Directions [1-8] Read the following passage carefully and answer the questions given below it. Certain words/phrases have been given in bold to help you locate them while answering some of the question.
Health insurance policies were first introduced in 1986 at a time when the Indian insurance industry was nationalized. The policies on offer were complicated to read and offered limited cover. There were no third-party administrators operating in India, and there was no direct settlement of claims between health insurer and hospital. There were therefore issues concerning claims servicing, which involved an Insured following cumbersome procedures to get claims, authenticated and paid. The business was not profitable for the nationalized Insurers, and not popular with the public at large.
The original ‘Mediclaim Policy’, however, developed and in many cases has provided the base model for the health care insurance policies that were introduced immediately after liberalization of the general insurance sector at the turn of the Millennium. Health insurance, however, saw no specialist players until relatively recently. This is because there was a general expectation that the insurance industry regulator, the IRDA, would set a smaller capitalization requirement for health insurers and/or amend the rules for foreign equity ownership in Indian Insurers in recognition of the fact that health insurance loss ratios were not good, and therefore finding an Indian partner to invest 76% in a health insurer would be a difficult task. The IRDA did not, however, relax either the capitalization requirements or foreign investments caps. Initially, therefore, the health insurance market did not grow as quickly as may have been expected.
Growth in policyholder numbers, more effective third-party administration and an effective network of hospitals are expected to see the number improve. Other changes have been effected to encourage growth in this sector. Life insurers have been allowed to sell health insurance. Initially, life insurers were only allowed to sell certain types of health covers as a supplement to a life policy. However, the IRDA has allowed life insurers to sell pure health insurance products subjects to product specific approvals. The standard Mediclaim policy has undergone several revisions and modifications. In recent years, private health insurers have been offering fresh products with increased covers and sums insured. Private hospital rates are still low compared to the rates charged in more developed countries, but high when compared to average Indian earnings. It is no longer uncommon for Indian employees to now expect that health care will be part of an employment package. With the opening up of the market to private competition, the claims process has become much less cumbersome. Support for a health insurance market has also come from some less obvious sources. Indian states have started relying on insurance policies to meet some of their legal obligations to provide health care to their citizens. The central government has also proposed the introduction of free health care insurance for the poor. This plan is meant to cover every poor family for INR 30,000 per annum. The central government will pay 75% of the premium, leaving the remaining 25% to be covered by state governments. The IRDA has also encouraged Micro insurance as a means of extending the availability of health insurance to areas of the market that, geographically and economically, may not have been at the forefront of Insurers’ business plans.
At the same time as the market grows, the IRDA is stepping in to a create a more consumer friendly playing field, particularly as regards the treatment of senior citizens; the operation of the pre-existing diseases exclusion, and the reluctance of insurers to renew policies where the claims experience has been bad. Senior citizens had been complaining about the reluctance of Insurers to issue policies to them, and the inclusion of disadvantageous terms when policies were offered – such as hefty increases in premium rates, added exclusions and conditions, etc. In May 2007, the IRDA set up a Committee on Health Insurance for Senior Citizens to make recommendations. The Committee reported in November 2007 and made the following main recommendations: Senior Citizens should have some assurance that their policies will be renewed; the Industry should adopt standard terms and conditions, such as for the definition of pre-existing diseases. The Committee also said that policy wordings should be simpler for the lay person to follow, suggesting that uniform terminology be used by all Insurers to lessen confusion in the public mind.
1. Which of the following is/are the reason/s because of which the health insurance industry has witnessed growth?
A. The format of the policy has been improvised since its inception
B. Organizations provide health insurance cover to their employees as part of the remuneration process.
C. The process of settlement of claims has become less troublesome as compared to the time when it was first introduced.
a. Only B
b. Only A and C
c. Only C
d. All A, B and C
2. What step has the Central Government taken in terms of insurance for the poor?
a. The poor will have access to free health care insurance, the payment of premium for which will be shouldered by the central and state government in the ratio of 3:1 respectively.
b. The poor people belonging to a particular region will get group health care insurance cover of INR 30,000 per annum
c. The poor will be insured for a sum of INR 45,000 per annum
d. The government has devised special health care insurance policies for the poor wherein no premium needs to be paid either by the individual or the government.
3. Which of the following is/are the reason/s that health insurance policies were not popular in the beginning?
A. The process for settlement of claims was lengthy and tiresome.
B. The clauses in the policy were very difficult to understand.
C. There were no direct claim settlements with the hospitals.
a. Only B
b. Only A and C
c. only C
d. All A, B and C
4. Which of the following is/are true in the context of the passage?
A. Private Hospitals fees can be easily afforded by the general public now as their earnings are significantly higher.
B. More people are now buying insurance policies as compared to almost two decade ago.
C. Insurance agencies initially allowed to independently sell life insurance policies only can also sell health insurance policies independently now.
a. Only B
b. Only A and C
c. only C
d. Only B and C
5. Which of the following is possibly the most appropriate title for the passage?
a. The Indian Health Insurance Industry – the Gradual Change
b. IRDA and its Functioning
c. Health Insurance vs. Life Insurance
d. Challenges Faced by the IRDA
6. What was the plight of senior citizens with respect to buying insurance cover prior to IRDA intervention?
A. Insurance agencies were unwilling to sell policies to them.
B. Clauses disadvantageous to senior citizens were included in the policies.
C. They had to pay higher premiums
a. Only A and C
b. Only A and B
c. Only A
d. All A, B and C
7. Which of the following are the recommendations of the Committee on Health Insurance for Senior Citizens?
A. Standardize wordings in the policy so as to avoid any misinterpretation.
B. Simplify language of the policy so that the common man can understand.
C. Policies of senior citizens may not be renewed.
a. Only A and C
b. Only A and B
c. Only A
d. Only B and C
8. Which of the following is not true in the context of the passage?
a. The general public now has a greater choice in selection of health insurance products since its inception
b. The number of private players in the insurance industry has gone up since 1986
c. The IRDA’s plan for ‘Micro insurance’ is for people who can easily afford insurance cover.
d. The business of insurance was neither initially nor very profitable
Answers:
1. Option- d Self-explanatory
2. Option- a The poor will have access to free health care insurance, the payment of premium for which will be shouldered by the central and state government in the ratio of 3:1 respectively.
3. Option- d Self-explanatory
4. Option- d Self-explanatory
5. Option- a Self-explanatory
6. Option- d Self-explanatory
7. Option- b Self-explanatory
8. Option- c The IRDA’s plan for ‘Micro insurance’ is for people who can easily afford insurance cover
