Changing with the times seems to be the sine qua non for commercial success. Within insurance, the refrain, in line with adapting to changed circumstances, is to giving more impetus to digital, selling byte-sized insurance, adding wellness and OPD (out-patient department) benefits, and developing products for specific diseases such as dengue, cancer and covid-19. These are all good things to do, I’m sure, but when I look back at the eight years of publishing the Mint SecureNow Mediclaim Ratings (MSMR), the aspects I value most are those that have remained unchanged and unwilling to accommodate current fashion.
Let’s begin with the overall weightages that go into the ratings. These are currently 40% for product features, 35% for claims and 25% for premiums. Five years ago, the weight for product features was identical, claims were 5% lower and premiums 5% higher, a very small change. There is a constant debate on the “correct” weight for premiums. I think we have found the balance: product features are most important because they decide what you will get when you claim, claim payment track record is second because it shows actual delivery on claims and premiums are third, but not insignificant.
Over the years, the product features rated by MSMR have changed somewhat but the top two features have always been the number of years pre-existing diseases are excluded and the capping on room rent. There has been a representation for more comprehensive inclusion of wellness features. This benefit was first recognized in our 2017 ratings when we gave it a 3% weight; this year the weight has been increased to 5%, another small change. Our measure of wellness has not changed. Wellness activities must translate into a specific financial benefit to policyholders that they cannot otherwise get on their own. Such a definition eliminates OPD and pharmacy discounts because many platforms offer those without insurance. Similarly, providing policyholders mobile apps or wearables but no financial incentive to keep well do not count. Wellness benefits are scored if they lead to a reduction in premium or points that can be used for purchases.
To see full Mint SecureNow Mediclaim Ratings (MSMR) 2020 click here
Over the years we have considered all the products where rates are available on the website. There were requests to not rate specific products because a refresh was due but our perspective is that if premiums are available on the website, we should rate it. We did want to rate the Aarogya Sanjivani Mediclaim this time. This is a standard health insurance that all insurers must offer. The only differences across insurers are in their premiums. Unfortunately, most of these premiums are not publicly available on the website.
There is no subjectivity in the ratings. The information is verifiable, from public disclosures and the insurers’ own websites. The math behind the ratings is transparently shared. This insistence on verifiable data also presents issues, the most pressing being that published claims information is at an aggregate level and not segregated by product. Since a large, 35% weight is given to claims, more refined information would be extremely useful.
Overall, the cut-off for A-rated products has consistently been 65%. This year the number of A-rated products that meet this benchmark has reduced. For example, in the individual ₹10 lakh sum assured, age 45 category, this has reduced from nine products last year to six this year. Similarly, in the category of individual cover of ₹20 lakh for a 75-year-old, the number of A-rated products has come down from three to two. The dropout is primarily because of price increases or worsening claims performance.
I don’t want to leave you with the thought that change is something to be resisted. As I look back at the past decade, there have been some remarkable improvements in health insurance. Today, contract definitions and exclusions are standardized, the definition of pre-existing conditions is policyholder-friendly. Insurance policies must be renewable life-long, premiums cannot be changed for specific persons based on their claim history and after eight years claims may not be rejected for any reason other than fraud.
The success of these ratings is due to the single-minded focus on policyholders. That’s a principle that should never change.
Kapil Mehta is co-founder, SecureNow