BPL insurance plan hit by payment delays

The government’s flagship health insurance scheme for below poverty line (BPL) people, Rash­triya Swasthya Bima Yojana, is in trouble as about Rs 250 crore premiums due to insurers is pending with state governments. In turn, claims worth Rs 96 crore made by hospitals have to be settled by insurers as of April 15, 2011. RSBY is subsidised by state and central governments in the ratio 25:75.

Insurers and their third party administrators have complained to the centre about delay in premium receipts. The centre, in turn, has pointed to the longer time taken by them to settle claims.

The government has held discussions with chai­rmen and managing directors of insurance companies and TPAs in Raipur during May 2-5 to resolve outstanding issues. Labour ministry has also begun one-to-one meetings with chiefs of insurance companies and TPAs beginning last Friday, said Anil Swar­up, joint secretary in labour and employment ministry.

“Delay in payments to insurers is a problem. It happens as the payment has to be made in advance and also since RSBY has expanded very fast. The bu­dgetary requirements have increased and processes take time. However, in so­me cases, 100 per cent premium has been received by insurance companies yet the claims are not settled to hospitals,” Swarup said.

“We have raised the issue at national and state-level workshops emphasising the need for state governments to expedite payment to insurance companies. There has been quite a lot of improvement in states like Punjab, Kerala and West Bengal that have set up mechanisms thr­ough which money is housed with a state nodal agency and is paid to the insurer,” said Swarup.

“The central government has just recently cleared all pending bills of insurance companies. It is now only the dues from the state governments that are pending,” added Swarup.

G Srinivasan, chairman and managing director of government-owned United India Insurance, said, “Rs 50 crore to Rs 60 crore is outstanding with the governments in the last four to eight months. We are talking to the governments to get timely payment and are not contemplating withdrawing from the scheme.”

A senior official of Oriental Insurance said, “The premium booked by us last year was Rs 150 crore of which Rs 40 crore is still outstanding.”

ICICI Lombard has to receive Rs 27 crore premiums from the central government while Cholamandalam MS General has Rs 50 crore pending.

Alok Agarwal, executive director at ICICI Lombard, said, “We are talking to RSBY coordinators in expediting the payment. We are not considering withdrawal from the scheme.”

Even though RSBY requires that insurance companies settle claims in 21 days, government-owned insurers have not been able to settle even 50 per cent of the claims in the past three years.

Data with Financial Chronicle show that four government-owned insurers — New India Assurance, Oriental Insurance, National Insurance and United India Insurance — have yet to settle more than 50 per cent of the claims on April 15, 2011. Among private insurance companies, ICICI Lombard has 35.31 per cent claims pending while Tata-AIG General has 28 per cent. However, companies like Star Health and Allied Insurance, Apollo Munich and Iffco-Tokio have no pending claims.

“The inertia in government companies is more. Private players, on the contrary, are more innovative and have evolved systems for faster claims settlement,” said Swarup.

State insurers and private insurers have a market share of 50 per cent each in RSBY. Overall, the scheme has been profitable for insurance companies. There are 11 insurance companies that have insured RSBY beneficiaries.

Budget allocation for RSBY in 2011-12 was Rs 279.94 crore. This is significantly lower than the actual spending of Rs 445.89 crore in 2010-11. The fall comes despite extending the coverage of the scheme to include unorganized workers in hazardous mining and associated industries.

RSBY was formally launched on October 1, 2007 and became operational on April 1, 2008. So far, more than 2.34 crore smart cards have been issued and nine crore people have been covered. The scheme is running in 25 states. It provides a cover for hospitalization charges of Rs 30,000 for a family of five.