Anuj Gulati, MD and CEO, Religare Health Insurance, talks to Chandralekha Mukerji and Dipak Mondal about the group's foray into the sector and some proposed regulatory changes.
Q. Recent draft guidelines propose to widen health insurance cover to include sickness benefits during international travel. What would this mean?
A. All stand-alone health insurance companies have asked the regulator to clarify whether insurers are allowed to sell overseas travel insurance, which is basically medical insurance. The new definition, therefore, says medical insurance would comprise health and allied covers, including international travel covers. There is a market segment wanting medical insurance that allows for treatment anywhere in the world. Then there is a group that travels abroad for short periods to work. For such people, managing multiple health policies is hard. They would rather prefer one health plan that would provide cover anywhere in the world.
Q. To lower the entry barrier, capital requirement for a health insurance company has been reduced from Rs 100 crore to Rs 50 crore. Do you think this will help in increasing health insurance penetration?
A. An investment of Rs 30-50 crore is required just to build the technology to be able to run this business. If you do not make such levels of investment, you cannot service this business. While Rs 50 crore looks attractive in theory, practically, it is not feasible to start a company with a capital of Rs 50 crore, considering how competitive the industry is and the current standards of service.
Q. Hospitals overcharging patients with health cover is an issue for insurers. What is your experience?
A. We have seen it less from large organised tertiary-care facilities and institutional set-ups. This is because there is no one individual gaining. It typically happens in smaller set-ups, where there are individuals who benefit.
Q. So, you are saying, large hospital chains such as Fortis or Max Hospital won't overcharge?
A. You cannot institutionalise such improper practices in large set-ups. For instance, if I say ask Religare to cut 10% for every claim and I carry it out for even three months, an employee leaving the organisation later can complain to the regulator or write to the media. So, in our experience, it is when dealing with smaller set-ups that you have to be careful about such practices.
Q. Then, do you think a fixed tariff system for common procedures, as proposed by the General Insurers' Public Sector Association (GIPSA), will help private insurers?
A. A fixed tariff system for common procedures is positive thinking. Beyond a point, the insurer becomes indifferent to, say, whether the customer stayed in the hospital for two days or three days. The hospital will then have to become efficient because the insurer will pay only the fixed amount. We are also forming a similar tariff system.
Q. But will these rates differ from hospital to hospital? GIPSA was rigid with the rates.
A. We are more flexible and evaluate hospitals on individual merit. So, on the basis of infrastructure, quality of medical staff, facilities and so on, we come to an agreement with them on the rates.
Q. You have your own team to settle claims. How does this add to your service efficacy?
A. In the third-party administration (TPA) system, a single TPA deals with a hospital on behalf of multiple insurance companies. Now, say one insurance company clears the claims while another doesn't pay. But the TPA has only one account with the hospital. So the insurance company that paid on time does not get the benefit of paying on time. In our case, we can pay them before the 30-day deadline. We have not only built a brand but also get discounts from hospitals. Hence, the customer is satisfied and we are able to cut costs.
Moreover, fraud is endemic in this business. But when you handle claims yourself, you can intervene. You can have triggers and at least check with the doctors.
Q. Does it help to have a hospital network as part of the group? Religare also has a life insurance firm.
A. As a consumer, when you buy insurance you want to deal with a big group because you are relying on the brand. On the healthcare side, there is Fortis and SRL (Specialty Ranbaxy Laboratories) Diagnostics. Religare can offer an annual health check-up to all our policyholders because we have SRL. It is convenient for the customer as it is cashless service.
Q. You have two banking partners. Any plan of getting foreign investments as well?
A. The primary shareholders of Religare are also the founders of Fortis Healthcare. We understand healthcare delivery and financial services. We had the knowledge to start this business within the group. Also, the business model that works in India is very different from what works in other markets. Typically, when you bring partners on board, they impose their processes and could make it (the business) a nonstarter. At this stage, we are happy with how we are progressing.