Medi-claim Insurance Policy : 4 ways to reduce premium cost by controlling claim ratio.

Medi-claim Insurance Policy : 4 ways to reduce premium cost by controlling claim ratio.

Many companies, now days, take Group Medical insurance policy for their employees’ welfare and most of the time it is HR department which facilitate inception and execution of this benefit to employee. HR department need to contact various vendors who provide medical insurance services and participate in designing of medical insurance policy for their employees. Here designing medical insurance policy means, selecting various features, benefits and constraints in the policy.

With my experience, I can say that a poor designing of medical insurance policy can lead to high claim ratio which means, a huge load on company, in terms of increase in premium next year or worst case that policy can be cancelled in between. As HR, we would surely not like to face both of the situations i.e. huge increase in insurance premium or cancellation of insurance policy in between.

What is claim ratio?

Claim ratio is basically a measure, to give ratio of premium paid by company and amount claimed by its employees.

Eg. If a company pay Rs 1,00,000/- as premium for medical insurance and its employees, all together, claims rs 5,00,000/- then the claim ratio will be 500%.

But obvious no insurance company would like to bear such loss, end of the day they are in business to make profit.

To avoid such instance here are few things which you can keep in mind while designing your insurance policy:

·         Co Payment Clause : Co payment clause means, employee also need to pay certain percentage of total claim amount.

Eg. If an employee, claims rs. 50,000/- and there is co-payment is of 10%, then rs 5000 will be paid by employee and rest rs 45000 will be paid through insurance company.

I would suggest that co payment should be in between 10% to 20%. Co-payment clause do help in reducing your claim ratio as employee becomes attentive to expenses happening for the treatment otherwise if employee knows that 100% claim will be borne by insurance company,  he becomes careless and hospitals do not wish to loose opportunity to claim maximum amount once they know that the person has medi-claim insurance policy.

·         Room rent Capping : It is another way of ensuring that employee do not take medical insurance policy as luxury but as a facility, which can help them in medical crises. Room rent capping means employee is restricted to take room of certain per day rent and in case employee take room of higher than decided maximum rent as per policy then employee need to bear extra cost by himself.

Eg. If the room rent capping is 2% of sum insured and sum insured is Rs 1 Lakh then employee can claim maximum room rent of Rs 2000 per day from insurance company and in case employee choose room where rent is more than Rs 2000 then additional cost will be borne by employee.

Now it is up to you to choose room rent capping percentage. Also I would suggest  thatwhile choosing capping on room rent, you should keep ICU admission without any capping so that in case of emergency and critical situation employee should not stopped from ICU facility.

·         Disease wise capping : It is wise idea to choose disease wise capping also. Medical experts have identified maximum expense which can happen on treatment of a particular disease, hence we can take this feature. This will stop hospital in overcharging.

·          Inclusion of Parents: Generally, claim ratio in medical insurance policy, where parents are included, is very high. This is due to the simple fact that senior citizen need more health benefits. Hence you need to see whether your company have budget to take load of such expenses. Hence premium of insurance policy with parents is very high.

Please share more ideas reduce claim ratio through your comments.

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