Topic 1: Insurance: How digital health records can help insurers as well as theĀ insured

No insurance scheme can remain sustainable by making some people subsidise the premiums payable by the people with some major ailments (or history of major ailments). That affects the health of the insurance companies severely. Incurred claims ratios of health insurance industry is as high as 89.34% (according to Irdai annual report), with all PSU insurers suffering underwriting losses. The government is all set to launch National Digital Health Mission (NDHM) which enables all citizens to possess digital health records. Unique Health ID will be allotted to each person and a Health Card will also be issued facilitating people to share the data with healthcare providers anywhere in the country and get the necessary medical attention. While this should usher in a new era in the healthcare sector, this can also be a boon to the insurance industry.

Today, the insurance industry functions with health data that are incomplete and inaccurate. But, in the insurance industry, the data is the product itself. All actuarial calculations are based on historical data. The premiums chargeable to standard lives (as mentioned in product brochure) are not the same as the premiums that are chargeable to people with health impairments

Concealing material facts
Usually, people with adverse medical history have to pay higher than standard premiums. In most cases the insurance intermediaries encourage people to suppress adverse medical history and declare themselves as hale and hearty. More than 90% of the proposals fall under this category.

Concealing material facts about health and habits do not serve anyone. If claims arise and the insurers fail to establish suppression of material facts, the claims are paid. But, such malafide claims are actually settled at the expense of other customers who disclose material information honestly. If the insurer can show evidence of suppression of material facts, the claim is rejected.

Now that the health records of all citizens will be available in digitised form, there should not be any scope to conceal material facts. Although the primary reason for digitisation of health data is to enable people to share history of treatment with doctors and hospitals, the people also stand to gain by sharing the data with the insurers while buying health or life insurance products. When the data are shared with insurers, people help the insurers to arrive at the right premium payable for the insurance cover and that enables the insurer to charge appropriate premiums and settle claims without much hesitation.

When health records are shared with insurers, there is every possibility that the premiums payable by people with better health conditions will come down significantly and people with some health impairments required to pay extra premium.

Wellness benefits
When health data of individual customers are known, the insurers can take a lot of measures to improve the lifestyle of the customers and such measures can be customised for each customer. That will reduce the incidence of diseases and claims. If insurers can monitor the health and habits of customers through wearables and other tech enabled systems, they can guide customers to switch over to better lifestyles. Irdai has already allowed insurers to provide such wellness benefits to customers of health insurance products. They can extend this provision to life insurance sector as well. Digital health records can enable not just quicker settlement of claims but also prevent risks and building a stronger nation.
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