PSU to handle revised health insurance scheme

The state government has finally set the ball rolling for the Chief Minister's Comprehensive Health Insurance Scheme that would benefit 1.34 crore families in Tamil Nadu. One of the most popular welfare schemes of the previous DMK regime, it is now in the process of a revamp with the new government replacing the earlier private health insurance company with a public sector firm.

On Monday, the Tamil Nadu Health Society, the implementing agency for the revised scheme, convened a pre-bid meeting to clarify doubts. The first round of unsuccessful bidding saw nine firms, including the Star Health and Allied Insurance Company (Star Health), which managed the scheme under the earlier DMK government. In the latest round, only four firms - United India Insurance Company, New India Insurance Company, Oriental Insurance Company and National Insurance Company - took part after the state restricted it to public sector companies. "The decision to choose among public sector firms was taken by the cabinet. The government thought it would be hassle free and there would be more transparency in the operations," said a senior official. Bidding is open till November 21.

"The new scheme will have extensive benefits as it covers more than 900 surgical procedures, including life saving interventions like cardiac, renal, neurological procedures and neonatal/ pediatric procedures which were hitherto not covered," said a senior official.

The scheme has been allotted Rs 750 crore for the current fiscal. After negotiations with the 12-member State Empowered Committee, Star Health, the lowest bidder in the previous round, reduced its offer to Rs 508 from Rs 510 towards premium per family. But it was still high for the state-sponsored scheme.

As per the plan, the sum assured is Rs 1 lakh per annum per family, while Rs 1.5 lakh for certain specific procedures like renal transplantation and more than one cardiac valve replacement. Under the new scheme, a family which has an annual income of Rs 72,000 is entitled to avail the benefits.

The successful bidder will have to ensure the availability of a minimum of 50 networked hospitals in Chennai, 20 networked hospitals each in the districts of Coimbatore and Madurai, six networked hospitals each in other districts excluding government hospitals. There will be a minimum of 50 networked hospitals in the areas under each region of the state.

Government plans to list general insurance companies

The government has started consultations on listing public sector general insurance companies besides selling shares in small lots at a time when it is facing a cash crunch.

Senior government officials told TOI that the finance ministry has started internal discussions on listing of the four general insurance companies - New India Assurance, National Insurance, Oriental Insurance and United India Insurance.

At the same time, the four companies are unlikely to hit the market together. Instead, listing of these companies will span a period of time just like public sector banks, where Punjab & Sind Bank was listed only last year, while State Bank of India has been listed for several years.

Given that New India is the largest player in the business, it is likely to be the first off the block.

UPA-2 has usually sold shares in small lots along with listing or follow-on issues by public sector companies. Punjab National Bank is the only instance of the Center disinvesting its stake in a financial sector company at the time of listing.

Listing of state-run players will also set the stage for some of the private sector general insurance companies tapping the markets.

But listing the public sector players is not going to be easy as their accounts are usually delayed. Most will also need to restructure their boards to comply with the listing norms, including a set of independent directors.

Rejig on at four PSU general insurers

While the government is planning to list public sector general insurance companies, over the last few years, it has tried to improve corporate governance standards and initiated an organizational rejig at four general insurers that are wholly-owned by it.

For instance, the insurance companies have started adopting core solutions, which is an electronic interface, allowing customers to transact across the country much like banks where you can now deposit or withdraw funds at any of the branches.

They have been asked to factor in the possible claims into their accounts since settlement in cases such as motor insurance takes years.

During the last fiscal, the state-owned general insurance companies saw a decline in their net profit on account of lower investment income as also due to higher provisions for motor insurance losses.

For instance, United India reported net profit of Rs 130 crore against Rs 707 crore a year ago, while National's profit fell to Rs 75 crore from Rs 225 crore in the previous year. Oriental Insurance bucked the trend reporting profit of Rs 54 crore against losses in 2009-10.

For general insurance companies, especially the public sector players, profit is usually a function of income from investment. For instance, New India Assurance's asset base was estimated at nearly Rs 40,000 crore at the end of March.

Similarly, the market value of United India's investment was almost Rs 16,000 crore. Thanks to their pre-nationalization legacy, they are major shareholders in the top companies in India which helps them cover the losses they incur on their insurance business.

Oriental Bank widens focus to include Mediclaim policy

Oriental Bank of Commerce today entered into a memorandum of Understanding with Oriental Insurance Co Ltd for selling Mediclaim policies to the bank's customers through its pan-India network.

Oriental Bank Mediclaim policy is cash-less family floater covering the members of the beneficiary's family. The policies are available for Rs 1 lakh to Rs 5 lakh. For a policy of Rs 5 lakh, the premium is as low as Rs 6,705 a year.

The memorandum of understanding was signed by Mr. R.M. Sharma, General Manager, Oriental Bank of Commerce (OBC), and Mr. A.K.Saxena, General Manager, Oriental Insurance Co, in the presence of Mr. Nagesh Pydah, Chairman and Managing Director of the bank, and Mr. R.K. Kaul, Chairman and Managing Director of the insurance firm.

Mr. Kaul noted that this policy has some features that are unique for OBC's customers. “This product will be available for all OBC customers up to the age of 79 years. Also, no medical check up will be required.”

So far, Oriental Bank was not looking at general insurance products as a source of “revenue” for the bank. However, there is now a change in its revenue model and OBC has decided to also focus attention on general insurance products for increasing its fee-based income.

“This product was a long-felt need of our customers. Oriental Bank Mediclaim policy will fill the gap in our bouquet of products and services. This should help us in our fee-based income and also in bolstering CASA. This will be a great opportunity for us to build our Current Account Savings Account (CASA) deposits,” Mr. Pydah said.

All Metro and urban branches of the bank have been mandated to sell minimum 250 policies in the next six months, he said. The six-month target has been pegged at 175 policies for semi-urban branches and 75 policies for rural branches.

Disclose agreements between TPA and hospitals

The agreements between public sector health insurance companies and hospitals, including those with third party administrators, should be disclosed to ensure transparency in delivery of medical services to an insured person, Central Information Commission has held.

The Commission rejected the arguments put forth by Oriental Insurance Company that the agreements are between the Third Party Administrators (TPA), to whom the processing of claims is outsourced by the insurance companies and the hospitals and since the TPAs are not public authority, there is no obligation to disclose these agreements.

Information Commissioner Deepak Sandhu held that funds for implementation of health insurance policies is paid by the respondent (Oriental Insurance) which is collected as premium from its customers.

"Therefore this argument is without merit," she said directing the company to disclose the information. However, the Information Commissioner agreed that some portions of these agreements could be severed as it could adversely affect commercial interests of the company.

Sandhu was hearing the plea of an RTI applicant who had sought information from Oriental Insurance on the issue and list of hospitals across the country which provides cashless treatments facilities.

“The disclosed portions would serve to provide greater transparency in respect of the medical services to which the insured are entitled and therefore lend itself to better service been provided to the insured," Sandhu held in her order and also directed the company to place on its web site the names of hospitals which provide cashless treatments.