Health Insurance in India is growing widely and rapidly from the last few years. Recently, there has been some very critical reforms that will not only shape the future but also help the present customers to reap the fruits.

Cashless Anywhere is one such reform that will change the entire landscape of Health Insurance claims in India.

Introduction about Health Insurance Claims 

In health insurance, there are two modes of claims - Cashless and Reimbursement. 

So when a health insurance client is hospitalized, the hospital checks whether they can provide cashless treatment to the client. It means the hospital, if under tie-up (agreement) with the insurance company, asks for expenses related to treatment of the client. If the insurance company agrees, the client won't have to pay the hospital for the treatment. This is known as a cashless claim.

Whereas if the insurance company denies or if there is no tie-up with the insurance company, then the customer has to pay the hospital bills from his/her own pocket and afterwards submit the claim forms & bills for reimbursements. This is known as a reimbursement claim.

Today, approx. 55% of clients take cashless claims while the others have to apply for the reimbursement claims. They might be admitted to the hospitals that are outside their Insurance company’s hospital network. This puts a lot of strain on their finances and makes the entire process long & burdensome. It was a necessity to make the whole journey of claims a frictionless process, which will not just improve the client’s experience but will build greater trust in the system.

What is Cashless Anywhere? 

In the case of a hospitalization, currently the facility of cashless treatment is available only at providers (hospitals) where the insurer has an agreement or tie-ups.

As per the directive from IRDAI - all insurance companies are working on to provide cashless claims in hospitals. Niva Bupa Health, Care Health and ManipalCigna Health Insurance Companies are now providing Cashless Anywhere facility to its clients. Some insurance companies have already started such facilities at a few locations and soon will provide it to PAN India. This improves client satisfaction and helps to increase penetration of Health Insurance in India.

Some insurers have a network agreement (tie-up) with about 1000+ hospitals, while some others might have a network of 4000 to 5000 providers (hospitals). But, this is one endeavor where the entire healthcare ecosystem of approximately 40,000 providers (hospitals) can work to give the cashless facility to their clients.

Steps 

• Inform about the claim to the Insurance Company well in advance. 
• Incase of a planned hospitalization, inform the insurer 48 hours prior to hospitalization.
• Incase of an emergency hospitalization, inform within 24 hours of hospitalization.
• In case the hospital is not under network list, Cashless service is subject to acceptance by the respective health care provider (hospital).
• In case the hospital is not under network list, Insurance companies may ask the client to take treatment in other nearby hospitals in which cashless is available.
• Even after putting in all the efforts, if the provider is not accepting an offer by the Insurer and the client is not ready to move to another available provider, the client will have to go for a reimbursement claim.

Claim is not payable incase of treatment in Excluded Hospitals. List of excluded hospitals is available on the respective insurance company’s website.

Summary

With this initiative, clients will be eligible to get treated in any hospital they choose, and a cashless facility will be made available even if the hospital is not in the network of the Insurer.

Aimed at encouraging more clients to opt for health insurance, the initiative also acts as a step towards reducing fraud, which has been plaguing the insurance industry significantly and diminishing trust of the clients.

Once this facility of 'cashless anywhere' works at its best efficiency, clients will benefit the most. 

• They don't have to worry about arranging money to pay for hospital bills. 
• They don’t have to run long distances for cashless hospitalization.
• They don’t have to change hospitals/doctors to get cashless hospitalization.
• Get access to world class medical facilities.

In short, Clients will be able to reap optimum benefits out of his/her health insurance policy.

In major cities, people prefer to travel by train or 2-wheeler even when they own a car to avoid traffic and reduce fuel expenses. However, irrespective of the kms you drive your car, the car insurance premium still remains the same. Moreover, there are no incentives given to the people with better driving skills. It is not rational, right?

Thanks to digitalisation & modernisation in motor insurance, there are some better & newer options available in the market in the form of telematics or usage-based vehicle insurance covers.

What is Telematics in Insurance?

In 2022, IRDAI permitted Telematics / Usage-based insurance that permits Pay As You Drive (PAYD) and Pay How You Drive (PHYD) car insurance covers. Earlier, Motor Insurance in India, did not consider how different client categories possess a different degree of risk, thereby not penalising rash drivers with higher premiums.  

By using telematics devices fitted in the car, insurers can now take a client-specific pricing approach. I.e. Depending upon the distance driven, how efficiently the vehicle is driven, time of driving, braking patterns, lane discipline, etc, the premium can be charged to a client. Telematics is a technology that uses telecommunication & informatics to analyse risks related to motor insurance. There is a device that consists of a GPS that tracks the location of the vehicle. It also gives information about the car’s speed, fuel consumption, braking, etc. 

Pay As You Drive

Pay as you Drive car insurance allows the client to pay for insurance based on the distance driven, rather than standard car insurance policies that depend on geography, make-model, and age of the vehicle to determine premiums. It means that those who rarely drive their cars will pay less premium for their car policy. For people who are not out on the road often, their risk of an accident is also low, and hence, their car insurance premium should reflect this.

Insurance companies have made slabs of different kilometre limits that the client can select at the time of policy buying/renewing. For example, limits of 5000 km, 7500 km, 10,000 km. If they exhaust the limit, they can top-up additional kilometres of 500 km, 1000 km, and 1500 km.

There are several advantages associated with PAYD like:

• Monitoring speed and tracking real-time location of the car.
• Premium discount for good drivers and customisation of policy.
• Such devices help in theft protection and break-down assistance, i.e. location updates on a real-time basis, which helps in better customer service and higher customer satisfaction.

Unlike other motor policies, these newly introduced coverages/add-ons are styled to give the clients more control and better savings on their motor insurance premiums.

Claim Process

If you raise a claim against the policy, the vehicle should be within the declared (selected slab) distance. For instance, if you selected a 7500 km limit, then the car should not exceed this distance limit at the time of the claim. If your car is within the limit, your claim will be processed as per normal policy terms & conditions, similar to the standard comprehensive car insurance policy.

Important Points to Consider While Taking Pay as You Drive for Your Vehicle

1. Owning more than one car

If you have more than 1 car, then you can buy the Pay as You Drive insurance for the car that is used rarely or has the least distance travelled, ideally less than 7,500 km or 10,000 km in a year.

2. Car Usage

If your yearly car usage is less than 7,500 km or 10,000 km, or if you commute to work/office using public transport, or if you travel out of town frequently and use your car rarely, then Pay as You Drive is the optimal choice of car insurance policy for you.

Cultivating positive habits for your financial health can prove to be pivotal for your financial success. Even subtle adjustments in lifestyle and savings practices can make a huge difference, for one good habit can create a ripple effect. Bringing discipline and consistency to your investment pattern and following fundamental financial health practices such as goal-based investing, budgeting, timely payment of debt, and insurance planning can lead you to a financially prosperous future. 

Insurance Policy is an agreement or a legal contract between the insurer, (the insurance company), and the insured or the policyholder /proposer. It is based on the information the insured provided in the proposal form, making it the most important part of the entire contract. An insurance company offers a policy on the basis of a proposal form and other information related to the insured detailed therein. To do so, the insurer seeks all the relevant information from the proposer in order to underwrite the risk.

The proposal form includes

• basic information such as address, age, name, education, income, etc; 
• other information like occupation, medical history, lifestyle habits like smoking / drinking, etc 

The Principle of Utmost Good Faith

Insurance operates on the principle of utmost good faith which means that both, the insurance company and the insured, have to disclose all material facts that may affect the insurance policy. It is trusted that the proposer would declare the same in good faith. Likewise, the insurance company provides all relevant information about the policy in the documents and policy terms. Thus, it becomes important that the proposer understands and asks for clarity from the insurance company in case of any doubt on the policy and also gives accurate, complete and comprehensive information as requested in proposal form.

What is a Material Fact?

A material fact may be understood as any information that may influence the judgement of the insurance underwriter in deciding whether to accept a risk or not and if so, at what premium. However, If the insurance company finds out that the policyholder has hidden or not stated any material information then the insurance company can cancel the policy & decline the claim, if any. It may thus be better to declare information if in doubt whether to declare or not. 

The Moratorium Period

If the policyholder continues the insurance cover for 8 years without a break, the insurance company cannot deny a claim. This 8 year period is called the moratorium period. After this moratorium period, a claim cannot be denied by the insurance company due to misrepresentation or non-disclosure. The only exceptions are cases of fraud and permanent exclusions specified in the policy contract. This removes anxiety on whether a genuine claim will be accepted or not by the Insurance company

Filling the Proposal Form… 

The accuracy of details entered in the proposal form is critical to the insurance policy. Some people sign and hand over the blank insurance form to the agent. It is likely though that the agent may miss out on some important details that only you are aware of, and your claim may be rejected on the basis of missing or incorrect information provided in the proposal form. Ideally, the proposer should carefully read this form and take time to fill it by himself and not leave it to the agent. Once filled, the proposer should verify that correct and complete details are given. Further, if the proposal form is in an unfamiliar language, one should get it clearly explained and understood before signing. Below are some of the most important points while filling the proposal form…

1. Mention Correct Details: Many people become casual while filling up the proposal form and may not provide the correct details related to age, income, qualification, contact details, address and so on. The contact info is used by the insurer to contact you when a claim arises. Many claims and the maturity/claim amounts remain unpaid as insurers are unable to reach the policyholders at the outdated or incorrect communication details provided by them. Further, details like BMI, health status, family’s medical history, occupation, education, income etc; of the proposer and all the insured members have a major influence on the decision of the insurance underwriter. It may result in rejection of the proposal or hike in the rate of premium.

2. Disclosure of Medical Condition: Many times current health condition is left undisclosed so as to obtain better coverage for lower premium or to avoid the waiting period or rejection. But while making the claim, if it is found that the medical history does not match, the claim might get rejected and/or policy may be cancelled ab-initio. Therefore, complete medical history must be disclosed in the proposal form.

3. Disclosure of Personal Health Habits: The proposer must inform about his/her lifestyle habits like the consumption of alcohol, tobacco and other drugs. We are all aware that addictive/intoxicating substances have a negative impact on health and thus constitutes material fact, having consequences on the risk underwriting by the insurer.

4. Disclosure of existing insurance policies: One must mention all the policies taken from the same insurer as well as other insurers. If you already have an insurance policy, the insurer will offer only the balance of the cover, that is, max cover allowed as per eligibility & underwriting guidelines - sum assured of the existing cover. Non-disclosure or inaccurate declaration of existing insurance policies may result in counter offer or proposal cancellation. In fact, if the insurer comes to know about a pre-held policy that was not declared at proposal stage, it can reject the claim and/or cancel policy on the basis of material non-disclosure.

5. Mention occupational details accurately: Occupation is a crucial parameter to measure health, accident and death risks. For example, if you work in a chemical factory, the risk to your life/health will be much higher. Persons with hazardous occupations or dangerous hobbies like paragliding, parasailing, rock climbing, etc. are charged more premium or the insurance company can even refuse them coverage.

6. Mention Nominee Details: It is mandatory to fill the nominee details in the proposal form in order to make sure that the benefit reaches the right hands.

Conclusion

It is obvious that the proposal form is the backbone of each policy. Hence, those buying an insurance policy must be alert & careful while filling this important document, failure of which may lead to adverse consequences such as rejection of claim or insurance cover. It is critical to ask questions to your insurance company or insurance advisor or an expert, regarding the understanding of the proposal form in case of any doubt. It is better to let the underwriter assess your risk appropriately, rather than being sorry at the time of a claim after you have paid the premiums. 

In the investment world, few names resonated as profoundly as Charlie Munger, the renowned vice chairman of Berkshire Hathaway and the long-time business partner of Warren Buffett. It is no surprise that his recent passing away at the age of 99 cast a shadow across the global investment community. Munger’s wisdom transcended beyond just investments and is universal and timeless in many ways and will continue to guide and inspire investors across the world. In this article we attempt to explore this wisdom, distilled into key principles and learnings that hopefully will inspire us as we progress in our own investment journey. 

1. Principle of Simplicity and Understanding

Munger often stressed the importance of simplicity and understanding in investing. Munger saw complexity as a trap, laying a shadow in the investment decisions. For Indian investors, this principle is particularly relevant in a market known for its dynamism and complexity. Munger advocated for investing in businesses and avenues that one can easily understand, emphasizing that if you don't understand it, you have no business investing in it. Munger believes that beauty lies not in complexity but in mastering the fundamentals, having deep understanding of what works and then letting them guide the investment decisions. 

2. Value Investing and Intrinsic Value

Munger, along with his long-time collaborator Warren Buffett, was a staunch advocate of value investing. Value investing involves identifying undervalued stocks with strong fundamentals and long-term growth potential. In the Indian context, where market fluctuations are a norm, understanding the intrinsic value becomes crucial. By seeking out companies trading below the intrinsic value, investors can aim to capitalize on market efficiencies. Munger's principle encourages investors to focus on the long-term potential rather than short-term market trends as markets would tend to recognise value in the long-term. 

3. Margin of Safety

Munger was a risk realist and the concept of a margin of safety was integral to Munger's investment philosophy. With the equity market, known for its volatility, having a margin of safety can protect investors from unforeseen downturns. Munger believed there is always a room for error, so it is wiser to have a cushion in terms of excess value that can protect you against making an error. Thus, he looked for buying businesses with strong fundamentals at a discount to their intrinsic value. The idea of margin of safety when practiced would give a buffer allowing investors to sleep soundly even when things or markets behaved unexpectedly. This principle is also at the heart of a well-diversified portfolio that balances risk and return, safeguarding wealth against market volatility.

4. The Power of Patience

Patience, according to Munger, is a virtue in investing. The ability to stay patient is invaluable, especially in the Indian markets where we see both rapid growth and occasional setbacks. Munger guides investors to avoid emotional, impulsive and reactionary decisions, allowing investments to mature and flourish over time. He saw the market as a long-term game, where patience was the ultimate winning strategy. 

5. Continuous Learning and a Diverse Mental Toolkit

Munger was no less than a learning machine, a voracious reader with a broad range of interests in diverse subjects and disciplines, including history, psychology, and even physics. He emphasized on having a curious mind and the importance of building a diverse ‘mental toolkit’ to tackle the complexities of investing and the ability to connect the dots. As investors we benefit from continuous learning and exploring, not just about investments, but on diverse interest areas. The more knowledge and tools we have, the more problems we can understand and solve and the more success we can find, not just in investing but also in life. 

6. The Importance of Inversion

Munger often recommended inversion as a problem-solving tool. In the context of investing, this means considering potential risks and downsides before making a decision. Instead of seeking success and bargains, Munger would ask “how to avoid failure?”. This would lead one to expose hidden flaws, pitfalls and simplify complex situations. Thinking forward is not enough, true wisdom comes from examining the problem backwards. By not being stupid, investors can better adopt this principle to enhance risk management, avoid uncertainties and make more informed decisions. 

7. Long-Term Greed Over Short-Term Fear

Munger famously stated, "The first rule of compounding is to never interrupt it unnecessarily." This encapsulates the essence of focusing on long-term goals and resisting the temptation to react to short-term market fluctuations. In equity markets that can be influenced by various external factors, Munger's principle encourages investors to maintain a steadfast approach to wealth creation. Munger believed that the short-sighted "fear-driven selling" creates buying opportunities for those who can maintain a long-term perspective. The long-term greed is in a positive context indicating trust in the power of compounding and the resilience of great businesses and economies. It was about playing the long game, holding conviction through temporary fluctuations and letting the magic of time work its wonders.

8. Keep an Eye for Opportunity Cost

Munger saw opportunity cost not just as an economic concept but as an invisible tax for investors. To put it simply, every "yes" to an investment means that it was a “no” to countless others which may include possibly much better options with higher returns potential. This opportunity cost silently stops us from enjoying good returns and can potentially make our investment choices look mediocre. Looking for opportunity costs doesn’t mean we get stuck or delay decision making but means that we need to focus and make the most of the good opportunities available and to keep an eye for comparing alternatives rationally and logically. This time, we will intuitively become better decision makers and explore the full potential of our investments. 

Conclusion:

Lessons from Charlie Munger's life offers a roadmap, a timeless framework for all investors. As one can imagine, what is written above is just a few buckets from the ocean of wisdom which we can aspire to learn from and implement in our investment journey. The idea is to think deeply, act rationally, and embrace the long game. In a world of noise and distraction, Munger's voice calls for intellectual humility, independent thinking, and a deep respect for the power of compounding. The market is not just a place to make money, but a place for developing a sound thinking mind, shaping character and behaviour and perhaps, even becoming a better person in life.