Deposits scheme. e.g. NSS • Subscription to any Notified Savings Certificate, Unit Linked Savings Certificates e.g. NSC VIII issue. • Contribution to Unit Linked Insurance Plan of LIC Mutual Fund e.g. Dhanrakhsa 1989 • Contribution to notified deposit scheme/Pension fund set up by the National Housing Scheme. • Certain payment made by way of installment or part payment of loan taken for purchase/construction of residential house property. • Condition has been laid that in case the property is transferred before the expiry of 5 years from the end of the financial year in which possession of such property is obtained by him, the aggregate amount of deduction of income so allowed for various years shall be liable to tax in that year. • Contribution to Notified Annuity Plan of LIC (e.g. Jeevan Dhara) or Units of UTI or a Notified Mutual Fund. • Subscription to units of a Mutual Fund notified u/s 10(23D). • Subscription to Deposit Scheme of a PSU engaged in providing Housing Finance. • Subscription to Equity Shares/Debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions. • Tuition fees paid at the time of admission or otherwise to any school, college, university or other educational institution situated within India for the purpose of full time education of any two children. • available in respect of any two children maximum
40 To avail of 80C benefit 1. Investment should be in your, your spouse’s or children’s name and you should be the owner (also called proposer) of the policy to get tax benefits for yourself. 2. Renewal premium for life insurance paid for a policy bought in an earlier year can also get the same tax benefit. 3. In the case of Pensions & Annuities, if deduction under section 80CCC has been availed of, then rebate under section 80C would not be allowable. 4. You should be present in India when you apply for the life insurance policy. 5. Any such life insurance policy should have been payable as well as paid in the said period. i.e. you cannot pay next year’s due premium this year, or last year’s overdue premium this year to claim the benefit. 6. Ensure that the Life Insurance cover (Sum Assured) of the policy is at least 10 times that of your Annual Premium in the year of premium payment. Tax Benefits under Section 80CCC- This tax benefit is available for premium payments made towards a pension/deferred annuity plan. The benefit under this section, along with all other investments of 80C, is limited to the 80C limit of Rs. 1.50 lakhs per annum. Tax Benefits under Section 80D- This tax benefit is available for premium payments made to cover a medical/health insurance policy including individual, family floater, critical illness, etc. which are non-investment products. Unlike 80CCC above, the 80D limit is exclusive, i.e. over and above the Rs. 1.50 lakhs limit of Section 80C. You can claim both of them. 1. Deduction under Section 80D is now available up to Rs. 15,000 in a financial year for insurance of self, spouse and dependent children. For senior citizens the limit is Rs, 20,000. 2. In addition to that, a deduction for insurance of parents (either father or mother, or even both) is available to the extent of Rs. 20,000 in a financial year if parents are senior citizens and Rs. 15,000 in other cases. Therefore, the maximum deduction available under this section is to the extent of Rs. 40,000 in a financial year. 1. From FY 2012-2013 (i.e. AY 2013-14) within the existing limit a deduction of up to Rs. 5,000 for preventive health check-up is available.
41 Note- 1. Both individuals and HUF are allowed to claim this benefit. 2. Premiums cannot be paid in cash. 3. In case you are buying the health insurance policy for a period of more than one year, the renewal premiums you pay will also be eligible for the tax benefit. Medical Insurance ( Section 80D ) Medical emergencies always take us by surprise. It is always advised to be safe than sorry and it is no different when it comes to medical insurance. A must in your investment portfolio, the government encourages everyone to buy medical insurance and allows you to avail tax deductions on it under Section 80D. 1. Applicability of Section 80D Every individual or HUF can claim a deduction under Section 80D for their medical insurance which is taken from their total income in any given year. In this article, we will talk about the deduction available for the FY 2018-19. Not only can you take benefit by purchasing a health plan for yourself but also you can take the benefit by purchasing the policy to insure your spouse, or your dependent children or parent. And the best part is, that it is over & above the deductions claimed under section 80C/CCC/CCD. 2. Quantum of Deduction available under Section 80D Individual: An individual can claim a deduction of up to Rs 25,000 for the insurance of self, spouse, and dependent children. An additional deduction for the insurance of parents is available to the extent of Rs 25,000 if they are less than 60 years of age, or Rs 50,000 (as per the Budget 2018) if your parents are aged above 60. If both the taxpayer and the parent whom the medical covers have been taken for are aged more than 60 years, the maximum deduction that can be availed under this section is to the extent of Rs.100,000. The below table captures the quantum of deduction available to an individual taxpayer under various scenarios:
42 Scenario Premium paid Deduction under 80D Self, family, children Parents Individual and parents below 60 years 25,000 25,000 50,000 Individual and family below 60 years but parents above 60 years 25,000 50,000 75,000 Both individual, family and parents above 60 years 50,000 50,000 1,00,000 Members of HUF 25,000 25,000 25,000 Non-resident individual 25,000 25,000 25,000 Note: Senior citizen will also include very senior citizen Example: Rohan is aged 45 and his father is aged 65 years. Rohan has taken a medical cover for himself and his father for which he pays insurance of Rs.30,000 and Rs.35,000 respectively. What would be the maximum amount he can claim by way of a deduction under Section 80D for FY 2018- 19? Ans: Rohan can claim up to Rs 25,000, for the premium paid on his policy. As for the policy taken for his father, who is a senior citizen, Rohan can claim up to Rs.50,000. In the given case, the deduction is Rs 25,000 and Rs 35,000. Therefore, the total deduction that he can claim for the year is Rs.60,000. HUF- An HUF can claim a deduction under section 80D for a mediclaim taken for any of the members of the HUF. This deduction will be Rs.25,000 if the member insured is less than 60 years, and will be Rs.30,000 (increased to Rs.50,000 in Budget 2018) if the insured is 60 years of age or more.
43 3. Preventive Health Check-up- Any payments made towards preventive health check-ups will entitle a taxpayer to a deduction of up to Rs.5,000, which is within the overall limit of Rs.25,000 / Rs.30,000 (Rs.50,000 w.e.f. 1 April 2018) as the case may be. This deduction can also be claimed either by the individual for himself, spouse, dependent children or parents. The payment for preventive health check-up can be made in cash.Example 1: Rahul has paid a health insurance premium of Rs.23,000 for the insurance of the health of his wife and dependent children in the financial year 2017-18. He also got a health check-up done for himself and paid Rs.5,000. Rahul can claim a maximum deduction of Rs.25,000 under Section 80D of the Income Tax Act. Rs.23,000 has been allowed towards insurance premium paid, and Rs.2,000 has been allowed for a health check-up. The deduction towards preventive health check-up has been restricted to RS.2,000 as the overall deduction cannot exceed Rs.25,000 in this case. 4. Single Premium Health Insurance Policies- Budget 2018 has introduced a new provision for claiming a deduction with regards to single premium health insurance policies. Under the new provision, where a taxpayer has made a lumpsum premium payment in a single year for a policy valid for more than one year, he can claim a deduction equal to the appropriate fraction of the amount, under Section 80D. The appropriate fraction is arrived at, by dividing the lump sum premium paid, by the number of years of the policy. However, this would again be subject to the limits of Rs.25,000 of Rs.50,000 as the case may be. Things to keep in mind before investing a. Contribution towards health insurance plan has to made to a scheme as specified by the Central Govt./ approved by IRDA. b. Payment should be made by any mode other than cash. c. Meaning of Senior citizen- Sr. Citizen means an individual resident in India who is of the age of 60 yrs or more during the relevant financial year. d. Premium paid towards a brother, sister, grandparents, aunts, uncles or any other relative cannot be claimed as a deduction for taking tax benefit. e. Premium paid on behalf of working children cannot be taken for tax benefit. f. In the case of part payment by you and a parent, both of you can claim a deduction to the extent paid by each. g. The deduction has to be taken without showing the Service Tax and Cess portion from the premium amount. h. Group Health Insurance premium provided by the company is not eligible for deduction.
44 Investments in Tax Saving FDs- Tax-saving FDs are like regular fixed deposits but come with a lock-in period of 5 years and tax break under Section 80C on investments of up to Rs 1.5 lakh. Eligibility : Can be opened by Resident Indian individuals. Liquidity: Fixed Deposits have lock-in period of 5 years. Rate of Interest : FD interest rate across different banks ranges from 5.5% to 7.75% Investment Limit: Minimum investment limit is Rs 1000. Tax Treatment : Interest earned in taxable. Investments in PPF (Public Provident Fund)- PPF are long term investments backed by government of India. Deposits made in a PPF account are eligible for tax deductions under Section 80C. Eligibility : Can be opened by Resident Indian individuals, salaried and non-salaried individuals. A HUF cannot open a PPF account. Liquidity: PPF account have lock-in period of 15 years, but can be further extended by 5 years. Partial withdrawals are allowed after 7 years. Rate of Interest : Current interest rate is 8.0% p.a. Investment Limit: Minimum and maximum investment limit is Rs 500 and Rs 1.5 lakh respectively. Tax Treatment : Interest earned is tax-free.
45 Investments in EPF (Employee Provident Fund)- EPF is a retirement benefit scheme that is available to all salaried employees. This amounts to 12% of basic salary + DA, that is deducted by an employer and deposited in the EPF or other recognized provident funds. Eligibility : Can be opened by employee with basic salary greater than 15,000 /month Liquidity: Can withdraw PF balance after 2 months of leaving job and does not take up employment within two months with an employer covered by PF Act Rate of Interest : Interest rate on the EPF is 8.55%. Investment Limit: Both employer and employee have to contribute a minimum 12% of Basic Pay + D.A. Tax Treatment :Entire PF balance (including interest) is tax-free, if withdrawn after continuous service of 5 years Investments in NPS (National Pension System)- The NPS is a pension scheme that has been started by the Indian Government to allow the unorganized sector and working professionals to have a pension after retirement. Investments of up to Rs 1.5 lakh can be used to avail tax deductions under Section 80C Eligibility : Can be opened by every Indian citizen between the age of 18 and 60 Liquidity: Partial withdrawals are allowed after 15 years but under special conditions Rate of Returns : Returns rate on the NPS varies between 12% – 14% Investment Limit: No limit on maximum contribution Tax Treatment : Employer contributions are tax-free
46 Investments in ULIP (Unit linked Insurance Plans) ULIPs are a mix of insurance and investment. A part of the invested amount in ULIPs is used to provide insurance and the rest of the amount is invested in the stock markets. Investments of up to Rs 1.5 lakh in ULIPs are eligible for tax breaks under Section 80C Eligibility : An investor can buy ULIP for self or spouse or child Liquidity: Interest rate varies as it is market linked Rate of Returns : Return rate on the ULIP varies between 12% – 14% Investment Limit: No limit on maximum contribution Tax Treatment : Investment and withdrawals & maturity amount are tax-free Investments in Sukanya Samriddhi Yojana- Sukanya Samriddhi Yojana/Scheme is one of the most popular schemes by the Government of India. The scheme is aimed at the betterment of girl child in the country Eligibility : Parents/guardians can open an account in the name of a girl child till she attains the age of 10 years Liquidity: Up to 50% of the deposit amount can be prematurely withdrawn once the girl reaches the age of 18 years Rate of Interest : Interest rate on Sukanya Samriddhi Yojana is 8.5% Investment Limit: Investment is limited to maximum Rs.1,50,000 in a financial year Tax Treatment : Investment and withdrawals & maturity amount are tax-free Save on Taxes.
47 Payments eligible for tax saving deductions under Section 80C- Payments in LIC – Life Insurance Premium The annual premium paid for life insurance in the name of the taxpayer or the taxpayer’s wife and children is an eligible tax-saving payment under Section 80C. The deduction is valid only if the premium is less than 10% of the sum assured. Payments in Children’s tuition fees The tuition fee paid for the education of two children is eligible for tax deduction under Section 80C of up to Rs 1.5 lakh. The fee can be paid to any school, college, university or educational institute situated in India. The fees have to be for a full-time course only. Repayment of Home Loan The repayment of the principal of a loan taken to buy or construct a residential property is eligible for tax deductions under Section 80C. This deduction is also applicable on stamp duty, registration fees and transfer expenses. IMPORTANCE OF HEALTH INSURANCE The importance of Health Insurance can never be undervalued for the following reasons: • Provides security to human life which is of prime importance to any individual. • Closely bonds Insurance Companies, Hospitals, Policyholders and TPAs together for the benefit of Indian masses. • An answer to the solution of uncertainties and risks that are prevalent and ever-pervading in human life. • Access to quality healthcare. • Means of savings and a safe investment option. • Provides financial stability in life. • A tax-saving instrument that significantly contributes in reduction of tax deductions. •Reduces tensions and stress caused on account of hospitalization. • Greatly contributes in leading a stress-free life.
48 REGULATORY FRAMEWORK IRDAI The Insurance Regulatory and Development Authority(IRDAI) was constituted to regulate and develop insurance business in India. As a key part of its role, it is responsible to protect the rights of policyholders. In order to create awareness about IRDAI, it's role, duties and responsibilities are stated here under: • IRDAI provides a certificate of registration to a insurance company. • IRDAI is responsible for the renewal, modification, withdrawal, suspension or cancellation of this certificate of registration. • IRDAI frames regulations on protection of policyholders' interests. • It offers policyholders the right to voice their complaints against insurers or insurance companies. • The IRDAI has set up the grievance redressal cell to take up the complaints of the policyholder. • It specifies the requisite qualifications, code of conduct and practical training for intermediaries or insurance intermediaries and agents. • It specifies the code of conduct for surveyors and loss assessors; • It promotes efficiency in the conduct of insurance businesses; • It promotes and regulates activities of professional organizations connected with life insurance; • It levies fees and other charges to carry out the purposes of the IRDAI Act; • It can call for information from, undertake the inspection of, conduct enquiries and investigations including the auditing of insurers, intermediaries, insurance intermediaries and other organizations connected with the business of life insurance; • It specifies the form and manner in which books of account should be maintained and statements of accounts should be rendered by insurers and other insurance intermediaries; • It regulates the investment of funds by insurance companies; • It regulates the maintenance of margins of solvency; • It adjudicates disputes between insurers and intermediaries or insurance intermediaries;
49 • It specifies the percentage of premium income of the insurer to finance schemes for the promotion and regulation of certain specified professional organizations; • It specifies the percentage of life insurance business to be undertaken by an insurer in the rural or social sector; and THIRED PARTY ADMINISTRATION A Third-Party Administrator (TPA) is an organization which processes claims or provides cashless facilities as a separate entity. Seen as an outsourcing of claim processing, TPA processes claims for both retail and corporate policies. The risk of loss incurred remains with the insurance company. The insurance company usually contracts a reinsurance company to share its risk. An insurance company hires TPA to manage its claims processing, provider network and utilization review. While some TPA operates as units of insurance companies, most are often independent. TPA is also involved in handling employee benefit plans such as processing retirement plans. Handling healthcare or employee benefit claims requires using a specialized set of manpower and technology, therefore hiring a TPA for the same is a more cost-effective method. The Insurance Regulatory and Development Authority of India (IRDA) defines TPA as a Third-Party Administrator who, for the time being, is licensed by the Authority, and is engaged, for a fee or remuneration, in the agreement with an insurance company, for the provision of health services. TPA was introduced by the IRDA in 2001. Being one of the prominent players in the managed care industry, it has the expertise and capability to administer all or a portion of the claims process. The services include claims processing, premium collection, enrollment and cashless processing. Insurance companies setting up its own health plan often outsource certain responsibilities to a TPA. The TPA acts like a claims adjuster for the insurance company. In some cases the insurance company sets up an entire department within their own company to act as TPA as opposed to hiring a commercial TPA company. ROLE OF TPA IN HEALTH INSURANCE Large number of the health insurance companies in India suffer losses and have been doing so for years together. The group health insurance profile is what may cause optimum leakage to the health insurance companies in India. TPA was introduced through the notification on TAP Health Insurance regulation 2001 by the IRDA-their basic role is to function as intermediary between the insurer and the insured and facilitate the cashless services of insurance .For this service they are paid a fixed percent of insurance premium as commission . The commission is currently fixed at 5.6 percent of premium. The introduction of TPAs is of great help and relief to the insurance companies, which have been searching for ways and means to get their management expenses in line with the specifications laid down by the IRDA. TPA is maintaining a database of policy holders and issue identity cards with unique identification numbers to them. They also handle all the policy- related issues, including claim settlements for the
50 policy holders Insurance companies (insurers) can now outsource their administrative activities, including settlement of claims, to third party administrators, who offer such services for a cost. The insurers remunerate the TPAs; hence, policyholders receive enhanced facilities at no extra cost. Once the policy has been issued, all the records will be passed on to the TPAs and all further correspondence of the insured will be with the TPAs and not with the insurance companies The TPA's are expected to provide value-added services to the consumers, like arranging ambulance services, medicines and supplies, guiding policy holders for specialized consultation, and providing information about 24- hour help lines, health facilities, bed availability, organization of lifestyle management and well- being programs. In the middle of 2010, the public sector health insurance companies, namely United India, New India, Oriental Insurance and moreover National Insurance took a tough stand and penalized major hospitals where such procedure were taking place. They eliminated these hospitals from the list from which cashless medical services can be availed by the customers. This caused a lot of pain to the insured, however the industry woke up to the fact that insurance companies were being taken for a ride. The 4 public sector health insurance companies then decided to float a TPA of their own and even do away with the middlemen who were not falling in line. This action is likely to cut down the frequency of false claims creeping their business. The move has acquired big support even from the private health insurance companies. The issuer was not of the public sector health insurance companies alone as well as certain private sector companies have done away with the practice of TPAs as well as used to process claims through in-house representatives. The TPA undoubtedly aims to give the health insurance industry the required boost in India. THE SERVICES PROVIDED BY TPA ARE AS FOLLOWS: ID card: TPA provides ID cards to all their policyholders in order to validate their identity at the time of admission. The TPA's undertakes "Pre-authorization" before a surgical procedure to ease claim processing 24 hours customer support services: The TPA provide assistance through their 24 hrs call center that provides information regarding policyholder's data, provider network, claim status, benefits available with existing cardholder, etc All these details are furnished on request. Cashless Hospitalization: Each policyholder is provided with a list of empanelled hospitals where in he/she can avail cashless hospitalization.
51 THE SPECIALIZED FUNCTIONS OF THE TPA INCLUDE: • The TPA keeps and maintains all the records of medical insurance policies of an insurer. • The TPA issues identity cards to all the policyholders. The policyholders will have to show the identity cards to the hospital authorities before availing any services from the hospital. • In case of a claim, policyholders will have to inform the TPA on a 24 hr toll- free line provided by them • After informing the TPA, the policyholder will be directed to a hospital where the TPA has a tied up arrangement. However, policyholders have the option to be admitted at another hospital of their choice in which case, payment will be on reimbursement basis. • TPA pays for the treatment; they issue an authorization letter to the hospital for the admission of the policyholder in the hospital. • At the point of discharge, all the bills will be sent to the TPA while they are tracking the case of the insured at the hospital. • TPA makes the payment to the hospital. • TPA sends all the documents necessary for consideration of claims, along with the bills to the insurance company. • The insurance company then reimburses the TPA.
52 CLAIM MANAGEMENT Health insurance claims management has evolved significantly in India over the past 10 years. Since the introduction of Mediclaim in the mid 1980s till the advent of TPAs in 2002, claims management focused primarily on reimbursement claims. With the advent of cashless hospitalization, the entire claim process changed. New processes, such as prior authorization became vital for providers and payers. Time, which was not a crucial element in processing reimbursement claims earlier, all of a sudden became a vital parameter. Frequently the patient was already admitted when an authorization request reached a TPA, this meant that a response had to be given within 4-6 hours so the full treatment could commence. Authorization limit enhancements were also sought as the treatment progressed or as the patient was ready for discharge, they also required an urgent response. The early claim systems were ad-hoc applications, frequently improvised upon to incorporate the ever changing multitude of payers / providers requirements, customer expectations and health insurance products. They were mostly reactive systems, supporting existing products and practices and not designed to support future requirements. Thus a peculiar chicken and egg scenario existed- how could an insurer introduce a new product when systems to service it did not exist? A good claims management system must service existing products well while having the in-built flexibility to support products with new and unique features, such as outpatient coverage or products with a savings component. Increased flexibility to incorporate on-the-fly modifications in benefits and processes, in-built intelligence to standardize routine processes and rules based prompts and alerts are now available in newer claims system. Not only do they reduce manual intervention and improve process efficiencies, they can auto adjudicate and process claims which meet all compliance parameters thus enabling claims staff to provide more time for claims that require detailed analysis.
53 RESEARCH METHODOLOGY D.Slesinger and M.Stephenson in the Encyclopedia of Social Sciences define the research as “the manipulation of things, concepts or symbols for the purpose of generalizing to extend, correct or verify knowledge, whether that knowledge aids in construction of theory or in the practice of an art.” In short, the research for knowledge through objective and systematic method of finding solution to a problem is research. The systematic approach concerning generalization and the formulation of a theory is also research. Research design provides the glue that the research project together. A designed is used to structure the research to show how all of the major parts of the research project, the sample or group measurement ,treatments and methods of assignment work to gather try to central research question. Hence, it is clear that research design is the blueprint for researcher it lays down the methodology involved in the collection of information and answering at meaningful conclusion from the same. This classification are made according to the objective of the research ,in some causes the research will fall in to one of this category but in other cases research will fall in to two categories. There are two types of methods of collecting data 1. PRIMARY 2. SECONDARY PRIMARY DATA: The main purpose of collection of primary data was to prepared questionnaire. The researcher tried to find out the awareness and Buying pattern of Health Insurance Through : Personal Approach Surveys Mails questionnaires articles ,magazines telephone ,discussion meeting with Managers, Agents of all the four Health Insurance companies &customers etc. for this project personal interviews was conducted for collection
54 SECONDARY DATA- Consists of published data collected through Books websites news papers journals magazines research papers SAMPLE SIZE Sample size in this report is 90 and the research tool is questionnaire. STATISTICAL TOOL The statistical tool used in this project is Microsoft excel. RESEARCH GAPS/LIMITATIONS The research was based on primary and secondary collection of data, there may be chances of human error and bias. The research was dependent on the information provided by the respondents who were very reluctant in providing right information and were careless. As associated with every project, time and money were the major limitations with project. Due to unwillingness of providing any information, the respondents filled the questionnaire casually. The projection is purely based on verbal meetings with the respondents. Non-co-operative behavior of respondent was a big problem in this survey. While studying the report the above facts should be taken into consideration.
55 DATA ANALYSIS AND FINDINGS Survey has been done to know the Awareness, Preference and consumption pattern of health insurance. By using Questionnaire method. SAMPLE SIZE- 90 More than 75% people who responded for questionnaire aged below 25, this represents young peoples thoughts, awareness regarding health insurance. In Gender Ratio 52% participant are female and about 48% are male and it shows that female participant more actively participated.
56 More than 68% participant are student, 12% peoples are employer and 10% people did not disclosed their occupation, Students are the mainstream of our country and they want to be aware and always ready to give their suggestion and thoughts regarding topic of their knowledge area. More than 84% participant earn less than 5 lac, 9% participant earn between 5-10 lac, 4% participant earn between 10-25 lac and only 1% earn more than 25 lac. It shows that more than 84% participant have low income level.
57 It shows that half of the people don’t have any health insurance policy due to various reasons like financial capability and unaware about health insurance policy. More than 35% market is covered by LIC and 30% is not known company only 20% market is covered by Aditya Birla Health insurance which is very less and ABHI have more market to cover with policy and provide their best facility to customers.
58 Only 50% people is health insured in which 54% is covered under family floater, 36% under individual policy and 8% under group Mediclaim policy which shows people need to focus more on individual health and company need to spread more information among people regarding health insurance. People are more focused on service quality, premium outflow, market value and product quality of the company so company should focus more on these things.
59 More than 54% people buy health insurance by themselves, 22% by insurance agent and 18% people by seeing advertisement. It shows people buy health insurance by their own awareness and knowledge.
60 More than 60% people pay their premium yearly and only 39% people pay their premium monthly. More than 40% people have health insurance plan subsidized based on their family income and 38% people thinks that plan is may be subsidized as their family income and 20% people are not aware.
61 60% people believe by opting for halth insurance they can get mediclaim and tax benefit both which is true. Only 59% are aware about tax benefit under section 80D and other 40% people are not aware about tax benefit so government and companies should start campaigning and other necessary things to spread awareness among people.
62 More than 63% people trust on insurance company for investing their money so this opportunity for private insurance firms. More than 68% people are saving from tax between 2000-10000 by investing their money in health insurance.
63 More than 47% people thinks that it may be government’s strategy to provide tax benefit to insurance holders for increasing the business of insurance companies, they are not fully sure. In the other hand only 16% people thinks that it is not possible and more than 36% people are sure about this strategy of government.
64 More than 75% people are satisfied with the service of their health insurance company and only 23% people are not satisfied with the service provided by their company. More than 70% people are not happy with the service of the company because reimbursement amount is less than 90% and other 29% are not happy because cashless facility is not available. So company should assure the reimbursement amount more than 90% and provide them cashless facility. What more do you expect in terms of health insurance service and benefits? Also give your suggestions • Full disclosure of all the clauses of the policy (especially the one regarding the claim). • All the procedures should be maintained through online applications and the terms and conditions should be more-clearer to the investors. • Decrease the time limit of pre-existing disease waiting period • easy comprehension of exclusion and non-exclusion of eligible treatments • Medical Cards should be provided for direct claims. • Workplace health insurance is usually cheaper than an individual health plan. An employer-sponsored health plan helps pay for your health costs. Federal law demands that large employers must pay at least half of health plan premiums. Businesses usually exceed that percentage
65 LITERATURE REVIEW When a person experiences a bad shock to health, their medical expenses typically rise and their contribution to household income and home production (e.g. cooking or childcare) declines (e.g. Wagstaff and Doorslaer, 2003; Gertler, Levine & Moretti, 2003; Gertler and Gruber, 2002). According to the WHO, ―Each year, approximately 150 million people experience financial catastrophe, meaning they are obliged to spend on health care more than 40% of the income available to them after meeting their basic needs.‖ (WHO Factsheet N°320) Low income and high medical expenses can also lead to debt, sale of assets, and removal of children from school, especially in poor nations. A short-term health shock can thus contribute to long-term poverty (e.g. Van Damme et al, Annear et al). At the same time, because households often cannot borrow easily, they may instead forego high-value care. When they do access care it will often be of low quality (Das, Hammer and Leonard, 2008), which can lead to poor health outcomes. Theory suggests that health insurance can address some of these problems. By covering the cost of care after a health shock, insurance can help to smooth consumption, reduce asset sales and new debt, increase the quantity and quality of care sought, and can improve health outcomes. Unfortunately, rigorous evidence on the impact of insurance is scarce, and there are even fewer studies on the effects of insurance in developing countries. One reason for the lack of evidence is that it is difficult to find a valid control group for the insured. We cannot simply compare the outcomes of insured and uninsured households, since health insurance status is typically strongly correlated with other household characteristics. For example, rich and well-educated households typically have both better health (Asfaw, 2003) and better health insurance coverage (Jütting, Cameron and Trivedi), but the positive correlation between health and insurance status tells us nothing about the impact of insurance. On the other hand, those in poor health may be more likely to pay for health insurance (Cutler and Reber, 1998; Ellis, 1989), but finding that the insured tend to be sicker would not imply that insurance causes illness. Below we review past evidence on the impacts of health insurance, focusing on studies where health insurance status is plausibly exogenous, or where studies have attempted to eliminate bias due to self-selection. A majority of the rigorous studies are based on United States data. We follow Levy and Meltzer (2004, 2008) in both our choice of U.S. studies and in our main conclusions.
66 FINDINGS A systematic approach was followed to identify the requirements of a Target customers to provide them with benefit and reasonable degree of security. Today everyone believes investment in Health Insurance –it is vital for the future. • Health insurance has emerged as one of the fastest growing segments in the non-life insurance industry. • Awareness and Perception of policy holder: Out of total 91 respondents only 75 percent people have proper knowledge about Health insurance plan. It shows that there has been 30:70 split between cashless and Reimbursement Health insurance policy. • Field experience it was quite evident that policy holder has not wider information about their insurance policy. Knowledge about coverage and exclusion of policy: Most of the time Policy Holders have inadequate knowledge on illness covered in their polices, exclusion of illness in the policy, cashless Reimbursement and list of empaneled hospitals. • Most of the time the agreed time for claim settlement is one month but actual time for claim settlement is 2-3 month. • Policy holders avoid dealing directly dealing with their Insurance Company due to various procedure hassles. Insurance agents seems to have major influence on policy holder’s decision and policy holders more trust and faith of them On one hand, because the prices of health insurance products most of the customers avoid best Health Insurance Plan. SUGGESTION/RECOMMENDATION • Advertisement Of Health Insurance. • Multiple health insurance products should be offered at various price points to customers. • IRDA should engage the services of the Ministry of Health and Family Welfare, Indian Medical Council, Indian Medical Association, healthcare associations and other bodies. • Introduction of a common pool for terminally ill people/people who do not have access to any kind of health insurance. • Fraudulent claims, when discovered and proved, should be treated as criminal offence and subject to strict legal action including imprisonment. • Systems of co-payment, co-insurance and voluntary deductibles to be used to (1) Make health insurance more viable, (2) Control frauds (3) Refrain customers wanting to avail luxury facilities.
67 CONCLUSION This paper makes an attempt to understand the awareness, preference and consumption pattern of Health insurance plan. The result of this study shows that the annual premium is the most important factor that influences the decision or choice of health Insurance plan. This means that households having higher income have higher probability of buying healthcare plan. Thus, less income groups may not opt for health insurance plan. Thus there is a need to develop more products that cater to need of larger and all levels of income groups. Apart from annual premium, hospital network and disease coverage or coverage of services hold importance in making choice of healthcare plan. Thus, insurance company should provide larger network of hospitals and services in their plans in order to satisfy their customer fully. Accessibility of service provider and company reputation also moderately influence the decisions. The decision made for choosing the plan is mainly influenced by self-perceptions. Family and relatives and past experience hold second position for assisting in the choice of plan. Most people would prefer to buy healthcare plan from private insurance companies for they provide better services and innovative products. Thus, there is large scope for private insurance companies to grow. The legal and regulatory framework of private health insurance, particularly because it operates in the voluntary market, should continually balance competing goals of access, affordability and quality of healthcare and provide health coverage to a larger fraction of the population with varying risk characteristics and ability to pay. Regulations, aside from their aim of providing protection of health insurance policyholders and beneficiaries, can be potent tools to promote access to healthcare, control pricing of health coverage vis-à-vis healthcare providers and enhance quality of healthcare. Allowing the participation of other entities that provide health coverage, such as Hospital and/or Professional entities, and self-insured health insurance schemes of Mutual Benefit Associations and Cooperatives would further increase the reach and depth of private health insurance. The analysis clearly shows that there is demand for cash less health insurance scheme but the customers want reduction in number of exclusions and inclusion of pre-existing diseases. They want the TPAs to be efficient and perform up to the expectation of the policyholders and insurers. Even though the insurers are providing need based plans but more should be done to meet the needs arising out of changing lifestyles of people. The population of elderly people, in India, is rising and they would require institutional care, which is totally missing. The plans need to include pregnancy related expenses, inclusion of chronic and debilitating diseases, HIV and AIDS, TPAs need to be more efficient in claims processing and providing better networking for the policyholders. These challenges can be overcome by setting up and stand-alone health insurance companies that are run on-profit objective. In most of countries life insurance companies underwrite health insurance. In India, life insurers should be allowed to underwrite health insurance. The tax benefits available at present should be hiked and continued with. The health plans should be wide based in order to include outpatient care along with in-patient. To create the awareness of health insurance is very important, the Government and all the associated bodies should all offer their support in spreading health insurance awareness so that Indian citizens are aware of the right to seek quality healthcare without any financial thought. and it will help to increase the awareness of health Insurance among the people.
68 BIBILIOGRAPHY 1. https://www.adityabirla.com/ 2. https://www.adityabirlacapital.com/multiply-wellness/#!/home 3. https://en.wikipedia.org/wiki/Aditya_Birla_Group 4. https://www.ibef.org/industry/insurance-presentation 5. https://www.mordorintelligence.com/industry-reports/india-health-and-medical-insurance- market 6. http://www.nishithdesai.com/information/areas-of-service/industry/insurance.html 7. https://www.policybazaar.com/ 8. https://economictimes.indiatimes.com/wealth/tax/can-you-claim-tax-benefit-for-tax-paid-on- insurance-premium/articleshow/68702197.cms 9. https://www.moneycontrol.com 10. https://www.irdai.gov.in/Defaulthome.aspx?page=H1 11. https://www.incometaxindia.gov.in/

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Summer internship program final report

  • 1. 1 SUMMER INTERNSHIP PROGRAM Project Report on Is taxation is a selling tool for health insurance? At Submitted in the Partial Fulfillment of the study of “Masters of Business Administration” Guidance/Accepted by- Mr. Ravi Mishra SUBMITTED BY- Ragnee Chauhan ERP ID- 0181MBA069 DATE- 21/08/2019-31/10/2019
  • 2. 2 CERTIFICATE OF ORIGINALITY (To be filled by the student in his/her handwriting) I _____________________, Enrolment No. ____________ of 2018-2020. I am a full-time bona-fide student of ____________________________________. I hereby certify that this Study report work carried out by me at _________________________________submitted as the per the requirements of the program is an original work of mine under the guidance of the industry guide ______________________ & internal guide (Faculty) _________________________and is not based on or reproduced from any existing work of any other person or any earlier work undertaken at any other time or for any other purpose, and has not been submitted anywhere else at any time. (Student’s Signature) Date: (Internal Guide’s Signature) Date:
  • 3. 3 ACKNOWLEDGEMENT I hereby acknowledge my sincere gratitude to the Doon Business School for giving this opportunity to undergo MBA BASE course to undertake this project work. I express my heartfelt thanks to Mr. Ravi Mishra for whose guidance made this project an enlightening educational experience. I would like to thank _____________________ for giving me the opportunity to associate with such an esteemed organization and gain practical exposure. I am very much obliged and indebted to Prof. Chhavi Prakash Mahto for his approval and guidance during internship and valuable suggestions to take up the project.
  • 4. 4 Contents EXECUTIVE SUMMARY.....................................................................7 OBJECTIVE OF THE STUDY.................................................................................................................8 ADITYA BIRLA GROUP......................................................................9 Values.....................................................................................................................................................10 INTRODUCTION.................................................................................................................................11 GLOBAL PRESENCE .........................................................................................................................11 PRINCIPAL COMPETITORS ...........................................................................................................12 GROUP PROFILE ...............................................................................................................................12 BUSINESS SECTORS..........................................................................................................................13 MANAGEMENT HIERARCHY.........................................................................................................15 BEYOND BUSINESS...........................................................................................................................15 Aditya Birla Capital Limited (ABCL) ................................................16 PRODUCTS...............................................................................................................................................17 Companies in Aditya Birla Capital .........................................................................................................17 PRODUCTS...........................................................................................................................................19 Aditya Birla Health Insurance.............................................................20 KEY ADVANTAGES AND FEATURES...............................................................................................21 TYPES OF PRODUCTS ..........................................................................................................................22 Why Aditya Birla Health Insurance Is Different From Others?..........................................................24 COMPETITORS.......................................................................................................................................25 EVOLUTION OF HEALTH INSURANCE.......................................27 INSURANCE INDUSTRY PROFILE ................................................28 MARKET SIZE ........................................................................................................................................28 INVESTMENTS AND RECENT DEVELOPMENTS..........................................................................29 GOVERNMENT INITIATIVES.............................................................................................................29 HEALTH INSURANCE SCENARIO IN INDIA ..................................................................................30 VARIOUS HEALTH INSURANCE PRODUCTS AVAILABLE IN INDIA- ....................................31
  • 5. 5 Types of Insurance ................................................................................35 Life Insurance............................................................................................................................................35 Types of General Insurance available.....................................................................................................35 TAX LAWS AFFECTING INSURANCE INDUSTRY....................37 Service Tax ................................................................................................................................................37 Tax benefit for tax paid on Insurance premium ....................................................................................37 GST paid on health insurance-................................................................................................................38 Tax Benefits under Section 80C- .............................................................................................................39 Tax Benefits under Section 80CCC-........................................................................................................40 Tax Benefits under Section 80D- .............................................................................................................40 Investments in Tax Saving FDs- ..........................................................................................................44 Investments in PPF (Public Provident Fund)- ...................................................................................44 Investments in EPF (Employee Provident Fund)- .............................................................................45 Investments in NPS (National Pension System)-................................................................................45 Investments in Sukanya Samriddhi Yojana-..........................................................................................46 IMPORTANCE OF HEALTH INSURANCE .......................................................................................47 REGULATORY FRAMEWORK .......................................................48 IRDAI .....................................................................................................48 THIRED PARTY ADMINISTRATION.................................................................................................49 ROLE OF TPA IN HEALTH INSURANCE .....................................................................................49 THE SERVICES PROVIDED BY TPA ARE AS FOLLOWS: .......................................................50 THE SPECIALIZED FUNCTIONS OF THE TPA INCLUDE:......................................................51 CLAIM MANAGEMENT....................................................................52 RESEARCH METHODOLOGY ........................................................53 SAMPLE SIZE..........................................................................................................................................54 STATISTICAL TOOL.............................................................................................................................54 RESEARCH GAPS/LIMITATIONS......................................................................................................54
  • 6. 6 DATA ANALYSIS AND FINDINGS..................................................55 LITERATURE REVIEW.....................................................................65 FINDINGS..............................................................................................66 SUGGESTION/RECOMMENDATION ............................................66 CONCLUSION......................................................................................67 BIBILIOGRAPHY................................................................................68
  • 7. 7 EXECUTIVE SUMMARY This Research work is totally focusing on the consumer behavior towards Health Insurance Policies, and as well as consumer‘s awareness, Preference and consumption patterns, also opinion about the determinants of image of a Health Insurance. This project has been made on the research on “Is taxation is a selling tool for Health Insurance”. Purpose of this project is to identify the characteristics of different variables like tax benefit, health issues and financial planning which are mostly responsible for taking health insurance policy by the people, also the main aim of research work is to find out buying behavior of the people before purchase insurance policy and to find out what are the factor behind it. Health Insurance is Insurance that pays for medical expenses. It is sometimes used more broadly to include Insurance covering disability or long-term nursing or custodial care needs. It may be provided through a government’s Sponsored social Insurance program, or from private Insurance companies. It may be purchased on a group basis (e.g., by a firm to cover its employees) or purchased by individual consumers. In each case, the covered groups or individuals pay premiums or taxes to help protect themselves from high or unexpected healthcare expenses. Similar benefits paying for medical expenses may also be provided through social welfare programs funded by the government. By estimating the overall risk of Healthcare expenses, a routine finance structure (such as a monthly premium or annual tax) can be developed, ensuring that money is available to pay for the healthcare benefits specified in the insurance agreement. The benefit is administered by a central organization such as a government agency, private business, or not for profit entity. The most important thing which is learned from this project is how to conduct a research on a particular problem by using different research methodology techniques. The health insurance market covers very smaller part of the total population (about 10%) in India. Presently, schemes like Voluntary health insurance schemes or Private for-profit schemes; Employer-based schemes; Insurance offered by NGOs / community-based health insurance, and Mandatory health insurance schemes or government run schemes (ESIS, CGHS) are found in India. The Health Insurance market in India is unique and has developed a strong growth potential in the recent years with the entry of many foreign players in the market. Gross premiums in India reached Rs 5.53 trillion (US$ 94.48 billion) in FY18, with Rs 4.58 trillion (US$ 71.1 billion) from life insurance and Rs 1.51 trillion (US$ 23.38 billion) from non-life insurance While the penetration of the Health Insurance market is still quite small, it is one of the fastest growing Industries in India. This Research analyzes this growing industry in its research report Health Insurance Industry in India. The report analyzes the whole industry in terms of growth rate, market segments, and the major players in the industry.
  • 8. 8 The growth will be supported by stand-alone Health Insurance companies and new players entering healthcare market with improved healthcare infrastructure across the country motivating a larger section of population for better healthcare services through various healthcare insurance policies. Currently State-owned health insurance companies constitute about 70% of the market and the rest is occupied by private companies. However private companies are growing fast and aims to occupy a larger hare in the Health Insurance market in near future. This report has attempted to discuss the vital scenario in healthcare and Health Insurance market in India. A brief about global insurance industry in 2019, Indian Insurance industry and Health Insurance industry overview are discussed. Growth drivers and issues of the industry are also covered. Major public and private players are covered in terms of their performance, products and out-look. Future outlook of the industry is also discussed. The report will be useful for insurance companies (both Indian and global), other intermediaries associated with the industry, industry analysts, companies aspiring to be TPAs and students in the field of Insurance. Since the liberalization in 2000, the Insurance industry in India has been growing considerably driven by multiple favorable economic and demographic factors. The Indian health insurance market grew at a CAGR of 24.00%. And expected to grow US$ 372 billion by 2022 register the fastest growth among all the Insurance sectors. Factors such as robust economic growth, changing demographic patterns such as the rise in double income no kids‘ families, increased FDI limits and the expansion of distribution channels are expected to contribute to the market growth in the forecast period. Of the overall healthcare expenditure in India, only 26% comes from the local, state and central government authorities, while nearly 71% is paid by the patient‘s family. Insurance accounts for just 3% of overall healthcare expenditure in India, indicating a substantial opportunity for the Health Insurance sector. The Health Insurance market is dominated by public-sector companies, while the private sector has made gradual progress in the sector. OBJECTIVE OF THE STUDY • To know the preference of individual regarding health insurance. • To evaluate consumption patterns of health insurance. • To assess the effectiveness of company services
  • 9. 9 ADITYA BIRLA GROUP Vision: To be a premium global conglomerate with a clear focus on each business. Mission: To deliver superior value to our customers, shareholders, employees and society at large. Founder: Seth Shiv Narayan Birla Founded: 1857 Headquarters: Mumbai Revenue: 4,830 crores USD (2019) Number of employees: 1,20,000 (2015)
  • 10. 10 Values Integrity-Acting and taking decisions in a manner that is fair and honest. Following the highest standards of professionalism and being recognized for doing so. Integrity for us means not only financial and intellectual integrity, but encompasses all other forms as are generally understood. Commitment-On the foundation of integrity, doing all that is needed to deliver value to all stakeholders. In the process, being accountable for our own actions and decisions, those of our team and those on the part of the organization for which we are responsible. Passion-An energetic, intuitive zeal that arises from emotional engagement with the organization that makes work joyful and inspires each one to give his or her best. A voluntary, spontaneous and relentless pursuit of goals and objectives with the highest level of energy and enthusiasm. Seamlessness-Thinking and working together across functional groups, hierarchies, businesses and geographies. Leveraging diverse competencies and perspectives to garner the benefits of synergy while promoting organizational unity through sharing and collaborative efforts. Speed-Responding to internal and external customers with a sense of urgency. Continuously striving to finish before deadlines and choosing the best rhythm to optimize organizational efficiencies.
  • 11. 11 INTRODUCTION Aditya Birla Group is one of India's largest conglomerates and also claims to be the most international of the country's major corporations. The company acts as a holding company for more than 72 manufacturing and services subsidiaries throughout India, and in Thailand, Indonesia, the Philippines, Malaysia, Australia, China, Egypt, and Canada. Aditya Birla's major subsidiaries include Grasim, the world's leading producer of viscose staple fiber, and a manufacturer of rayon grade pulp, cement, sponge iron, textiles, and chemicals; Hindalco, a leading producer of aluminum and copper; UltraTech Cement, which produces portland cement and related products; Aditya Birla Nuvo, which manufactures clothing, textiles, and carbon black and is India's second largest producer of viscose filament yarn; Indo Gulf, a fertilizer producer; Birla NGK Insulators (a joint venture with NGK of Japan), which is the world's leading producer of insulators; and Idea Cellular Ltd., a mobile service provider jointly owned with fellow Indian conglomerate Tata Industries. The company also produces software and provides IT services, and operates a number of financial products subsidiaries. The company's Birla Sun Life Insurance Co. is the second largest private sector insurance company in India, and its Birla Sun Life Asset Management Co. is the country's fourth largest assets manager. In other areas, the company claims to be the world's eighth largest producer of cement and the world's fourth largest producer of carbon black. These operations combine to generate revenues of nearly $7.6 billion per year. The company is led by Kumar Mangalam Birla, son of Aditya Birla. GLOBAL PRESENCE Australia | Bahrain | Bangladesh | Bolivia | Brazil | Canada | China | Egypt | Germany | Hungary | India | Indonesia Italy |. Ivory Coast | Kenya | Mozambique | Myanmar | Paraguay | Philippines | Russia | Singapore | South Korea Spain | Sri Lanka | Sweden | Switzerland | Tanzania | Thailand | Turkey | UAE | UK | USA | Vietnam | Zambia
  • 12. 12 PRINCIPAL COMPETITORS RPG Enterprises; Tata Sons Ltd.; Murugappa Group; Jaypee Group; Amalgamations Ltd.; Dabur India Ltd.; Balmer Lawrie and Company Ltd.; Escorts Ltd.; HMT Ltd.; Greaves Cotton Ltd.; Bombay Burmah Trading Corporation. GROUP PROFILE A US $48.3 billion corporation Founded in 1857: Seth Shiv Narayan Birla commences cotton trading operations at Pilani, Rajasthan, sets foundation of the Birla Group of Companies Is in the League of Fortune 500 An extraordinary force of over 120,000 employees, belonging to 42 nationalities Over 50 per cent of its revenues flow from its overseas operations spanning 34 countries Named the AON best employer in India for 2018 - the third time over the last 7 years The Group topped the Nielsen's Corporate Image Monitor 2014-15 and emerged as the 'No.1 Corporate', the 'Best in Class', for the third consecutive year Number of companies: 38
  • 13. 13 Companies listed on BSE and NSE: BUSINESS SECTORS Metals- • Aluminum ( Hindalco, Novelis) • COPPER (BIRLA COPPER) Cement- • Ultratech cement Telecom- • Vodafone Idea Limited Financial services- • Aditya Birla Capital Ltd. Textiles- • Grasim Fashion and Retail- • Aditya Birla Fashion and Retail Ltd. Carbon Black • Birla Carbon Chemicals • Aditya Birla Chemicals Insulators • Aditya Birla Insulators Agri-Business • Indo Gulf Mining • Aditya Birla Natural Resources/ Essel Mining
  • 14. 14 Globally, the Aditya Birla Group is 1st in aluminum rolling 1st in viscose staple fibre 1st in carbon black 2nd in telecom 3rd in cement (excluding China) 4th largest producer of insulators In India, the Group leads in several sectors No. 1 fashion (branded apparel) and lifestyle player No. 1 mobile telephony company The 2nd largest player in viscose filament yarn The largest producer in the chlor-alkali sector No. 1 player in grey cement, white cement and concrete A leading player in life insurance and asset management
  • 15. 15 MANAGEMENT HIERARCHY BEYOND BUSINESS Reaches out annually to 7.5 million people through the Aditya Birla Centre for Community Initiatives and Rural Development Works in 5,000 villages globally Runs 56 schools which provide quality education to 46,500 children. Of these 18,000 students belong to the underprivileged segment Merit scholarships are given to 24,000 children from the interiors Its 20 hospitals tend to more than a million villagers Ongoing education, healthcare and sustainable livelihood projects in Philippines, Thailand, Indonesia, Egypt, Korea and Brazil lift thousands of people out of poverty Providing mid-day meals to 74,000 children through Akshaya Patra
  • 16. 16 Aditya Birla Capital Limited (ABCL) Aditya Birla Capital Limited (ABCL) is the holding company of all the financial services businesses of the Aditya Birla Group. Through its subsidiaries and joint ventures, it manages aggregate assets worth more than Rs3000 billion and has a lending book of Rs600 billion (including housing) as of December 31, 2018. ABCL is among the top five private diversified NBFCs in India. It is also one of the largest private life insurance companies, asset management companies and general insurance brokers in the country. The company has undertaken various internal and external sustainability efforts to be a sustainability leader in its sector. Aditya Birla Capital Limited is the holding company of all the following financial services businesses: Aditya Birla Finance Limited Aditya Birla Health Insurance Limited Aditya Birla Housing Finance Limited Aditya Birla Insurance Brokers Limited Aditya Birla Money Aditya Birla My universe Limited Aditya Birla PE Advisors Limited Aditya Birla Sun Life Asset Management Company Aditya Birla Sun Life Insurance Aditya Birla Sun Life Mutual Fund Aditya Birla Sun Life Pension Management Limited Aditya Birla Asset Reconstruction Company Limited
  • 17. 17 PRODUCTS • Insurance • Wealth management • Financing • Advising Companies in Aditya Birla Capital Aditya Birla Finance Limited ABFL offers customised solutions in areas of personal and business loans , corporate finance ,mortgages , capital market- based lending , project loans, structured finance ,wealth management and digital lending, debit market and syndication Aditya Birla Health Insurance Health insurance is a type of insurance coverage that pays for medical and surgical expenses incurred by the insured. Health insurance can return the money insured for expenses incurred from illness or injury, or pay the care provider directly. Aditya Birla Housing Finance Limited “The purpose of a housing finance system is to provide the funds which home-buyers need to purchase their homes that is call housing finance Aditya Birla Insurance Brokers Limited Aditya Birla Insurance Brokers Limited is a leading composite general insurance intermediary, licensed by the Insurance Regulatory and Development Authority of India (IRDA). The company specialises in providing general insurance broking and risk management solutions for corporates and individuals alike. Aditya Birla Money Aditya Birla money provide a range of other products from Aditya Birla money mart limited like company deposits ,mutual funds , insurance, structured products, alternate investment and has a premier wealth management . Aditya Birla My Universe Limited Aditya Birla is an online money management platform, it offering customers an opportunity to manage their financial status Aditya Birla PE Advisors Limited Aditya Birla PE advisor is a wholly owned subsidiary of ABCL. It provides financial advisory and management services with focus on managing venture capital funds and alternate investment fund.
  • 18. 18 Aditya Birla Sun Life Asset Management Company Aditya Birla Sun Life Insurance Life insurance is a form of insurance in which a person makes regular payments to an insurance company, in return for a sum of money to be paid to them after a period of time, or to their family if they die Aditya Birla Sun Life Mutual Fund A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. These investors may be retail or institutional in nature. Aditya Birla Sun Life Pension Management Limited A pension is a type of retirement plan that provides monthly income in retirement. Not all employers offer pensions. Government organizations usually offer a pension, and some large companies offer them and Aditya Birla company one of them. Aditya Birla Asset Reconstruction Company Limited Aditya Birla Asset Reconstruction Company is a specialized Financial Institution That Buys the NPAs or bad assets from banks and financial institutions so that the latter can be clean up their balance sheets. Or in other words. ARCs are in the business of buying bad loans from banks. Aditya Birla Motors Insurance Aditya Birla motor insurance motor insurance is an insurance for cars, trucks, motorcycle and other road vehicles .Its primary use is to provide financial protection against physical damage Aditya Birla Travel Insurance Travel insurance is insurance that is intended to cover medical expenses, trip cancellation, lost luggage, flight accident and other losses incurred while traveling Aditya Birla Life Insurance Aditya Birla life insurance is a contract between an insurance policy hold and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money in exchange for a premium, upon the death of an insured person. Depending on the contract, other events such as terminal illness or critical illness can also trigger payment. The policy holder typically pays a premium, either regularly or as one lump sum. Other expenses such as funeral expenses, can also be included in the benefits. Aditya Birla Wealth Management Wealth management is a high-level professional service that combines financial and investment advice, accounting and tax services, retirement planning and legal or estate planning for one set.
  • 19. 19 Aditya Birla Wellness Good health is a state of physical, psychological, social and spiritual wellbeing. Aditya Birla memorial hospital aim is to create awareness, educate patients and guide them to a healthy life style. PRODUCTS INSURANCE WEALTH MANAGEMENT FINANCING ADVISING
  • 20. 20 Aditya Birla Health Insurance Walk with us towards health, we are with you every step of the way. Purpose : Empower and motivate the families to prioritize their health and live heathy and disease-free lives. Aditya Birla Health Insurance Co. Limited(ABHICL) ,subsidiary of Aditya Birla Capital Ltd (ABCL), is a joint venture between Aditya Birla Group and MMI Holdings of South Africa. ABHICL was incorporated in 2015 wherein Aditya Birla Capital Limited(ABCL) and MMI Strategic Investments (Pty) Ltd. hold 51% and 49% shares respectively. ABHICL commenced its operations in October 2016 and is engaged in the business of health insurance. ABHICL’s current product portfolio includes unique offerings including chronic care and incentivized wellness. ABHICL recorded a gross premium income of Rs. 3,155 Mn in nine months of FY 2018-19 and has covered more than 1.3Mn lives on date. ABHICL has nation-wide distribution presence in over 650 cities through branches and partner offices, 9 bank assurance partners and over 17,100+ direct selling agents. ABHICL serves as an enabler and influencer of health and healthcare choices that customers make, in addition to being a player of healthcare expenses. Thus, ABHICL would act like a much–needed catalyst to grow the prevalent health insurance landscape in India through product innovations and a wider choice of consumer relevant products. ABHICL has invested considerable time and effort to understand existing correlations between good health and individual health choices. ABHICL’s product philosophy aims to combine understanding of this science with an assessment of unaddressed needs of large customer segments, which presently remain unfulfilled.Aditya Birla Capital Limited(ABCL), is the financial services platform of the Aditya Birla Group. With a strong presence across the life insurance, asset management, private equity, corporate lending, structured finance, project finance, general insurance broking, wealth management, equity, currency and commodity broking, online personal finance management, housing finance, pension fund management and health insurance business, ABCL is committed to serving the end-to-end financial services needs of its retail and corporate customers. Anchored
  • 21. 21 by more than 17,000 employees, ABCL has a nationwide reach and more than 2,00,000 agents/channel partners. • Aditya Birla Health Insurance Company was established to bring focus on health as much as insurance. The current healthcare facility in the country needs significant improvement, and this initiative is a moving a step closer towards achieving the goal for a better and healthier India. • Mayank Bathwal, earlier the Deputy CEO of Birla Sun Life Insurance was made the Chief Executive Officer of ABHICL. He has been with the Aditya Birla Group for more than 20 years and has been trusted with the responsibility of taking ABHICL towards success. • ABHICL is entering the Indian health market with a business differentiated model when evaluated with that of any health insurance player existing. They are presenting health insurance to a wider customer set by creating awareness and changing existing consumer approach towards health insurance. KEY ADVANTAGES AND FEATURES Below is a list of the key advantages that ABHICL has over its competitors- Exclusive Focus on Health Insurance: Insurance Regulatory and Development Authority, which regulates, promotes and ensures the growth of the insurance industry in India pointed out that there, are only five private sector general insurers that exclusively deal with health insurance. ABHICL is the first health insurance company to be issued with a certificate of registration. Customization of the plan: The certificate of registration is a mandatory requirement for the amendment of the Insurance Act, 1938 to classify a company specifically for health insurance. When compared to these companies Aditya Birla group has much more customization of the plan and is turning its focus on the retail sector.
  • 22. 22 TYPES OF PRODUCTS Activ Health Essential This plan is aimed at helping customers stay healthy. It provides health rewards for following a healthy lifestyle. Benefits It also has many another optional cover apart from the following: · Inpatient Hospitalization · Pre-hospitalization Medical Expenses · Post-hospitalization Medical Expenses · Day-care Treatment · Domiciliary Hospitalization · Road Ambulance Cover · Benefit for Hospital Room Choice · Second E-Opinion on Critical Illness · Cumulative Bonus · Health Check-up program · Chronic Management Program · Health Returns™ · Wellness Coach · OPD Expenses · Deductible · Maternity, Newborn and Vaccination Expenses · Hospital Cash Benefit Activ Health Enhanced · This plan is a value for money health cover. Benefits- In the Activ enhanced plan apart from the following benefits it also provides a reload of the sum insured.· Inpatient Hospitalization · Pre-hospitalization Medical Expenses · Post-hospitalization Medical Expenses · Day-care Treatment · Domiciliary Hospitalization · Road Ambulance Cover · Organ Donor Expenses · Reload of Sum Insured · Cumulative Bonus · Health Check-up program
  • 23. 23 · Recovery Benefit · Benefit for Hospital Room Choice · Second E-Opinion on Critical Illness · Worldwide Emergency Assistance Services · Chronic Management Program · Health Returns™ · Wellness Coach · OPD Expenses · Deductible · Maternity, Newborn and Vaccination Expenses · Hospital Cash Benefit · Also in this plan, one get zone based premium which ensures that they get the best possible cover. Group Activ Health · This is a highly customizable group premium plan which allows the covers to be tailored to the insured’s needs as it has many optional covers under this plan. ABHICL has ensured that this plan has very simple documentation with benefits of cashless settlements. Group Activ Secure Under this plan for the following cases the company pays a lump sum amount to cover damages to the client or their family: • Accidents • Critical Illness • Hospitalization This plan is a fixed health plan and covers only the above situations. The amount given is based on the premium and other customizations. ABHICL is also planning to introduce a chronic care management program to cater to the unmet needs of a growing Indian population of those suffering from five chronic lifestyle conditions. Reasons to Choose Aditya Birla Health Insurance • Additional benefits such as Wellness Coaching, Health Returns, etc. • Rewards for maintaining a healthy lifestyle • Floater benefit in most insurance policies • Multiple plans (critical illness, hospital cash, personal accident, etc.) under a single brand • Plenty of add-on covers to enhance overall protection
  • 24. 24 Why Aditya Birla Health Insurance Is Different From Others? ADITYA BIRLA HEALTH INSURANCE CO. LIMITED OTHER INSURANCE COMPANIES HOSPITRALIZATION BENEFITS HOSPITALIZATION BENEFITS CASHLESS CLAIMS CASHLESS CLAIMS HEALTH RETURNS ---- CHRONIC MANAGEMENT PROGRAM ---- HOSPITALIZATION BENEFITS: Aditya birla health insurance plans not only to offer free and post hospitalization expenses coverage but also as per your plan you can also avail cover for extra treatments like ICU charges, medical charges, and other patients treatments. CASHLESS CLAIM Cashless is a mechanism wherein if a patient is treated within a hospital which is on the panel of the insurance company, then an insurance company settles either the part of the claim or the entire claim directly with the hospital. This requires a patient not to pay any amount, at the hospital, for the treatment. HEALTH RETURNS At Aditya Birla health insurance, we take special efforts to help our customers maintain good health. Hence we offer policy rewards in the form of health returns to our customers as a motivation to stay fit. Our health returns are monetary rewards that can be accumulated over time and redeemed as per your needs. CHRONIC MANAGEMENT PROGRAM If you or your family member suffer from chronic condition such as ASTHAMA, DIABETES, BLOOD PRESSURE OR CHOLESTEROL, you would know the challenge involved with such chronic disease management. These conditions can be managed well through systematic chronic disease management.To help you manage your chronic condition and to help you live healthy, our team of experts have designed a special chronic care management program called chronic management program. It comes inbuilt with your active health platinum cover and includes coverage for consultation with medical practitioners, diagnostic tests, and medicines.
  • 25. 25 COMPETITORS Apollo Munich Health Insurance Company Limited- Apollo Munich Health Insurance Company had an outstanding record of Incurred Claim Ratio of 92% for the fiscal year 2018-19, and it has brought additional benefits like portability and lifelong renewability options in its existing health insurance plans. Star Health & Allied Insurance Company Limited- Star Health & Allied Insurance Company recorded the Incurred Claim Ratio of 90% for the fiscal year 2018-19. The company has an in-house claim settlement procedure to deal with cashless hospitalization facility. Along with this, Star Health & Allied insurance company comes up with a range of exciting products that offer protection to Diabetes and HIV+ patients. Max Bupa Health Insurance Company Limited- Max Bupa is one of the best-known insurance companies in India, which had an Incurred Claim Ratio of 96% for the fiscal year 2018-19. This company offers its health insurance policies to individuals from all age groups. SBI Health Insurance Company Limited- SBI Health Insurance Co. Ltd is a joint venture between the State Bank of India (SBI) and Insurance Australia Group. SBI holds a 74% stake while 26% stake is held by Insurance Australia Group. It operates out in around 14,000 official branches across the globe. With an Incurred Claim Ratio of 52.93% for the fiscal year 2018-19, SBI Health Insurance Company has issued 198876 policies. Religare Health Insurance Company Limited- Religare Health Insurance Company limited has shown tremendous growth in a short period of time, thereby setting a benchmark in the insurance market of India. It had an Incurred Claim Ratio of 93% for financial year 2018-19. It is being regularly appreciated and promoted by the Fortis Hospitals. Manipal Cigna Health Insurance Company Limited- ManipalCigna Health Insurance Company is comparatively a new player in the Indian insurance market, as it was launched in 2014 only and immediately fell into the category of the best health insurance companies in India. Its Incurred Claim Ratio for the fiscal year 2018-19 is 91%. Bajaj Allianz General Insurance Company Limited- Bajaj Allianz General Insurance Company has some health products that are very beneficial for customers from a particular age group. The 3 major health insurance products are Health Guard, Silver Health, and Star Package. Bajaj Allianz Insurance Company was the first to provide
  • 26. 26 captive TPA services with certain additional benefits. Its Incurred Claim Ratio is 98% for the fiscal year 2018-19. New India Assurance Company Limited- New India Assurance is a fully government-owned entity of India, which has been in operations since 1919. This company is well-known for its Mediclaim policy. The best feature offered under this health insurance policy is that it provides different ratings for major metros. It had an Incurred Claim Ratio of 97% for the fiscal year 2018-19. Oriental Insurance Company Limited- Oriental general insurance is also a government-owned general insurance company that offers a wide range of health insurance products in India. The impressive part of Oriental health insurance is that it doesn’t require a pre-policy medical test up to the age of 60 years, whereas it is mandatory under other health insurance providers to get a medical examination done if you are below 45 years of age. Its Incurred Claim Ratio stood at 89% for the fiscal year 2018-19. National Insurance Company Limited- National Insurance Company Ltd. is a full government entity, which has been serving its customers for more than a century and also provides health insurance coverage. It had an Incurred Claim Ratio of 103.19% for the fiscal year 2018-19. The best health product offered by National General Insurance Company is Varishtha Mediclaim that offers coverage to senior citizens.
  • 27. 27 EVOLUTION OF HEALTH INSURANCE The concept of Health Insurance was proposed in the year 1694 by Hugh the elder Chamberlen from Peter Chamberlen family. In 19th Century “Accident Assurance” began to be available which operated much like modern disability insurance. This payment model continued until the start of 20th century. During the middle to late 20th century traditional disability insurance evolved in to modern health insurance programs. Today, most comprehensive health insurance programs cover the cost of routine, preventive and emergency health care procedures and also most prescription drugs. But this is not always the case. Healthcare in India is in a state of enormous transition: increased income and health consciousness among the majority of the classes, price liberalization, reduction in bureaucracy, and the introduction of private healthcare financing drive the change. Over the last 50 years, India has achieved a lot in terms of health insurance. Before independence, the health structure was in dismal condition i.e. high morbidity and high mortality and prevalence of infectious diseases. Since independence, emphasis has been put on primary health care and we made considerable progress in improving the health status of the country. But still, India is way behind many fast-developing countries such as China, Vietnam and Sri Lanka in health indicators. Health insurance, which remains highly underdeveloped and less significant segment of the product portfolios, is now emerging as a tool to manage financial needs of people to seek health services. The new economic policy and liberalization process followed by Government of India since 1991 paved the way for privatization of insurance sector in the country. The Insurance Regulatory and Development Authority (IRDA) bill, passed in Indian parliament, is the important beginning of changes having significant implications for the health sector. Health Insurance is more complex than other segments of insurance business because of serious conflicts arising out of adverse selection, moral hazard, unavailability of data and information gap problems. Health sector policy formulation, assessment and implementation are an extremely complex task, especially, in changing epidemiological, institutional, technological and political scenario. Proper understanding of Indian Health situation and application of principles of insurance, keeping in view the social realities and national objectives, are important.
  • 28. 28 INSURANCE INDUSTRY PROFILE The insurance industry of India consists of 57 insurance companies of which 24 are in life insurance business and 33 are non-life insurers. Among the non-life insurers there are six public sector insurers. In addition to these, there is sole national re-insurer, namely, General Insurance Corporation of India (GIC Re). Other stakeholders in Indian Insurance market include agents (individual and corporate), brokers, surveyors and third-party administrators servicing health insurance claims. MARKET SIZE Government's policy of insuring the uninsured has gradually pushed insurance penetration in the country and proliferation of insurance schemes. Gross premiums written in India reached Rs 5.53 trillion (US$ 94.48 billion) in FY18, with Rs 4.58 trillion (US$ 71.1 billion) from life insurance and Rs 1.51 trillion (US$ 23.38 billion) from non-life insurance. Overall insurance penetration (premiums as % of GDP) in India reached 3.69 per cent in 2017 from 2.71 per cent in 2001. In FY19 (up to October 2018), premium from new life insurance business increased 3.66 per cent year- on-year to Rs 1.09 trillion (US$ 15.46 billion). In FY19 (up to October 2018), gross direct premiums of non-life insurers reached Rs 962.05 billion (US$ 13.71 billion), showing a year-on-year growth rate of 12.40 per cent.
  • 29. 29 INVESTMENTS AND RECENT DEVELOPMENTS The following are some of the major investments and developments in the Indian insurance sector. • As of November 2018, HDFC Ergo is in advanced talks to acquire Apollo Munich Health Insurance at a valuation of around Rs 2,600 crore (US$ 370.05 million). • In October 2018, Indian e-commerce major Flipkart entered the insurance space in partnership with Bajaj Allianz to offer mobile insurance. • In August 2018, a consortium of WestBridge Capital, billionaire investor Mr Rakesh Jhunjunwala announced that it would acquire India’s largest health insurer Star Health and Allied Insurance in a deal estimated at around US$ 1 billion. • In September 2018, HDFC Ergo launched ‘E@Secure’ a cyber insurance policy for individuals. • Insurance sector companies in India raised around Rs 434.3 billion (US$ 6.7 billion) through public issues in 2017. • In 2017, insurance sector in India saw 10 merger and acquisition (M&A) deals worth US$ 903 million. • India's leading bourse Bombay Stock Exchange (BSE) will set up a joint venture with Ebix Inc to build a robust insurance distribution network in the country through a new distribution exchange platform GOVERNMENT INITIATIVES The Government of India has taken a number of initiatives to boost the insurance industry. Some of them are as follows: • In September 2018, National Health Protection Scheme was launched under Ayushman Bharat to provide coverage of up to Rs 500,000 (US$ 7,723) to more than 100 million vulnerable families. The scheme is expected to increase penetration of health insurance in India from 34 per cent to 50 per cent. • Over 47.9 million famers were benefitted under Pradhan Mantri Fasal Bima Yojana (PMFBY) in 2017-18. • The Insurance Regulatory and Development Authority of India (IRDAI) plans to issue redesigned initial public offering (IPO) guidelines for insurance companies in India, which are to looking to divest equity through the IPO route. • IRDAI has allowed insurers to invest up to 10 per cent in additional tier 1 (AT1) bonds that are issued by banks to augment their tier 1 capital, in order to expand the pool of eligible investors for the banks.
  • 30. 30 HEALTH INSURANCE SCENARIO IN INDIA Health is a human right. It’s accessibility and affordability have to be ensured. The escalating cost of medical treatment is beyond the reach of common man. While well to do segment of the population both in Rural and Urban areas have accessibility and affordability towards medical care, the same cannot be said about the people who belong to the poor segment of the society. Health care has always been a problem area for India, a nation with a large population and larger percentage of this population living in urban slums and in rural area, below the poverty line. The government and people have started exploring various health financing options to manage problem arising out of increasing cost of care and changing epidemiological pattern of diseases. In the light of escalating health care costs, coupled with demand for health care services, lack of easy access of people from low income group to quality health care, health insurance is emerging as an alternative mechanism for financing health care. Indian health financing scene raises number of challenges, which are:
  • 31. 31 • Increase in health care costs. • High financial burden on poor eroding their incomes. • Need for long term and nursing care for senior citizens because of increasing nuclear family system . • Increasing burden of new diseases and health risks. • Due to under-funding of government health care, preventive and primary care and public health functions have been neglected. In the above scenario, exploring health financing options became critical. Naturally, health insurance has emerged as one of the financing options to overcome some of the problems of our system. In simple terms, health insurance can be defined as a contract where an individual or group purchases in advance health coverage by paying a fee called “premium”. Health insurance refers to a wide variety of policies. These range from policies that cover the cost of doctors and hospitals to those that meet a specific need, such as paying for long term care. Even disability insurance, which replaces lost income if you cannot work because of illness or accident, is considered health insurance, even though it is not specifically for medical expenses. Health insurance is very well established in many countries, but in India it still remains an untapped market. Less than 15% of India’s 1.1 billion people are covered through health insurance. And most of it covers only government employees. At any given point of time, 40 to 50 million people are on medication for major sickness and share of public financing in total health care is just about 1% of GDP. Over 80% of health financing is private financing, much of which is out of pocket payments and not by any pre- payment schemes. Given the health financing and demand scenario, health insurance has a wider scope in present day situation in India. However, it requires careful and significant efforts to tap Indian health insurance market with proper understanding and training. VARIOUS HEALTH INSURANCE PRODUCTS AVAILABLE IN INDIA- The existing health insurance schemes available in India can be broadly categorized as: 1. Voluntary health insurance schemes or private-for-profit schemes 2. Mandatory health insurance schemes or government run schemes (namely ESIS, CGHS) 3. Insurance offered by NGOs/Community based health insurance 4. Employer based schemes 1. Voluntary health insurance schemes or private-for-profit schemes: In private insurance, buyers are willing to pay premium to an insurance company that pools similar risks and insures them for health related expenses. The main distinction is that the premiums are set at a level, which are based on assessment of risk status of the consumer (or of the group of employees) and the level of benefits provided, rather than as a proportion of consumer’s income. In the public sector, the General Insurance Corporation (GIC) and its four subsidiary companies (National Insurance Corporation, New India Assurance Company, Oriental Insurance Company and United Insurance Company) provide voluntary insurance schemes. The most popular health insurance cover offered by GIC is Mediclaim policy
  • 32. 32 • Mediclaim policy It was introduced in 1986. It reimburses the hospitalization expenses owing to illness or injury suffered by the insured, whether the hospitalization is domiciliary or otherwise. It does not cover outpatient treatments. Government has exempted the premium paid by individuals from their taxable income. Because of high premiums it has remained limited to middle class, urban tax payer segment of population. • Some of the various other voluntary health insurance schemes available in the market are :- Asha deep plan II , Jeevan Asha plan II, Jan Arogya policy, Raja Rajeswari policy, Overseas Mediclaim policy, Cancer Insurance policy, Bhavishya Arogya policy, Dreaded disease policy, Health Guard, Critical illness policy, Group Health insurance policy, Shakti Shield etc. • At present Health insurance is provided mainly in the form of riders. There are very few pure health insurance policies under voluntary health insurance schemes. Mandatory health insurance schemes or government run schemes (namely ESIS, CGHS0) Employer State Insurance Scheme (ESI):- Enacted in 1948, the employers’ state insurance (ESI) Act was the first major legislation on social security in India. The scheme applies to power using factories employing 10 persons or more and non- power & other specified establishments employing 20 persons or more. It covers employees and the dependents against loss of wages due to sickness, maternity, disability and death due to employment injury. It also covers funeral expenses and rehabilitation allowance. Medical care comprises outpatient care, hospitalization, medicines and specialist care. These services are provided through network of ESIS facilities, public care centers, non-governmental organizations (NGOs) and empanelled private practitioners. The ESIS is financed by three way contributions from employers, employees and the state government. Even though the scheme is formulated well there are problem areas in managing this scheme. Some of the problems are :- • Large numbers of posts of medical staff remain vacant due to high turnover and low remuneration compared to corporate hospitals. • Rising costs and technological advancement in super specialty treatment. • Management information is not satisfactory. • The patients are not satisfied with the services they get • Low utilization of the hospitals • In rural areas, the access to services is also a problem All these problems indicate an urgent need for reforms in the ESIS Scheme.
  • 33. 33 1.Central Government Health Insurance Scheme (CGHS):- Established in 1954, the CGHS covers employees and retirees of the central government and certain autonomous and semi-autonomous and semi-government organizations. It also covers Members of Parliament, Governors, accredited journalists and members of general public in some specified areas. Benefits under the scheme include medical care, home visits/care, free medicines and diagnostic services. These services are provided through public facilities with some specialized treatment (with reimbursement ceilings) being permissible at private facilities. Most of the expenditure is met by the central government as only 12% is the share of contribution. • The CGHS has been criticized from the point of view of quality and accessibility. Subscribers have complained of high out of pocket expenses due to slow reimbursement and incomplete coverage for private health care (as only 80% of the cost is reimbursed if referral is made to private facility, when such facilities are not available with the CGHS). 2.Universal Health Insurance Scheme (UHIS):- For providing financial risk protection to the poor, the government announced UHIS in 2003. Under this scheme, for a premium of Rs. 165 per year per person, Rs.248 for a family of five and Rs.330 for a family of seven , health care for sum assured of Rs. 30000/- was provided. This scheme has been made eligible for below poverty line families only. To make the scheme more saleable, the insurance companies provided for a floater clause that made any member of family eligible as against mediclaim policy which is for an individual member. In spite of all these, the scheme was not successful. • The reasons for failing to attract rural poor are many :- • The public sector companies who where required to implement this scheme find it to be potentially loss making and do not i • Invest in propagating it. To meet the target, it is learnt that several field officers pay the premium under fictious names. • Identification of eligible families is a difficult task • Poor find it difficult to pay the entire premium at one time for future benefit, foregoing current consumption needs. • Paper work required to settle the claims is cumbersome • Deficit in availability of service providers • Set back due to health insurance companies refusing to renew the previous year’s policies. 3. Insurance offered by NGOs/Community based health insurance Community based schemes are typically targeted at poorer population living in communities. Such schemes are generally run by charitable trusts or non-governmental organizations (NGOs). In these schemes the members prepay a set amount each year for specified services. The premia are usually flat rate (not income related) and therefore not progressive. The benefits offered are mainly in terms of preventive care, though ambulatory and inpatient care is also covered. Such schemes tend to be financed through patient collection, government grants and donations. Increasingly in India, CBHI schemes are negotiating with for profit insurers for the purchase of custom designed group insurance policies.
  • 34. 34 • CBHI schemes suffer from poor design and management. Often there is a problem of adverse selection as premiums are not based on assessment of individual risk status. These schemes fail to include the poorest of the poor. They have low membership and require extensive financial support. Other issues relate to sustainability and replication of such schemes. • Some of the popular Community Based Health Insurance schemes are: - Self-Employed Women’s Association (SEWA), Tribuvandas Foundation (TF), The Mullur Milk Co-operative, Sewagram, Action for Community Organization, Rehabilitation and Development (ACCORD), Voluntary Health Services (VHS) etc. 4.Employer based schemes Employers in both public and private sector offers employer-based insurance schemes through their own employer. These facilities are by way of lump sum payments, reimbursement of employees’ health expenditure for out-patient care and hospitalization, fixed medical allowance or covering them under the group health insurance schemes. The Railways, Defense and Security forces, Plantation sector and Mining sector run their own health services for employees and their families. • Increase in health care costs. • High financial burden on poor eroding their incomes. • Need for long term and nursing care for senior citizens because of increasing nuclear family system . • Increasing burden of new diseases and health risks. • Due to under-funding of government health care, preventive and primary care and public health functions have been neglected. In the above scenario, exploring health financing options became critical. Naturally, health insurance has emerged as one of the financing options to overcome some of the problems of our system. In simple terms, health insurance can be defined as a contract where an individual or group purchases in advance health coverage by paying a fee called “premium”. Health insurance refers to a wide variety of policies. These range from policies that cover the cost of doctors and hospitals to those that meet a specific need, such as paying for long term care. Even disability insurance, which replaces lost income if you cannot work because of illness or accident, is considered health insurance, even though it is not specifically for medical expenses. Health insurance is very well established in many countries, but in India it still remains an untapped market. Less than 15% of India’s 1.1 billion people are covered through health insurance. And most of it covers only government employees. At any given point of time, 40 to 50 million people are on medication for major sickness and share of public financing in total health care is just about 1% of GDP. Over 80% of health financing is private financing, much of which is out of pocket payments and not by any pre- payment schemes. Given the health financing and demand scenario, health insurance has a wider scope in present day situation in India. However, it requires careful and significant efforts to tap Indian health insurance market with proper understanding and training.
  • 35. 35 Types of Insurance Risk is everywhere: When you drive your car to work, when you visit a new country, when you ride your bike to a nearby shop, when there’s a new bug going around in town.There are two broad types of insurance: • Life Insurance • General Insurance Life Insurance Life insurance is a contract that offers financial compensation in case of death or disability. Some life insurance policies even offer financial compensation after retirement or a certain period of time. Life insurance, thus, helps you secure your family’s financial security even in your absence. You either make a lump-sum payment while purchasing a life insurance policy or make periodic payments to the insurer. These are known as premiums. In exchange, your insurer promises to pay an assured sum to your family in the event of death, disability or at a set time. Types of General Insurance available 1. Health Insurance 2. Motor Insurance 3. Travel Insurance 4. Home Insurance 5. Fire Insurance Health Insurance This type of general insurance covers the cost of medical care. It pays for or reimburses the amount you pay towards the treatment of any injury or illness.It usually covers: • Hospitalization • The treatment of critical illnesses • Medical bills prior to or post hospitalization • Day care procedures like Cataract operations You can also opt for add-on benefits like: • Maternity cover: Your health insurance covers you for the costs related to childbirth. This includes pre-delivery check-ups, hospitalization during delivery, and post-natal care. • Pre-existing diseases cover: Your health insurance takes care of the treatment of diseases you may have before buying the health insurance policy. • Accident cover: Your health insurance can pay for the medical treatment of injuries caused due to accidents and mishaps.
  • 36. 36 Home Insurance Home insurance is a cover that pays or compensates you for damage to your home due to natural calamities, man-made disasters or other threats. It covers liabilities due to fire, burglary, theft, flood, earthquakes, and sabotage. It not only offers financial protection to your home, but also takes care of the valuables inside the property. Travel insurance A travel insurance compensates you or pays for any financial liabilities arising out of medical and non- medical emergencies during your travel abroad or within the country. Travel insurance usually cover • Loss of baggage • Emergency medical expenses • Loss of passport • Hijacking • Delayed flights • Accidental death Fire Insurance Fire insurance pays or compensates for the damages caused to your property or goods due to fire. It covers the replacement, reconstruction or repair expenses of the insured property as well as the surrounding structures. It also covers the damages caused to a third-party property due to fire. In addition to these, it takes care of the expenses of those whose livelihood has been affected due to fire. Motor Insurance Motor insurance is for your car or bike what health insurance is for your health. It is a general insurance cover that offers financial protection to your vehicles from loss due to accidents, damage, theft, fire or natural calamities. You can also get motor insurance for your commercial vehicles.In India, you cannot drive or ride without motor insurance.Let’s look at the two key types: 1. Car Insurance It’s precious—your car. You paid lakhs of rupees to buy that beauty. Even a single scratch can be painful, forget about bigger damages.Car insurance can reduce this pain for a few thousand rupees. 2. Two-wheeler Insurance This is your bike’s guardian angel. It’s similar to Car insurance.You cannot ride a bike or scooter in India without insurance.As with car insurance, what the insurer will pay depends on the type of insurance and what it covers.
  • 37. 37 TAX LAWS AFFECTING INSURANCE INDUSTRY Income Tax Act, 1961 It is tax on income imposed by Central Government. Residents in India are taxed on their worldwide income. Non- residents are taxed on Indian source of income. The Indian tax rates applicable to non-residents could be up to 40% (excluding applicable surcharge). If the tax payable by any company, including a foreign company taxable in India, is less than 18.5% of its book profits, it will be required to pay Minimum Alternate Tax. Interest received by a non- resident from India on foreign currency denominated loans may be taxable. Payments towards royalty and fees for technical services are taxable. u/s. 10(10D) of the Income Tax Act, 1961 any sum received under a life insurance policy, including the sum allocated by way of bonus on such policies is exempted from income tax. There-fore any claims or maturity proceeds received by the resident policy holder will not be taxable as income. Section 80C of the Act provides for deduction in respect of payments for life insurance premium in computing the total income of an individual or a Hindu Undivided Family. The amount of deduction is subject to the maximum of Rupees one lakh being the aggregate of sums referred to in sub-section (2) of Section 80C.Section 88 of the Act provides for a rebate on life insurance premium paid on the policy to the policyholder. Service Tax Under the current service tax regime, service tax leviable on service provided by an insurance agent is not to be paid by the insurance agent himself but by the insurance company. Life Insurance premium is taxable as per the provisions of Service Tax. Tax benefit for tax paid on Insurance premium Premium paid for life and medical insurance policies can be used to claim tax benefit under Section 80C and Section 80D of the Income Tax Act. Normally, the total amount that a person pays to buy/ keep in force a life or medical insurance policy also includes the GST paid on the premium. The GST is calculated as a percentage of the premium and can often be a substantial amount. So, it becomes important for you to understand how much GST is applicable on life and non-life insurance premiums, and whether the GST paid with the basic insurance premium qualifies for getting tax benefit. "Section 80C and Section 80D of Income tax Act entitles specified taxpayers to claim deduction for the entire amount paid to the insurance company for specified insurance schemes. GST being an indirect tax is charged/recovered by the supplier of services from the recipient with actual value of service. Thereby, a collective reading of income tax and GST laws would echo that entire amount paid to the insurance company including applicable GST would be allowed as a deduction."
  • 38. 38 GST paid on health insurance- GST of 18 per cent is charged on the premium paid for health insurance, as per the prevailing regulations. Tax benefit can be claimed under section 80D of the Income Tax Act for the payment made for health insurance policies. For instance, if you purchase a health insurance policy with a sum insured of Rs 10 lakh at the age of 30 years from Bajaj Allianz General Insurance company, you would have to pay a basic premium of Rs 7,843 and GST of Rs 1,412 (18 percent GST is applied on basic premium). The overall premium will add up to Rs 9,255. Similarly, if someone purchases the same policy at the age of 50, then s/he will have to pay a basic premium of Rs 17,782 and GST of Rs 3,200. The overall premium will come to Rs 20,983. Thus, a substantial amount of GST, which is applicable to the basic premiums, in both the cases, can be claimed for getting tax saving deduction benefit under section 80D. Therefore, in each case, you can claim the total premium of Rs 9,255 or Rs 20,983 under section 80D. This tax saving deduction amount is subjected to an investment limit available under the particular section. It is contractually provided (in the policy document/renewal intimations etc.) that GST would be recovered in addition to the premium. Accordingly, without the payment of GST, the obligation of the policyholder would not be discharged, i.e., the policy will not be active. "As an investor, you should know that the income-tax law is widely worded so as to provide a deduction for any sums paid to effect or to keep in force a contract of insurance on the life of a specified person. Accordingly, a component of GST as an element of the premium is eligible for deduction subject to an overall cap of the Section. Also, principally the logic for section 80D would remain same as for section 80C. Without the payment of GST, the obligation of the assesse would not be discharged Types of product GST applied on GST applied % Total premium* can be claimed for tax benefit (under section) Health insurance Basic insurance premium 18 80D Term insurance Basic insurance premium 18 80C ULIPs Charges like fund, Management Charges and Mortality Charges 18 80C Traditional plans like endowment policy, money back policy, whole-life, policies and pension products First-year insurance premium, Second year insurance premium 4.25,2.2 5 80C *Total premium equals to basic premium plus GST.
  • 39. 39 Tax Benefits under Section 80C Section 80C was introduced by the Finance Act 2005. It provides deduction from total income in respect of various investments/expenditure/payments explained below. The total deduction under this section (along with section 80CCC and 80CCD) is limited to Rs. 1.50 lakhs maximum. Instruments that can give you Section 80C benefits are as follows. • Life Insurance Premium • for an individual, policy must be in self or spouse’s or any child’s name. • For HUF, it may be on life of any member of HUF • Sum paid under contract for Deferred Annuity/Pension Plan • for an individual, on life of self, spouse or any child • Sum deducted from salary payable to Govt. Servant for securing deferred annuity • for self or spouse or child • payment is limited to 20% of salary • Employee’s Provident Fund Scheme contribution • PPF Contribution • Contribution by employee to a Recognized Provident Fund. • Sum deposited in 10 year/15 year account of Post Office Saving Bank • Subscription to any Notified Securities/Notified Deposits scheme. e.g. NSS • Subscription to any Notified Savings Certificate, Unit Linked Savings Certificates e.g. NSC VIII issue. • Contribution to Unit Linked Insurance Plan of LIC Mutual Fund e.g. Dhanrakhsa 1989 • Contribution to notified deposit scheme/Pension fund set up by the National Housing Scheme. • Certain payment made by way of installment or part payment of loan taken for purchase/construction of residential house property. • Condition has been laid that in case the property is transferred before the expiry of 5 years from the end of the financial year in which possession of such property is obtained by him, the aggregate amount of deduction of income so allowed for various years shall be liable to tax in that year. • Contribution to Notified Annuity Plan of LIC (e.g. Jeevan Dhara) or Units of UTI or a Notified Mutual Fund. • Subscription to units of a Mutual Fund notified u/s 10(23D). • Subscription to Deposit Scheme of a PSU engaged in providing Housing Finance. • Subscription to Equity Shares/Debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions. • Tuition fees paid at the time of admission or otherwise to any school, college, university or other educational institution situated within India for the purpose of full time education of any two children. • available in respect of any two children maximum
  • 40. 40 To avail of 80C benefit 1. Investment should be in your, your spouse’s or children’s name and you should be the owner (also called proposer) of the policy to get tax benefits for yourself. 2. Renewal premium for life insurance paid for a policy bought in an earlier year can also get the same tax benefit. 3. In the case of Pensions & Annuities, if deduction under section 80CCC has been availed of, then rebate under section 80C would not be allowable. 4. You should be present in India when you apply for the life insurance policy. 5. Any such life insurance policy should have been payable as well as paid in the said period. i.e. you cannot pay next year’s due premium this year, or last year’s overdue premium this year to claim the benefit. 6. Ensure that the Life Insurance cover (Sum Assured) of the policy is at least 10 times that of your Annual Premium in the year of premium payment. Tax Benefits under Section 80CCC- This tax benefit is available for premium payments made towards a pension/deferred annuity plan. The benefit under this section, along with all other investments of 80C, is limited to the 80C limit of Rs. 1.50 lakhs per annum. Tax Benefits under Section 80D- This tax benefit is available for premium payments made to cover a medical/health insurance policy including individual, family floater, critical illness, etc. which are non-investment products. Unlike 80CCC above, the 80D limit is exclusive, i.e. over and above the Rs. 1.50 lakhs limit of Section 80C. You can claim both of them. 1. Deduction under Section 80D is now available up to Rs. 15,000 in a financial year for insurance of self, spouse and dependent children. For senior citizens the limit is Rs, 20,000. 2. In addition to that, a deduction for insurance of parents (either father or mother, or even both) is available to the extent of Rs. 20,000 in a financial year if parents are senior citizens and Rs. 15,000 in other cases. Therefore, the maximum deduction available under this section is to the extent of Rs. 40,000 in a financial year. 1. From FY 2012-2013 (i.e. AY 2013-14) within the existing limit a deduction of up to Rs. 5,000 for preventive health check-up is available.
  • 41. 41 Note- 1. Both individuals and HUF are allowed to claim this benefit. 2. Premiums cannot be paid in cash. 3. In case you are buying the health insurance policy for a period of more than one year, the renewal premiums you pay will also be eligible for the tax benefit. Medical Insurance ( Section 80D ) Medical emergencies always take us by surprise. It is always advised to be safe than sorry and it is no different when it comes to medical insurance. A must in your investment portfolio, the government encourages everyone to buy medical insurance and allows you to avail tax deductions on it under Section 80D. 1. Applicability of Section 80D Every individual or HUF can claim a deduction under Section 80D for their medical insurance which is taken from their total income in any given year. In this article, we will talk about the deduction available for the FY 2018-19. Not only can you take benefit by purchasing a health plan for yourself but also you can take the benefit by purchasing the policy to insure your spouse, or your dependent children or parent. And the best part is, that it is over & above the deductions claimed under section 80C/CCC/CCD. 2. Quantum of Deduction available under Section 80D Individual: An individual can claim a deduction of up to Rs 25,000 for the insurance of self, spouse, and dependent children. An additional deduction for the insurance of parents is available to the extent of Rs 25,000 if they are less than 60 years of age, or Rs 50,000 (as per the Budget 2018) if your parents are aged above 60. If both the taxpayer and the parent whom the medical covers have been taken for are aged more than 60 years, the maximum deduction that can be availed under this section is to the extent of Rs.100,000. The below table captures the quantum of deduction available to an individual taxpayer under various scenarios:
  • 42. 42 Scenario Premium paid Deduction under 80D Self, family, children Parents Individual and parents below 60 years 25,000 25,000 50,000 Individual and family below 60 years but parents above 60 years 25,000 50,000 75,000 Both individual, family and parents above 60 years 50,000 50,000 1,00,000 Members of HUF 25,000 25,000 25,000 Non-resident individual 25,000 25,000 25,000 Note: Senior citizen will also include very senior citizen Example: Rohan is aged 45 and his father is aged 65 years. Rohan has taken a medical cover for himself and his father for which he pays insurance of Rs.30,000 and Rs.35,000 respectively. What would be the maximum amount he can claim by way of a deduction under Section 80D for FY 2018- 19? Ans: Rohan can claim up to Rs 25,000, for the premium paid on his policy. As for the policy taken for his father, who is a senior citizen, Rohan can claim up to Rs.50,000. In the given case, the deduction is Rs 25,000 and Rs 35,000. Therefore, the total deduction that he can claim for the year is Rs.60,000. HUF- An HUF can claim a deduction under section 80D for a mediclaim taken for any of the members of the HUF. This deduction will be Rs.25,000 if the member insured is less than 60 years, and will be Rs.30,000 (increased to Rs.50,000 in Budget 2018) if the insured is 60 years of age or more.
  • 43. 43 3. Preventive Health Check-up- Any payments made towards preventive health check-ups will entitle a taxpayer to a deduction of up to Rs.5,000, which is within the overall limit of Rs.25,000 / Rs.30,000 (Rs.50,000 w.e.f. 1 April 2018) as the case may be. This deduction can also be claimed either by the individual for himself, spouse, dependent children or parents. The payment for preventive health check-up can be made in cash.Example 1: Rahul has paid a health insurance premium of Rs.23,000 for the insurance of the health of his wife and dependent children in the financial year 2017-18. He also got a health check-up done for himself and paid Rs.5,000. Rahul can claim a maximum deduction of Rs.25,000 under Section 80D of the Income Tax Act. Rs.23,000 has been allowed towards insurance premium paid, and Rs.2,000 has been allowed for a health check-up. The deduction towards preventive health check-up has been restricted to RS.2,000 as the overall deduction cannot exceed Rs.25,000 in this case. 4. Single Premium Health Insurance Policies- Budget 2018 has introduced a new provision for claiming a deduction with regards to single premium health insurance policies. Under the new provision, where a taxpayer has made a lumpsum premium payment in a single year for a policy valid for more than one year, he can claim a deduction equal to the appropriate fraction of the amount, under Section 80D. The appropriate fraction is arrived at, by dividing the lump sum premium paid, by the number of years of the policy. However, this would again be subject to the limits of Rs.25,000 of Rs.50,000 as the case may be. Things to keep in mind before investing a. Contribution towards health insurance plan has to made to a scheme as specified by the Central Govt./ approved by IRDA. b. Payment should be made by any mode other than cash. c. Meaning of Senior citizen- Sr. Citizen means an individual resident in India who is of the age of 60 yrs or more during the relevant financial year. d. Premium paid towards a brother, sister, grandparents, aunts, uncles or any other relative cannot be claimed as a deduction for taking tax benefit. e. Premium paid on behalf of working children cannot be taken for tax benefit. f. In the case of part payment by you and a parent, both of you can claim a deduction to the extent paid by each. g. The deduction has to be taken without showing the Service Tax and Cess portion from the premium amount. h. Group Health Insurance premium provided by the company is not eligible for deduction.
  • 44. 44 Investments in Tax Saving FDs- Tax-saving FDs are like regular fixed deposits but come with a lock-in period of 5 years and tax break under Section 80C on investments of up to Rs 1.5 lakh. Eligibility : Can be opened by Resident Indian individuals. Liquidity: Fixed Deposits have lock-in period of 5 years. Rate of Interest : FD interest rate across different banks ranges from 5.5% to 7.75% Investment Limit: Minimum investment limit is Rs 1000. Tax Treatment : Interest earned in taxable. Investments in PPF (Public Provident Fund)- PPF are long term investments backed by government of India. Deposits made in a PPF account are eligible for tax deductions under Section 80C. Eligibility : Can be opened by Resident Indian individuals, salaried and non-salaried individuals. A HUF cannot open a PPF account. Liquidity: PPF account have lock-in period of 15 years, but can be further extended by 5 years. Partial withdrawals are allowed after 7 years. Rate of Interest : Current interest rate is 8.0% p.a. Investment Limit: Minimum and maximum investment limit is Rs 500 and Rs 1.5 lakh respectively. Tax Treatment : Interest earned is tax-free.
  • 45. 45 Investments in EPF (Employee Provident Fund)- EPF is a retirement benefit scheme that is available to all salaried employees. This amounts to 12% of basic salary + DA, that is deducted by an employer and deposited in the EPF or other recognized provident funds. Eligibility : Can be opened by employee with basic salary greater than 15,000 /month Liquidity: Can withdraw PF balance after 2 months of leaving job and does not take up employment within two months with an employer covered by PF Act Rate of Interest : Interest rate on the EPF is 8.55%. Investment Limit: Both employer and employee have to contribute a minimum 12% of Basic Pay + D.A. Tax Treatment :Entire PF balance (including interest) is tax-free, if withdrawn after continuous service of 5 years Investments in NPS (National Pension System)- The NPS is a pension scheme that has been started by the Indian Government to allow the unorganized sector and working professionals to have a pension after retirement. Investments of up to Rs 1.5 lakh can be used to avail tax deductions under Section 80C Eligibility : Can be opened by every Indian citizen between the age of 18 and 60 Liquidity: Partial withdrawals are allowed after 15 years but under special conditions Rate of Returns : Returns rate on the NPS varies between 12% – 14% Investment Limit: No limit on maximum contribution Tax Treatment : Employer contributions are tax-free
  • 46. 46 Investments in ULIP (Unit linked Insurance Plans) ULIPs are a mix of insurance and investment. A part of the invested amount in ULIPs is used to provide insurance and the rest of the amount is invested in the stock markets. Investments of up to Rs 1.5 lakh in ULIPs are eligible for tax breaks under Section 80C Eligibility : An investor can buy ULIP for self or spouse or child Liquidity: Interest rate varies as it is market linked Rate of Returns : Return rate on the ULIP varies between 12% – 14% Investment Limit: No limit on maximum contribution Tax Treatment : Investment and withdrawals & maturity amount are tax-free Investments in Sukanya Samriddhi Yojana- Sukanya Samriddhi Yojana/Scheme is one of the most popular schemes by the Government of India. The scheme is aimed at the betterment of girl child in the country Eligibility : Parents/guardians can open an account in the name of a girl child till she attains the age of 10 years Liquidity: Up to 50% of the deposit amount can be prematurely withdrawn once the girl reaches the age of 18 years Rate of Interest : Interest rate on Sukanya Samriddhi Yojana is 8.5% Investment Limit: Investment is limited to maximum Rs.1,50,000 in a financial year Tax Treatment : Investment and withdrawals & maturity amount are tax-free Save on Taxes.
  • 47. 47 Payments eligible for tax saving deductions under Section 80C- Payments in LIC – Life Insurance Premium The annual premium paid for life insurance in the name of the taxpayer or the taxpayer’s wife and children is an eligible tax-saving payment under Section 80C. The deduction is valid only if the premium is less than 10% of the sum assured. Payments in Children’s tuition fees The tuition fee paid for the education of two children is eligible for tax deduction under Section 80C of up to Rs 1.5 lakh. The fee can be paid to any school, college, university or educational institute situated in India. The fees have to be for a full-time course only. Repayment of Home Loan The repayment of the principal of a loan taken to buy or construct a residential property is eligible for tax deductions under Section 80C. This deduction is also applicable on stamp duty, registration fees and transfer expenses. IMPORTANCE OF HEALTH INSURANCE The importance of Health Insurance can never be undervalued for the following reasons: • Provides security to human life which is of prime importance to any individual. • Closely bonds Insurance Companies, Hospitals, Policyholders and TPAs together for the benefit of Indian masses. • An answer to the solution of uncertainties and risks that are prevalent and ever-pervading in human life. • Access to quality healthcare. • Means of savings and a safe investment option. • Provides financial stability in life. • A tax-saving instrument that significantly contributes in reduction of tax deductions. •Reduces tensions and stress caused on account of hospitalization. • Greatly contributes in leading a stress-free life.
  • 48. 48 REGULATORY FRAMEWORK IRDAI The Insurance Regulatory and Development Authority(IRDAI) was constituted to regulate and develop insurance business in India. As a key part of its role, it is responsible to protect the rights of policyholders. In order to create awareness about IRDAI, it's role, duties and responsibilities are stated here under: • IRDAI provides a certificate of registration to a insurance company. • IRDAI is responsible for the renewal, modification, withdrawal, suspension or cancellation of this certificate of registration. • IRDAI frames regulations on protection of policyholders' interests. • It offers policyholders the right to voice their complaints against insurers or insurance companies. • The IRDAI has set up the grievance redressal cell to take up the complaints of the policyholder. • It specifies the requisite qualifications, code of conduct and practical training for intermediaries or insurance intermediaries and agents. • It specifies the code of conduct for surveyors and loss assessors; • It promotes efficiency in the conduct of insurance businesses; • It promotes and regulates activities of professional organizations connected with life insurance; • It levies fees and other charges to carry out the purposes of the IRDAI Act; • It can call for information from, undertake the inspection of, conduct enquiries and investigations including the auditing of insurers, intermediaries, insurance intermediaries and other organizations connected with the business of life insurance; • It specifies the form and manner in which books of account should be maintained and statements of accounts should be rendered by insurers and other insurance intermediaries; • It regulates the investment of funds by insurance companies; • It regulates the maintenance of margins of solvency; • It adjudicates disputes between insurers and intermediaries or insurance intermediaries;
  • 49. 49 • It specifies the percentage of premium income of the insurer to finance schemes for the promotion and regulation of certain specified professional organizations; • It specifies the percentage of life insurance business to be undertaken by an insurer in the rural or social sector; and THIRED PARTY ADMINISTRATION A Third-Party Administrator (TPA) is an organization which processes claims or provides cashless facilities as a separate entity. Seen as an outsourcing of claim processing, TPA processes claims for both retail and corporate policies. The risk of loss incurred remains with the insurance company. The insurance company usually contracts a reinsurance company to share its risk. An insurance company hires TPA to manage its claims processing, provider network and utilization review. While some TPA operates as units of insurance companies, most are often independent. TPA is also involved in handling employee benefit plans such as processing retirement plans. Handling healthcare or employee benefit claims requires using a specialized set of manpower and technology, therefore hiring a TPA for the same is a more cost-effective method. The Insurance Regulatory and Development Authority of India (IRDA) defines TPA as a Third-Party Administrator who, for the time being, is licensed by the Authority, and is engaged, for a fee or remuneration, in the agreement with an insurance company, for the provision of health services. TPA was introduced by the IRDA in 2001. Being one of the prominent players in the managed care industry, it has the expertise and capability to administer all or a portion of the claims process. The services include claims processing, premium collection, enrollment and cashless processing. Insurance companies setting up its own health plan often outsource certain responsibilities to a TPA. The TPA acts like a claims adjuster for the insurance company. In some cases the insurance company sets up an entire department within their own company to act as TPA as opposed to hiring a commercial TPA company. ROLE OF TPA IN HEALTH INSURANCE Large number of the health insurance companies in India suffer losses and have been doing so for years together. The group health insurance profile is what may cause optimum leakage to the health insurance companies in India. TPA was introduced through the notification on TAP Health Insurance regulation 2001 by the IRDA-their basic role is to function as intermediary between the insurer and the insured and facilitate the cashless services of insurance .For this service they are paid a fixed percent of insurance premium as commission . The commission is currently fixed at 5.6 percent of premium. The introduction of TPAs is of great help and relief to the insurance companies, which have been searching for ways and means to get their management expenses in line with the specifications laid down by the IRDA. TPA is maintaining a database of policy holders and issue identity cards with unique identification numbers to them. They also handle all the policy- related issues, including claim settlements for the
  • 50. 50 policy holders Insurance companies (insurers) can now outsource their administrative activities, including settlement of claims, to third party administrators, who offer such services for a cost. The insurers remunerate the TPAs; hence, policyholders receive enhanced facilities at no extra cost. Once the policy has been issued, all the records will be passed on to the TPAs and all further correspondence of the insured will be with the TPAs and not with the insurance companies The TPA's are expected to provide value-added services to the consumers, like arranging ambulance services, medicines and supplies, guiding policy holders for specialized consultation, and providing information about 24- hour help lines, health facilities, bed availability, organization of lifestyle management and well- being programs. In the middle of 2010, the public sector health insurance companies, namely United India, New India, Oriental Insurance and moreover National Insurance took a tough stand and penalized major hospitals where such procedure were taking place. They eliminated these hospitals from the list from which cashless medical services can be availed by the customers. This caused a lot of pain to the insured, however the industry woke up to the fact that insurance companies were being taken for a ride. The 4 public sector health insurance companies then decided to float a TPA of their own and even do away with the middlemen who were not falling in line. This action is likely to cut down the frequency of false claims creeping their business. The move has acquired big support even from the private health insurance companies. The issuer was not of the public sector health insurance companies alone as well as certain private sector companies have done away with the practice of TPAs as well as used to process claims through in-house representatives. The TPA undoubtedly aims to give the health insurance industry the required boost in India. THE SERVICES PROVIDED BY TPA ARE AS FOLLOWS: ID card: TPA provides ID cards to all their policyholders in order to validate their identity at the time of admission. The TPA's undertakes "Pre-authorization" before a surgical procedure to ease claim processing 24 hours customer support services: The TPA provide assistance through their 24 hrs call center that provides information regarding policyholder's data, provider network, claim status, benefits available with existing cardholder, etc All these details are furnished on request. Cashless Hospitalization: Each policyholder is provided with a list of empanelled hospitals where in he/she can avail cashless hospitalization.
  • 51. 51 THE SPECIALIZED FUNCTIONS OF THE TPA INCLUDE: • The TPA keeps and maintains all the records of medical insurance policies of an insurer. • The TPA issues identity cards to all the policyholders. The policyholders will have to show the identity cards to the hospital authorities before availing any services from the hospital. • In case of a claim, policyholders will have to inform the TPA on a 24 hr toll- free line provided by them • After informing the TPA, the policyholder will be directed to a hospital where the TPA has a tied up arrangement. However, policyholders have the option to be admitted at another hospital of their choice in which case, payment will be on reimbursement basis. • TPA pays for the treatment; they issue an authorization letter to the hospital for the admission of the policyholder in the hospital. • At the point of discharge, all the bills will be sent to the TPA while they are tracking the case of the insured at the hospital. • TPA makes the payment to the hospital. • TPA sends all the documents necessary for consideration of claims, along with the bills to the insurance company. • The insurance company then reimburses the TPA.
  • 52. 52 CLAIM MANAGEMENT Health insurance claims management has evolved significantly in India over the past 10 years. Since the introduction of Mediclaim in the mid 1980s till the advent of TPAs in 2002, claims management focused primarily on reimbursement claims. With the advent of cashless hospitalization, the entire claim process changed. New processes, such as prior authorization became vital for providers and payers. Time, which was not a crucial element in processing reimbursement claims earlier, all of a sudden became a vital parameter. Frequently the patient was already admitted when an authorization request reached a TPA, this meant that a response had to be given within 4-6 hours so the full treatment could commence. Authorization limit enhancements were also sought as the treatment progressed or as the patient was ready for discharge, they also required an urgent response. The early claim systems were ad-hoc applications, frequently improvised upon to incorporate the ever changing multitude of payers / providers requirements, customer expectations and health insurance products. They were mostly reactive systems, supporting existing products and practices and not designed to support future requirements. Thus a peculiar chicken and egg scenario existed- how could an insurer introduce a new product when systems to service it did not exist? A good claims management system must service existing products well while having the in-built flexibility to support products with new and unique features, such as outpatient coverage or products with a savings component. Increased flexibility to incorporate on-the-fly modifications in benefits and processes, in-built intelligence to standardize routine processes and rules based prompts and alerts are now available in newer claims system. Not only do they reduce manual intervention and improve process efficiencies, they can auto adjudicate and process claims which meet all compliance parameters thus enabling claims staff to provide more time for claims that require detailed analysis.
  • 53. 53 RESEARCH METHODOLOGY D.Slesinger and M.Stephenson in the Encyclopedia of Social Sciences define the research as “the manipulation of things, concepts or symbols for the purpose of generalizing to extend, correct or verify knowledge, whether that knowledge aids in construction of theory or in the practice of an art.” In short, the research for knowledge through objective and systematic method of finding solution to a problem is research. The systematic approach concerning generalization and the formulation of a theory is also research. Research design provides the glue that the research project together. A designed is used to structure the research to show how all of the major parts of the research project, the sample or group measurement ,treatments and methods of assignment work to gather try to central research question. Hence, it is clear that research design is the blueprint for researcher it lays down the methodology involved in the collection of information and answering at meaningful conclusion from the same. This classification are made according to the objective of the research ,in some causes the research will fall in to one of this category but in other cases research will fall in to two categories. There are two types of methods of collecting data 1. PRIMARY 2. SECONDARY PRIMARY DATA: The main purpose of collection of primary data was to prepared questionnaire. The researcher tried to find out the awareness and Buying pattern of Health Insurance Through : Personal Approach Surveys Mails questionnaires articles ,magazines telephone ,discussion meeting with Managers, Agents of all the four Health Insurance companies &customers etc. for this project personal interviews was conducted for collection
  • 54. 54 SECONDARY DATA- Consists of published data collected through Books websites news papers journals magazines research papers SAMPLE SIZE Sample size in this report is 90 and the research tool is questionnaire. STATISTICAL TOOL The statistical tool used in this project is Microsoft excel. RESEARCH GAPS/LIMITATIONS The research was based on primary and secondary collection of data, there may be chances of human error and bias. The research was dependent on the information provided by the respondents who were very reluctant in providing right information and were careless. As associated with every project, time and money were the major limitations with project. Due to unwillingness of providing any information, the respondents filled the questionnaire casually. The projection is purely based on verbal meetings with the respondents. Non-co-operative behavior of respondent was a big problem in this survey. While studying the report the above facts should be taken into consideration.
  • 55. 55 DATA ANALYSIS AND FINDINGS Survey has been done to know the Awareness, Preference and consumption pattern of health insurance. By using Questionnaire method. SAMPLE SIZE- 90 More than 75% people who responded for questionnaire aged below 25, this represents young peoples thoughts, awareness regarding health insurance. In Gender Ratio 52% participant are female and about 48% are male and it shows that female participant more actively participated.
  • 56. 56 More than 68% participant are student, 12% peoples are employer and 10% people did not disclosed their occupation, Students are the mainstream of our country and they want to be aware and always ready to give their suggestion and thoughts regarding topic of their knowledge area. More than 84% participant earn less than 5 lac, 9% participant earn between 5-10 lac, 4% participant earn between 10-25 lac and only 1% earn more than 25 lac. It shows that more than 84% participant have low income level.
  • 57. 57 It shows that half of the people don’t have any health insurance policy due to various reasons like financial capability and unaware about health insurance policy. More than 35% market is covered by LIC and 30% is not known company only 20% market is covered by Aditya Birla Health insurance which is very less and ABHI have more market to cover with policy and provide their best facility to customers.
  • 58. 58 Only 50% people is health insured in which 54% is covered under family floater, 36% under individual policy and 8% under group Mediclaim policy which shows people need to focus more on individual health and company need to spread more information among people regarding health insurance. People are more focused on service quality, premium outflow, market value and product quality of the company so company should focus more on these things.
  • 59. 59 More than 54% people buy health insurance by themselves, 22% by insurance agent and 18% people by seeing advertisement. It shows people buy health insurance by their own awareness and knowledge.
  • 60. 60 More than 60% people pay their premium yearly and only 39% people pay their premium monthly. More than 40% people have health insurance plan subsidized based on their family income and 38% people thinks that plan is may be subsidized as their family income and 20% people are not aware.
  • 61. 61 60% people believe by opting for halth insurance they can get mediclaim and tax benefit both which is true. Only 59% are aware about tax benefit under section 80D and other 40% people are not aware about tax benefit so government and companies should start campaigning and other necessary things to spread awareness among people.
  • 62. 62 More than 63% people trust on insurance company for investing their money so this opportunity for private insurance firms. More than 68% people are saving from tax between 2000-10000 by investing their money in health insurance.
  • 63. 63 More than 47% people thinks that it may be government’s strategy to provide tax benefit to insurance holders for increasing the business of insurance companies, they are not fully sure. In the other hand only 16% people thinks that it is not possible and more than 36% people are sure about this strategy of government.
  • 64. 64 More than 75% people are satisfied with the service of their health insurance company and only 23% people are not satisfied with the service provided by their company. More than 70% people are not happy with the service of the company because reimbursement amount is less than 90% and other 29% are not happy because cashless facility is not available. So company should assure the reimbursement amount more than 90% and provide them cashless facility. What more do you expect in terms of health insurance service and benefits? Also give your suggestions • Full disclosure of all the clauses of the policy (especially the one regarding the claim). • All the procedures should be maintained through online applications and the terms and conditions should be more-clearer to the investors. • Decrease the time limit of pre-existing disease waiting period • easy comprehension of exclusion and non-exclusion of eligible treatments • Medical Cards should be provided for direct claims. • Workplace health insurance is usually cheaper than an individual health plan. An employer-sponsored health plan helps pay for your health costs. Federal law demands that large employers must pay at least half of health plan premiums. Businesses usually exceed that percentage
  • 65. 65 LITERATURE REVIEW When a person experiences a bad shock to health, their medical expenses typically rise and their contribution to household income and home production (e.g. cooking or childcare) declines (e.g. Wagstaff and Doorslaer, 2003; Gertler, Levine & Moretti, 2003; Gertler and Gruber, 2002). According to the WHO, ―Each year, approximately 150 million people experience financial catastrophe, meaning they are obliged to spend on health care more than 40% of the income available to them after meeting their basic needs.‖ (WHO Factsheet N°320) Low income and high medical expenses can also lead to debt, sale of assets, and removal of children from school, especially in poor nations. A short-term health shock can thus contribute to long-term poverty (e.g. Van Damme et al, Annear et al). At the same time, because households often cannot borrow easily, they may instead forego high-value care. When they do access care it will often be of low quality (Das, Hammer and Leonard, 2008), which can lead to poor health outcomes. Theory suggests that health insurance can address some of these problems. By covering the cost of care after a health shock, insurance can help to smooth consumption, reduce asset sales and new debt, increase the quantity and quality of care sought, and can improve health outcomes. Unfortunately, rigorous evidence on the impact of insurance is scarce, and there are even fewer studies on the effects of insurance in developing countries. One reason for the lack of evidence is that it is difficult to find a valid control group for the insured. We cannot simply compare the outcomes of insured and uninsured households, since health insurance status is typically strongly correlated with other household characteristics. For example, rich and well-educated households typically have both better health (Asfaw, 2003) and better health insurance coverage (Jütting, Cameron and Trivedi), but the positive correlation between health and insurance status tells us nothing about the impact of insurance. On the other hand, those in poor health may be more likely to pay for health insurance (Cutler and Reber, 1998; Ellis, 1989), but finding that the insured tend to be sicker would not imply that insurance causes illness. Below we review past evidence on the impacts of health insurance, focusing on studies where health insurance status is plausibly exogenous, or where studies have attempted to eliminate bias due to self-selection. A majority of the rigorous studies are based on United States data. We follow Levy and Meltzer (2004, 2008) in both our choice of U.S. studies and in our main conclusions.
  • 66. 66 FINDINGS A systematic approach was followed to identify the requirements of a Target customers to provide them with benefit and reasonable degree of security. Today everyone believes investment in Health Insurance –it is vital for the future. • Health insurance has emerged as one of the fastest growing segments in the non-life insurance industry. • Awareness and Perception of policy holder: Out of total 91 respondents only 75 percent people have proper knowledge about Health insurance plan. It shows that there has been 30:70 split between cashless and Reimbursement Health insurance policy. • Field experience it was quite evident that policy holder has not wider information about their insurance policy. Knowledge about coverage and exclusion of policy: Most of the time Policy Holders have inadequate knowledge on illness covered in their polices, exclusion of illness in the policy, cashless Reimbursement and list of empaneled hospitals. • Most of the time the agreed time for claim settlement is one month but actual time for claim settlement is 2-3 month. • Policy holders avoid dealing directly dealing with their Insurance Company due to various procedure hassles. Insurance agents seems to have major influence on policy holder’s decision and policy holders more trust and faith of them On one hand, because the prices of health insurance products most of the customers avoid best Health Insurance Plan. SUGGESTION/RECOMMENDATION • Advertisement Of Health Insurance. • Multiple health insurance products should be offered at various price points to customers. • IRDA should engage the services of the Ministry of Health and Family Welfare, Indian Medical Council, Indian Medical Association, healthcare associations and other bodies. • Introduction of a common pool for terminally ill people/people who do not have access to any kind of health insurance. • Fraudulent claims, when discovered and proved, should be treated as criminal offence and subject to strict legal action including imprisonment. • Systems of co-payment, co-insurance and voluntary deductibles to be used to (1) Make health insurance more viable, (2) Control frauds (3) Refrain customers wanting to avail luxury facilities.
  • 67. 67 CONCLUSION This paper makes an attempt to understand the awareness, preference and consumption pattern of Health insurance plan. The result of this study shows that the annual premium is the most important factor that influences the decision or choice of health Insurance plan. This means that households having higher income have higher probability of buying healthcare plan. Thus, less income groups may not opt for health insurance plan. Thus there is a need to develop more products that cater to need of larger and all levels of income groups. Apart from annual premium, hospital network and disease coverage or coverage of services hold importance in making choice of healthcare plan. Thus, insurance company should provide larger network of hospitals and services in their plans in order to satisfy their customer fully. Accessibility of service provider and company reputation also moderately influence the decisions. The decision made for choosing the plan is mainly influenced by self-perceptions. Family and relatives and past experience hold second position for assisting in the choice of plan. Most people would prefer to buy healthcare plan from private insurance companies for they provide better services and innovative products. Thus, there is large scope for private insurance companies to grow. The legal and regulatory framework of private health insurance, particularly because it operates in the voluntary market, should continually balance competing goals of access, affordability and quality of healthcare and provide health coverage to a larger fraction of the population with varying risk characteristics and ability to pay. Regulations, aside from their aim of providing protection of health insurance policyholders and beneficiaries, can be potent tools to promote access to healthcare, control pricing of health coverage vis-à-vis healthcare providers and enhance quality of healthcare. Allowing the participation of other entities that provide health coverage, such as Hospital and/or Professional entities, and self-insured health insurance schemes of Mutual Benefit Associations and Cooperatives would further increase the reach and depth of private health insurance. The analysis clearly shows that there is demand for cash less health insurance scheme but the customers want reduction in number of exclusions and inclusion of pre-existing diseases. They want the TPAs to be efficient and perform up to the expectation of the policyholders and insurers. Even though the insurers are providing need based plans but more should be done to meet the needs arising out of changing lifestyles of people. The population of elderly people, in India, is rising and they would require institutional care, which is totally missing. The plans need to include pregnancy related expenses, inclusion of chronic and debilitating diseases, HIV and AIDS, TPAs need to be more efficient in claims processing and providing better networking for the policyholders. These challenges can be overcome by setting up and stand-alone health insurance companies that are run on-profit objective. In most of countries life insurance companies underwrite health insurance. In India, life insurers should be allowed to underwrite health insurance. The tax benefits available at present should be hiked and continued with. The health plans should be wide based in order to include outpatient care along with in-patient. To create the awareness of health insurance is very important, the Government and all the associated bodies should all offer their support in spreading health insurance awareness so that Indian citizens are aware of the right to seek quality healthcare without any financial thought. and it will help to increase the awareness of health Insurance among the people.
  • 68. 68 BIBILIOGRAPHY 1. https://www.adityabirla.com/ 2. https://www.adityabirlacapital.com/multiply-wellness/#!/home 3. https://en.wikipedia.org/wiki/Aditya_Birla_Group 4. https://www.ibef.org/industry/insurance-presentation 5. https://www.mordorintelligence.com/industry-reports/india-health-and-medical-insurance- market 6. http://www.nishithdesai.com/information/areas-of-service/industry/insurance.html 7. https://www.policybazaar.com/ 8. https://economictimes.indiatimes.com/wealth/tax/can-you-claim-tax-benefit-for-tax-paid-on- insurance-premium/articleshow/68702197.cms 9. https://www.moneycontrol.com 10. https://www.irdai.gov.in/Defaulthome.aspx?page=H1 11. https://www.incometaxindia.gov.in/