Fitness quotient

S Murlidharan | Updated on September 24, 2020

In insurance, prevention is better than cure

To ensure that customers stay fit, which is win-win for both the insurer and the insured, insurance regulator IRDAI has allowed insurers to offer redeemable vouchers for health supplements, gym/yoga centre/sports club membership, etc., under health insurance plans. In many advanced countries, such practices have been kosher on the pragmatic ground that prevention is better than cure for the insured, and prevention is cheaper than cure for the insurer, so much so that some insurers in the US see the wisdom in installing a treadmill at the residence of those who have taken family health insurance.

The IRDAI has now specified a list of items that can be offered as wellness benefits under a health insurance policy. However, inclusion of these benefits would require permission. To foster transparency, IRDAI has said that every insurer has to assess the pricing impact of wellness and preventive features offered and disclose it upfront to the regulator while filing the product.

As part of the health and witness solution, insurers can offer outpatient consultations or treatments that are typically excluded in a standard health plan. Health check-ups and diagnostic tests can also be part of the wellness package. For customers who participate in fitness activities, insurers can also offer either a discount in premium or a bump up in the sum insured during renewals.

In the wake of this thaw in favour of seeming freebies offered with health insurance policies, there is bound to be competition revolving around this new parameter. Insurance aggregators and agents, who hitherto have been evaluating policies of diverse insurers on the touchstone of the premium, will now add another column to factor in the value of these wellness and prevention benefits that come as a package with a policy.

The free annual check-up is bound to be a hit with the insured especially those suffering from middle-age blues. As it is, health insurance is perceived as a down-the-drain expenditure; the entire premium paid goes down the drain save in begetting tax benefit under Section 80D of the Income Tax Act. Hospitals too are going to welcome it as their annual check-up packages do not find ready takers even by the most aware and health-conscious despite catchy marketing. But when it comes free as part of the annual health insurance premium, it will have takers all round.

Hospitals have a vested interest in inflating an in-patient’s bill and, conversely, an insurer has a vested interest in axing as many items of hospital expenses as possible. This is a classic clash. While this conflict of interest is not going to end due to the new thaw in favour of freebies, it is a fact that prevention harmonises the interests of all the three — hospitals, patients and insurers — that have a skin in the game.

A treadmill at the residence of the insured can come with a few riders — at least say three persons in the family to be covered and a minimum sum assured of, say, ₹10 lakh. The insurance regulator, hopefully, would not frown on such reasonable conditions before allowing a major and expensive freebie. Health supplements coupons are a little more tricky. There are genuine and fake health supplements. Insurers will have to sift the grain from the chaff because unrestrained and untrammelled access to nutraceutical products may well prove to be counterproductive.

The writer is a chartered accountant

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Published on September 24, 2020
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