In 2022, ICICI Lombard suggested a CIBIL-like score for health insurance – a concept that aims to improve risk assessment in the insurance industry. This was first introduced in the National Digital Health Mission: Health Data Management Policy and emphasized the importance of an anonymized system that securely stores and manages people’s health data. As the government is actively working toward its goal of Insurance for All by 2047, could this become a reality?
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What is a CIBIL-like score for health insurance?
Popularly dubbed as the ‘health risk score,’ it is a potential system that evaluates your health profile for insurance purposes. Similar to how CIBIL scores are used in credit assessment, this score would offer insurers better insights into your medical history, lifestyle habits, and overall well-being.
Why do Insurers Need a Health Risk Score?
Insurance companies face significant financial losses due to fraudulent claims. It is estimated that insurers lose ₹12,000-15,000 crore annually due to fraudulent claims. This burden only leads to higher premiums for honest policyholders. A health risk score could curb fraudulent claims by:
- Having a record of pre-existing diseases
- Helping insurers assess health profiles more accurately by keeping track of their claim history
How will a CIBIL-like score reduce fraudulent claims?
Fraudulent claims significantly affect the industry, contributing to rising costs that directly impact genuine claims. By introducing a CIBIL-like score to track people who repeatedly file for fraudulent claims, insurers aim to reduce these losses and hopefully reduce insurance premiums. At the end of the day, this ensures that people who genuinely claim their insurance are not adversely affected.
Factors That Could Impact a Health Risk Score
Several factors may influence a person's health risk score, including:
- Medical History: Chronic illnesses, past surgeries, and hereditary conditions.
- Age and Lifestyle Habits: Smoking, alcohol consumption, and fitness levels.
- Occupation: Jobs involving physical risks or exposure to hazardous environments.
All of these could influence the score, thereby affecting your premiums, policy eligibility, and how the insurer may settle your claims. However, regardless of this, we feel that health insurance is essential for everyone. Here’s why.
Why is Health Insurance Important for Everyone?
Health insurance is essential for everyone, regardless of age or current health. Buying a policy early has multiple benefits — premiums are lower when you're younger, and you're less likely to have pre-existing conditions. This also allows you to serve waiting periods during your healthier years, ensuring full coverage when you need it most. To give you a quick overview, here are the top 5 health insurance companies in India.
Name of the Company | Average CSR (2021-24) | Average ICR (2020-23) | Average Complaints (2021-24) | Network Hospitals |
---|---|---|---|---|
HDFC ERGO | 98 | 85 | 7 | 11.5k+ |
Aditya Birla | 95 | 61 | 22 | 11k+ |
Care | 90 | 58 | 36 | 16k+ |
Bajaj Allianz | 95 | 81 | 3 | 8k+ |
Tata AIG | 96 | 77 | 11 | 10k+ |
Potential Drawbacks and Concerns?
For a health risk score to function effectively, insurers would require access to information such as your medical history, lifestyle habits, and other personal data. If this information is not stored properly or misused, it could pose privacy concerns. This is particularly concerning, given the increasing incidents of data breaches in recent years. However, IRDAI is taking steps to have checks and balances regarding data security and privacy.
Conclusion
If implemented, a CIBIL-like score in the insurance sector could benefit honest policyholders by reducing fraudulent claims and stabilizing insurance premiums. While the system carries potential risks, embracing healthy habits and staying informed may help policyholders improve their scores and secure better insurance policies.
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