HEALTH INSURANCE

IC 01 - PRINCIPLES OF INSURANCE
(Revised Edition: 2011)

Objectives
This course intends to provide a basic understanding of the insurance mechanism. It
explains the concept of insurance and how it is used to cover risk. How insurance is
transacted as a business and how the insurance market operates is also explained.
The relationship between insurers and their customers and the importance of
insurance contracts are discussed. Some commonly used insurance terms are also
listed out. An overview of major life insurance and general insurance products is
included as well.

Contents
Chapter 1: Risk Management: Provides an understanding of risk management –
different types of risks – actual and consequential losses – management of risks – loss
minimization techniques.

Chapter 2: The Concept of Insurance and its Evolution: The basics and nature of
insurance – evolution and nature of insurance – how insurance operates today –
different classes of insurance – importance of insurance – how insurance takes care of
unexpected eventualities.

Chapter 3: The Business of Insurance: Management of risk by individuals –

management of risk by insurers – fixing of premiums – reinsurance and its importance
for insurers – role of insurance in economic development and social security –
contribution of insurance to the society.

Chapter 4: The Insurance Market: The various constituents of the insurance market
– operations of insurance companies - operations of intermediaries – specialist
insurance companies – insurance specialists – the role of regulators – other bodies
connected with insurance.

Chapter 5: Insurance Customers: Understanding insurance customers – different

customer needs – importance of customers – customer mindsets – customer
satisfaction – customer behavior at purchase point – customer behavior when claim
occurs – importance of ethical behavior.

Chapter 6: The Insurance Contract: Terms of an insurance contract – principles

which form the foundation of insurance – significance of the principle of insurable
interest – the principle of indemnity – the principle of subrogation – the principle of

I nsurance I nstitute of I ndia …1

contribution – disclosure of all relevant information – principle of utmost good faith –
the relevance of proximate cause – the insurance contract.

Chapter 7: Insurance Terminology: Common terms used in insurance – terms

common to both life and non – life insurance – terms are specific to life and non – life
insurance – how insurance terms are used.

Chapter 8: Life Insurance products: The risk of dying early – the risk of living too
long – different products offered by life insurers – term plans – pure endowment plans
– combinations of plans – traditional products – linked policies – features of annuities
and group policies.

Chapter 9: General Insurance Products: Risks faced by the owner of assets –

exposure to perils – features of products covering fire and allied perils – products
covering marine and transit risks – products covering financial losses due to accidents
– products covering financial losses due hospitalization – products covering
miscellaneous risks.

Annexure: A write up on the history of insurance is provided.

I nsurance I nstitute of I ndia …2

IC 11 - PRACTICE OF GENERAL INSURANCE
(Revised Edition: 2011)

Objectives:

This course primarily deals with practical aspects of General insurance within the
framework of prevailing legislation and aims at familiarizing the reader with the market
structure, procedures and practices, coverages under various insurance policies,
underwriting practices, claims management, accounting, investments and customer
service.

Contents:
Chapter 1: Insurance Legislation: The Insurance Act 1938 – Insurance Regulatory
& Development Authority (IRDA) Act 1999 – General Insurance Councils –
Amendments to Life Insurance Corporation Act 1956 – Amendments to General
Insurance Business (Nationalisation) Act regulations issued by IRDA – Motor Vehicles
Act 1988 – Other Acts – Exchange Control Regulations – Consumer Protection Act
1986 – Insurance Ombudsman, Market – Statutes & Regulations that affect conduct of
business in India,

Chapter 2: Insurance Market: Historical – Present scenario – Agents – Corporate

Agents – Brokers – Third Party Administrators (TPA) – Surveyors / loss Assessors –
Overseas Markets – U K – U S A,

Chapter 3: Insurance Forms: Proposal Forms – Cover Notes – Certificate of Insurance

– Policy Forms – Endorsements – Interpretation of policies – Co-insurance – Standard
policies.

Fire & Marine Insurance Coverages: Fire insurance Coverages – Marine insurance
Coverages – Types of Marine insurance policies – Duty & increased value insurance.
Miscellaneous Coverages: Motor insurance – Liability only policy – Package policy –
Personal Accident insurance – health insurance – Burglary insurance – Baggage
insurance – Legal Liability insurance – Public & Product Liability insurances –
Professional Indemnity insurance – Workmen’s Compensation insurance – Fidelity
Guarantee insurance – Banker’s Indemnity insurance – Carrier’s Legal Liability
insurance – Jeweller’s Block insurance – Composite policies – Aviation insurance –
Engineering insurance – Rural insurances – Micro insurance.

Chapter 4: Specialised Insurances: Industrial All Risks insurance – Advance Loss of

Profits insurance – Oil & Energy Risks insurance – Satellite insurance.

Chapter 5: Underwriting: Objectives and approach – Underwriting policy – Class

Rated Products – Individually Rated Products – Filing of products – Role of Actuary –
Compliance officer – Underwriting Practice in different classes of insurance – Moral
I nsurance I nstitute of I ndia …3
hazard – Underwriting of physical hazards – Declined risks – Risk inspections –
Reinsurance – Risk Management – Insurer’s role in risk management – Documentation
procedure – Renewal procedure – Customer service – IRDA Regulation Protection of
Policyholder’s Interest.

Chapter 6: Rating & Premium: Classification of risks – Discrimination –

Bonus/Malus – Claims cost – Acquisition cost – Management expenses – Classification
of products – Premium – Short period scales – Failure of consideration – Refund /
return of premium – Advance payment of premium.

Chapter 7: Claims: Preliminary procedure – Loss minimization – Procedure – Claims

form – Investigation & assessment – Surveyors and loss assessors – Claims documents
– Arbitration – Discharge vouchers – Post settlement actions – Recoveries – Salvage &
loss minimization – In –house settlement – Practices in U K & USA.

Chapter 8: Investment & Accounting: IRDA Investment Regulations 2000 –

Accounting – Reserves for outstanding claims – Unexpired risk reserves – Other
reserves – Final accounts – Profit & Loss account – Balance Sheet – Returns – Returns
for Management control – Claims, underwriting and general administration returns –
Database on computer.

References & recommended reading:

1. General Insurance, John Magee & David Bicklhaupt

2. Operational Transformation of General Insurance Industry during the period 1950
to 1990 & Beyond, R. D.Samarth
3. Study on Distribution Functions in General Insurance & Role of Intermediaries,
Arun Agarwal / P R Rao
4. General Insurance for Information Technology Professionals, Martin Frappoli.

I nsurance I nstitute of I ndia …4

IC35:- BASICS OF HEALTH INSURANCE

Year of Edition: 2013

Contents
CHAPTER 1: HEALTHCARE SYSTEMS, SERVICES, INDUSTRY: Importance of Health
- Concept of Health - Determinants of health - Levels of healthcare - Legal provisions -
Healthcare – Stakeholders in India - Healthcare – Progress since Independence -
Factors affecting the health system - Current status of healthcare - Healthcare sector
issues in India - Accreditation and patient safety norms and rights.

CHAPTER 2: HEALTH INSURANCE – MODELS AND OPERATING ENVIRONMENT:

Health Economics and its role in health care financing - Peculiarities of healthcare -
Health Financing - Health insurance models operating - Categorisation of health
Systems - The Beveridge Model or Single Payer Systems - The Bismarck Model /
Employment based or Multi Payer Systems - The National Health Insurance or
Managed Competition Model- The Out of Pocket Model - Types of network-based
managed care programs - Provision of healthcare in India - Control and balance in
health insurance.

CHAPTER 3: HEALTH INSURANCE IN INDIA: Social health insurance schemes -

various schemes - Growth and value of Private health insurance - Value of health
insurance - The legal and regulatory environment - The role of Insurance Companies -
Role of Third Party Administrator (TPA) - Functions of TPAs - Role of healthcare
providers - Role of agents, brokers and other distribution channels - The Customer -
Challenges to health insurance penetration - The paramount role of IRDA in promoting
health insurance – Annexure.

CHAPTER 4: HEALTH INSURANCE UNDERWRITING PRINCIPLES: Need for

Underwriting - Concept of Underwriting - morbidity, prevalence and incidence -
Underwriting principles - Basic tenets for underwriting approach - Link to product
development, pricing and claim management - Life cycle of an insurance product -
Underwriting process - Measures to prevent adverse selection and moral hazard -
Factors affecting health insurance markets - Health insurance underwriting - Actuarial
pricing methods – underwriter Skills - Review of underwriting effectiveness –
Reinsurance.

CHAPTER 5: HEALTH INSURANCE UNDERWRITING PRACTICES (NON-LIFE): Health

insurance - retail underwriting - Interpreting specific medical reports - Health
insurance – Group underwriting.

I nsurance I nstitute of I ndia …5

CHAPTER 6: HEALTH INSURANCE PRODUCTS: Classification of health insurance
products - Health insurance products - fixed benefit insurance plans - Clauses in
Health Policies.

I nsurance I nstitute of I ndia …6

IC36:- HEALTH INSURANCE CLAIMS MANGEMENT

Year of Edition: 2013

Contents
CHAPTER 1: INSTRUCTIONAL MODULE: Organisation of human body Body Systems
- Classification of Nervous system - Common infections - Infections of the human body
- Common conditions that affects the human body - Functional units of a hospital -
Units of a hospital – healthcare.

CHAPTER 2: CLAIMS MANAGEMENT: Claims management in insurance –

management of health Insurance Claims – Claim process – Domiciliary hospitalisation
- Pre-existing illnesses - Initial time-period exclusions - conditions with respect to the
claims - Payment of claim - health insurance claims - Claims Reserving - Rashtriya
Swastha Bima Yogna - Claims Management – Personal Accident - Claim
documentation - Claims Management- Overseas Travel Insurance - Claims: Achieving
customer service excellence

CHAPTER 3: ROLE OF THIRD PARTY ADMINISTRATORS IN HEALTH INSURANCE

CLAIMS: Role of Third party administrators, Definition, Concept of Third Party
Administration, Regulations governing TPAs, Scope and relationship between insurer
and TPA, Cashless access services, Customer Relationship and Contact Management,
Functioning of the TPA, Managing relationship between TPA and service providers,
Providing professional customer service, Monitoring TPAs performance.

CHAPTER 4: PROVIDER NETWORK MANAGEMENT: Services of the provider network,

Economics of Patient Safety, Classification of providers, Classification according to
individual based or facility based providers, Accreditation and categorisation of
facilities, Provider Network Concept, Costing of healthcare in India, Network
management and control.

CHAPTER 5: CLAIMS MANAGEMENT - COST CONTAINMENT: Cost control, Need for

cost control , Importance, Cost Control Measures, Clinical audit, Scope of Clinical
Audit, Scope of Medical Management, Concept of Medical Management for Health
Insurance, Tools for Medical Management, Suitability of case management, Healthcare
management.

CHAPTER 6: MEDICAL CODING: Definition, Types of Medical Coding, Benefits,

Importance of Medical Coding for co-morbidity, International Classification of diseases,
Diagnostic codes, Procedure codes used in Indian healthcare practice, Relevance of
medical coding.

I nsurance I nstitute of I ndia …7

CHAPTER 7: FRAUD AND ABUSE CONTROL: Fraud and abuse in health insurance,
Definition, Reasons behind fraud, Types of fraud, Parties involved in fraud and abuse,
Detection, treatment and prevention of fraud and abuse, Verification and investigation.

I nsurance I nstitute of I ndia …8

IC37:- HEALTH INSURANCE OPERATIONS
Year of Edition: 2013

Contents

CHAPTER 1: POLICY ADMINISTRATION AND ACCOUNTING: Policy issuance and

administration activities, Classification of proposals, Policy renewals, Reasons for
endorsements, premium accounting, Modes of premium payment, Reserving and
solvency margins, unearned premium reserve, Solvency Margin.

CHAPTER 2: CUSTOMER SERVICE IN HEALTH INSURANCE: Concept of Customer

Service, Importance of customer service in health insurance, Challenges of customer
service in health insurance, Nature of health insurance product, Rejection of claim on
account, The customer service experience, Customers’ expectations about customer
service, Factors influencing customer’s perception, Types of customer queries,
Interaction with customers, Corporate Culture, Developing and Implementing Strategic
Plan, Customer service process, Documenting and Sharing Information, Knowledge
Management Systems, Challenges of Technology, Role of customer acquisition
channel, Regulatory and legal framework, Policyholder Protection Guidelines.

CHAPTER 3: DATA MANAGEMENT & WAREHOUSING: Data warehousing concepts,

Definition, Components of a Data Warehouse, types of data warehouses, Designing a
Data Warehouse, Importance of data for health insurance, Requirement of data by
various stakeholders, Outstanding claims data, Collection and collation of Health
Insurance data, Examples of material facts, Standardisation work done by FICCI and
CII.

CHAPTER 4: HEALTH INSURANCE- MIS AND ANALYTICS: Important elements of

MIS, Components of information system, Process of Information system, Derived fields,
Advantages of coding, Claims Analysis, Mode of Distribution, MIS – financial figures,
terminology and meaning, Claims, Premium, Reserves, Ratios analyse a company’s
profitability, Rational reports & analytics, Solvency management, Strategic analysis.

CHAPTER 5: THE ROLE OF IT IN HEALTH INSURANCE: Need and role of IT in health

insurance operations, Insurance Policy Administration System, Claims Management,
Insurance Agency Management system, User Management, Quote Engine, Insurance
Document Management System, Insurance Accounting, Data Migration System,
Operational efficiency and cost optimisation, IT interface and architecture, Standard
operating procedures and exchange of data, Use of IT in health insurance, Health
Management, Improving customer management, Facilitating provider management,
Improving Claims Servicing, Facilitating Fraud Detection and Prevention.

I nsurance I nstitute of I ndia …9

CHAPTER 6: GOVERNMENT AND SOCIAL HEALTH INSURANCE SCHEMES IN
INDIA: The social healthcare scenario in India, Important Health Insurance Scheme,
Implementation Mechanism, Medical Benefits, Product Feature, Management of the
scheme, Aarogyashri Health Insurance Scheme, Benefit under the scheme, Chief
Ministers Compressive Health Insurance Schemes, ESIC - Employees’ State Insurance
Corporation, Medical care after retirement and leaving employment, Central
Government of Health Scheme.

CHAPTER 7: GOVERNMENT HEALTH INSURANCE SCHEME – RASHTRIYA

SWASTHIYA BIMA YOJANA: Social Security in India and RSBY, Definition of RSBY,
PPP Model, Insurance Coverage, Eligible beneficiaries, Hospitalizartion, Cashless
treatment, Network Hospitals, Package Rates, RSBY Equipment, Agencies involved in
RSBY, Process Flow in RSBY, Preparation of Beneficiary Data in Specified Format,
Setting-up of Support Services by the Insurance Company, Enrolment of Beneficiaries,
Utilisation of Services by Beneficiaries, Important Stakeholders in RSBY, Cash less
and Paperless transactions.

Updated on 23rd April, 2015

I nsurance I nstitute of I ndia
…10