Health insurances are now cashless, how does it work?
Hiral Dadia in conversation with #ICICILombard's Gopal Balachandran and #TataAIG's Rudraraju Rajgopal. #NDTVProfitLive
Hiral Dadia in conversation with #ICICILombard's Gopal Balachandran and #TataAIG's Rudraraju Rajgopal. #NDTVProfitLive
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00:00 for many claims and this is something which will be you know a
00:04 Holistic view that has been taken joining us on the show to discuss more on this is
00:09 Mr. Gopal Balachandran chief financial officer and chief risk officer at ICICI Lombard
00:16 Gopal
00:18 Welcome to the show. My first question coming to you is overall
00:22 How does the cashless everywhere system?
00:26 Actually work and how has you know, how is the industry actually come to a consensus like this?
00:31 So good afternoon and welcome to you and to all of your viewers as well
00:37 So let's like let's put this in context. I think when you look at the health insurance space
00:43 Like unlike let's say a property where you any accidents or damages could impact let's say an asset or a property in world
00:52 in so far as let's say health insurance is concerned it impacts individuals and
00:56 Therefore to that extent what you would want to experience is a service
01:01 Capability, which is significantly positive in so far as a customer is concerned and it is in that context
01:07 I mean particularly when you are getting
01:09 Yourselves for a treatment or it's any of your relatives or friends what you don't want is
01:14 Unnecessary, let's say processes taking a lot of your time and more importantly kind of significantly impacting
01:22 the process of
01:23 Getting treated at the hospital. So it is in that context is where when you look at health insurance
01:28 There are two options that are available in case if a customer ends up visiting a network of hospitals
01:34 Which is there as a part of the panel of the insurance company concerned?
01:37 Because there is a kind of an arrangement is the insurance company has with the hospital
01:42 The customer is entitled to a cashless facility as in to say that the customer doesn't have to necessarily end up a
01:48 Paying any amounts at the time of admission and in the process he or she can experience a significantly seamless
01:54 experience as such but ultimately it's a for some reason if the hospital is not there in the network of hospitals of the insurance company
02:02 Unfortunately, the customer has to kind of still experience a treatment there
02:06 He or she will have to go through the process of reimbursement
02:09 Which could be time-consuming and cumbersome in terms of the processes and let's say the documentation involved
02:15 It is with that process is where the general insurance council which kind of constitutes member body of all insurance players
02:22 in the non-life space
02:24 They have decided to kind of come together and say that irrespective of whether the hospital is there as a part of your network or otherwise
02:31 The customer will be entitled to a cashless facility, which is a great great positive if you are if you are to ask me from
02:37 a longer term
02:38 Standpoint, but if you want to look at this in the context of ICC robot, we launched an anywhere cashless facility
02:45 almost about nine months back in March
02:48 2023 is when I says no one had kind of instituted an anywhere cashless facility exactly keeping in mind
02:55 This aspect of creating convenience for the customer and hence to that action
03:00 That's a change that is being brought about by virtue of this announcement
03:02 The general insurance council has done as I said extremely positive from a longer-term perspective, right?
03:08 This is an extreme positive with regards to where consumers are concerned. However, if you have to look at the health insurer
03:15 That's a company like yours
03:17 How does it impact you firstly?
03:19 What percentage of the claims are cashless claims for you and what percentage of our claims are reimbursement?
03:25 Claims as of today and how does that change?
03:28 So I think it's a great question to ask because if you look at again
03:34 The details that the general insurance council had put out as a part of the press release
03:38 If you look at for the market as a whole the number is roughly anywhere between about 63% or there about
03:44 The 63% of the claims are typically cashless and the rest of it
03:48 Rest of it typically as I said will obviously go through the process of the reimbursement mode
03:52 Now coming specifically in terms of what does it do in terms of let's say shifting?
03:58 Reimbursement from an insurance company standpoint again, very very positive because from an insurance company standpoint what it does is
04:05 It kind of helps us to kind of have a direct dialogue in so far as the hospitals are concerned and therefore to that extent
04:12 We will be in a much better position to be able to kind of know what exactly are the procedures?
04:17 What exactly the treatment that the customer is undergoing in so far as the first?
04:21 notification of loss intimate is concerned because today you will find in many of the
04:27 Cases the customer actually ends up visiting an hospital and the insurance company would get an intimation at a later point of time
04:33 By virtue of this anywhere cashless facility insurance companies will be also getting a first intimation of loss
04:39 Assuming it's a if it's a planned procedure
04:42 If it's an emergency procedure
04:44 I think the requirement is to kind of make us or let's say give us the intimation within 48 hours of admission
04:50 But let's stay with the planned procedures wherein before 48 hours of the intended hospitalization
04:56 The customer is required to intimate the insurance company. So therefore we become the first
05:00 Notice of notification of loss in so far as the claim is concerned to what we have generally seen
05:06 In the context of reimbursement. It does kind of come fraught with some elements of fraud and therefore in the process of
05:14 instituting an anywhere cashless facility
05:16 Clearly from an insurance company and more importantly also from a market perspective
05:20 It possibly will result into let's say a reduced number of hospitalization
05:25 Which in turn will again be very very positive
05:27 In so far as policyholder pricing is concerned and that is exactly what you want
05:31 You would want to obviously keep insurance affordable at all points of time and at the same time possibly try and minimize
05:37 instances of frauds
05:40 in so far as the
05:42 Customers are concerned. So both positive customer as I said convenience
05:46 insurance company also stands to benefit in terms of the
05:50 Network that is increasingly available in so far as the customer is concerned and two
05:54 It helps in possibly minimizing frauds and therefore better pricing for the customers
05:59 right so koppal
06:01 from here on
06:03 uh any way where it impacts the cash flow cycle of the insurance company number one because
06:09 You know the reimbursements
06:11 Probably a little delayed right? So the cash going out of the books is a little far away versus
06:17 A cashless which has which happens immediately. So any impact on that front and secondly, do you see?
06:23 Increase in terms of policy sales that could happen
06:27 I think if you look at it, let me address the second part first
06:31 uh, if you look at health insurance as an area of opportunity is significantly
06:35 A long-term prospect and if you look at the levels of penetration that is existing in the market
06:41 I think we have a long runway for growth at least so far as the health insurance space is concerned, which is why
06:47 Health insurance by far is the largest growing segment
06:51 In so far as the market is concerned, even if you look at the last I would say five six years
06:55 despite that
06:57 I think the runway for growth is significantly long term and therefore
07:00 To that extent not only arising out of this specific change that is being brought about but even otherwise
07:06 I think the potential for this market is uh significantly
07:09 long term
07:12 So hence we will continue to see and today i'm sure thanks to covid
07:15 In which ways I think the level of awareness the need for an insurance the need for a top-up cover etc, etc
07:20 All of this is clearly positive
07:23 In so far as the long-term potential of the segment is concerned
07:26 To your first point on what will this entail any kind of a change in so far as costing is concerned
07:32 I think I would say that I don't think this will any kind of materialist change the overall
07:37 Cost structures rather as I said, it will only be a very positive development because even when we were offering a cashless facility
07:44 it all depended on what kind of a
07:46 Arrangement or a procedure that you had with let's say the individual hospitals where there is a part of the network
07:52 There could be predetermined cycles within which let's say
07:55 Settlements will be happening with the individual hospitals concerned and in that extent even this
08:00 This change of anywhere cashless will again be subject to a similar thought process
08:05 given the fact that
08:07 We will have more number of hospitals as a part of the network
08:10 To be kind of working with we will obviously kind of work with a time period within which settlements could take place
08:16 But more importantly as I said, uh the the element of what otherwise would have led to let's say given that
08:23 You're also exactly to your point on giving getting extended time
08:26 It is quite possible that as I mentioned could result into let's say unwarranted frauds at some points of time
08:33 So hence again when you put all of this together, I don't see
08:36 This particular change in transition impacting so much out in so far as the costing of
08:41 Health insurance is concerned rather some of the benefits that we're expecting out of this change
08:46 Is going to be significantly positive from a pricing in so far as customers are concerned
08:52 But Gopal very quickly we're running out of time. But a quick question
08:56 Settlement in terms of cashless on an average. How many number of days does it take from insurer to hospital?
09:03 versus in reimbursement in on an average
09:06 So, let me just put the first part i'm saying i'll just address maybe a part before that
09:12 If you look at the time that it used to take for a customer to get an authorization request cleared from an insurance company
09:19 Could vary between player to player
09:21 Historically for us several types some several years back that process used to take almost about anywhere between three to four hours
09:27 Today by virtue of various technological changes today for a defined set of procedures
09:33 The authorization request for the customer happens in less than 90 seconds
09:36 That's for for the customer to get a treatment done
09:39 In so far as the authorization is concerned and from there on in so far the settlement is concerned
09:44 Given the fact that for the customer, it's a cashless arrangement
09:48 It does not impact so far as the customer is concerned any arrangement there on between the insurance company and the hospital will be a case
09:55 to case base
09:56 And hence to that extent as I said it will all depend on what kind of an arrangement that you've entered into with respect to
10:01 those individual hospitals
10:03 Right. All right. Gopal. Thank you so much for speaking to us at NDTV and giving us those views because this is something
10:09 Absolutely of consumer interest as well currently
10:13 And everyone is watching out for so that is the cfo and the cro at icici lombard
10:19 But let's quickly slip into a short break after the break. We will have
10:22 parthanil gosh president retail business at htfc or go and
10:27 Rudra raju rajgopal the executive vice president and national head at accidental and health claims
10:32 At tata aig general insurance who will be joining us on the show to discuss more
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12:54 Welcome back you're watching ndtv profit and continuing the discussion with regards to where
12:59 cashless claims go
13:01 Rudra raju rajgopal executive vice president and national head accident and health claims at tata aig general insurance
13:07 joins in
13:10 Rudra raju my first question coming to you is we know the way it will benefit consumers
13:14 Uh, you know that life for them changes. How does it really impact a company like yours?
13:20 specifically from a cash flow perspective
13:24 Uh, thanks, thanks for the opportunity. Good. Good seeing the afternoon
13:28 From a cash flow perspective the short run. They would be
13:32 A little faster outflow because cashless and so we're on
13:36 shorter tail
13:37 But I don't think it's a material difference in cash flows for us
13:41 Today more than six to seven or ten rupees we pay is cashless
13:46 So it's not going to materially impact us. Yes in the short run. It'll be
13:51 bigger outflows let's say by 30 60 days for the
13:55 Reimbursement portion but it's not going to materially matter. So
13:59 We also expect some time
14:02 Before this project, you know, there's a larger uptake
14:05 We just announced it the first day itself. We got more than 12
14:10 Cases people asking for cashless and non-network. There's a lot of excitement in the in the insurance community, but we expect
14:18 Some time before it gets universally adopted
14:21 And from a cash flow perspective shouldn't material impact in the long run short run
14:25 Yes for one cycle to make a difference, but once cashless increases the cycle it won't material impact
14:31 Anyway, healthy the short tail business to start with
14:34 It's not like more to third party or something with a long tail
14:37 So not a material difference for our financials because of this
14:40 Right. So what percentage of the claims right now for a Tata AIG?
14:45 Are cashless and what percentage is reimbursements?
14:48 So more than six out of every 10 rupees is cashless
14:53 Depending on a portfolio between
14:55 Six to seven out of every 10 rupees we pay is cashless
14:59 By number it would be smaller but larger claims large value claims tend to be cashless
15:04 So we expect so around 30 40 percent
15:08 We pay reimbursements
15:12 But in the hospitalization, of course, we have some benefits which are
15:15 Fixed benefits which are not related to indemnity
15:18 Daily cash or critical illness which are anyway paid not paid on cashless business
15:23 Indemnity will be nearly six and a half or six to seven rupees
15:27 Out of every 10 is cashless today
15:29 So for the industry, it's not just
15:32 For Tata AIG, there's a lot of difference between
15:37 Cities so something like Delhi it will be eight out of ten rupees
15:40 In Gujarat or Maharashtra to be a little lower
15:43 But at a book level a little over
15:47 60 percent is cashless payments for us, right?
15:50 Another thing I have Rujra Raju is
15:53 Why this move and secondly, do you think it will help?
15:57 insurance companies
16:00 Get an increase in terms of policy sales
16:05 First of all this initiative by the council with regulatory blessing is one of the
16:09 major
16:12 projects I would say
16:13 For health insurance regulator has been making a lot of positive changes for the consumer
16:18 And this I believe is the next big step
16:21 The issue but you know
16:24 Business or no business have different perspectives slightly
16:27 Today if you look at grievances in reimbursement versus grievances in cash
16:33 Grievances in reimbursement versus grievances in cashless
16:35 There's a disproportionate number of grievances in reimbursement process
16:39 Because general customers don't understand the documentation required
16:44 They're not well versed with the insurance process
16:46 Because hospitals are better equipped to manage the process. So just from a customer service perspective
16:52 This is one of the best initiatives in a very long time
16:56 Any ease of customer journey will do well for the industry more business and less
17:02 Complaints or better service for the customer
17:04 Purely from customer service initiative. It has great potential to remove a lot of the bottlenecks
17:10 customers facing reimbursement
17:13 Nobody reads policies in so much detail. So people are not used to submitting the documents
17:18 Hospitals have dedicated tpa desk trained people
17:22 You can better manage this process. So just from that perspective forget the cost element of it. It could make a
17:29 dramatic difference in customer experience
17:33 When we do a satisfaction service and mps service
17:36 The cashless scores tend to be very very high compared to reimbursement
17:40 So it's my take on it is the customers
17:43 From a customer service perspective is one of the greatest initiatives in recent days
17:48 Right another question I have with you is in terms of cashless
17:53 What percentage is reimbursed?
17:56 And what percentage of it is something that the
18:00 You know the consumer will have to pay on an average basis or is it going to be where it's end to end?
18:07 uh
18:09 End-to-end claims that will be settled
18:11 Um
18:14 It's a little you know complex question to answer in a few minutes. It depends on the product you have
18:18 So we know one of our products for example, we pay every part. There's no deduction at all
18:24 Policies have copays deductible procedure limits depends on the product you have
18:29 So
18:31 In the limit of the policy
18:33 So one of the as part of the initiative and requesting the customer to apply for cashless prior to admission
18:38 So before admission the customer exactly knows how much will be cashless
18:43 How much is to be borne by the customer? Of course in a retail product. We generally end up paying the complete claims. So
18:50 That's a different thing. But we have products range of products with copays sublimates deductibles
18:58 Many more restrictions so it depends on the product
19:00 The best way to deal with that is to actually apply for cashless prior to admission
19:05 So that on the day of admission you exactly know what would happen
19:08 You won't have to run around trying to figure out how much to pay and how much the insurer is going to pay
19:13 So around 30 40 percent of cashless requests actually come prior to admission
19:18 More than two thirds the request itself comes after admission
19:23 So if you can take this prior to admission that could make another huge impact on customer service
19:29 At least they can deal with the patient at the hospital and not running around to
19:33 You know get the bill or trying to figure out how much to pay
19:36 so it depends on the product, uh
19:39 it could be as well as
19:41 500 rupees a claim or it could be 30 40 percent of the claim. So read your product
19:46 Uh apply for cashless in advance. You'll exactly get to know how much
19:52 Right
19:53 Thank you. Rudra. I do so much for joining us on the show and sharing the view
19:56 So clearly, you know a lot of perspective that we're picking up with regards to where
20:00 uh the entire cashless
20:02 Uh claims are concerned in the health insurance
20:07 Space as well and this is something which the general insurance council has launched
20:13 What this means is that clearly the cashless claims will be possible at all hospitals
20:19 They need not be a part of the insurers network and for elective surgeries consumers
20:25 Will have to inform insurers and hospitals
20:28 48 hours prior whereas for emergency cases customers have to inform the insurers within 48 hours of
20:36 Hospitalization and the claims will be paid as per the terms of the health insurance policy
20:42 And this is mainly to help policyholders gain access to all hospitals
20:47 And to help the industry tackle fraudulent claim issues
20:51 And the policyholders need not pay for the treatment out of pocket in event of hospitalization
20:56 subject to admissibility of claim, so that's what it looks like in terms of
21:02 The entire scenario that is panning out so far and 63 percent of the claims on an average currently are cashless, but a 37 percent
21:10 Are via reimbursement but completely out of time with that. It's a wrap on this edition on NDTV profit
21:17 Thanks for watching
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