Role of Intermediaries in Health Insurance

This story was first published in IRDAI’s February Journal.


Insurance is an important part of modern economics as well as the day-to-day life of any individual. Far beyond its role of protecting the country’s wealth, insurance is of greater significance to public interest and affairs. It is the only safety net that can help to reduce the financial burden one experiences in a calamity. Over the last few decades, insurance has become the critical tool that protects individuals, families and institutions against, accidents, natural calamities, and illnesses.

In the healthcare industry, insurance forms a major pillar, because consumption of healthcare services today and tomorrow will be defined by how health insurance policies are provided by the insurers and utilized by the insured. The ecosystem that ensures a smooth and streamlined process of delivering health insurance has various key players known as intermediaries who are the facilitators between the end customer and the insurance company. For example, individual agents, corporate agents, banks who sell policies and insurance brokers are the most known intermediaries driving in the front seat of the insurance car. In the back seat of the car are those intermediaries who are though not customer-facing but are equally, if not more important – the technology providers who ensure that the provider and the insurer have a streamlined channel to exchange information and transact, ensuring that and enhanced seamless transaction benefits the customer’s experience as well.

Currently in India, as compared to the more mature United States and United Kingdom markets, the role of information technology in delivering health insurance is only beginning to surface in the sector. While the medical equipment and R&D sections of healthcare are consistently evolving, technology in health insurance is yet, to make a mark and certainly, needs support and encouragement from the insurance regulator.

What role does technology play as an intermediary in health insurance and how can it support the other intermediaries? How will it benefit millions of Indians?

A real-time transaction: India is fast becoming a cashless society at a steady pace. Across sectors, cashless transactions are being encouraged while simultaneously ensuring that consumer needs are met and the most stringent safety measures are implemented. Two key benefits that emerge are; eliminating the need to carry lump sum cash and more importantly, ensuring fraud-free transactions within the ecosystem. In the case of health insurance too, cashless insurance is being implemented by state governments, encouraged by the regulator and widely used by corporates, small yet, significantly growing in numbers.

With this evolution into a cashless society, the framework that fuels the transaction also needs to evolve. A cashless transaction cannot rely on scanned paper forms, PDFs, e-mails and FAX and channels that do not enable a real-time exchange of information. For example, when a policyholder avails cashless treatment at a hospital, he/she should not wait for a non-electronic medium to accept his/her details and wait for the insurer to respond and pre-approve the claim. Similarly, the hospital too, cannot afford to waste time on manual time-consuming channels of exchange with the insurer. The situation gets further complicated if there are iterations and queries raised. This increases the waiting time for the patient and delays the hospital and the insurers processes both, at pre-approval and at discharge when all the insurance paperwork needs to be completed, resulting in customer dissatisfaction.

Transparent transactions: Using electronic mediums to exchange data in real-time has a host of benefits. When data is entered and exchanged on electronic platforms, it needs to be entered only once and does not require conversion at every stage – eliminating data dilution and enhancing accuracy. When data is exchanged in this manner between the hospital and the insurance company/ Third Party Administrator (TPA), the time taken to process the claim from start to end comes down. Since data conversion is eliminated, the possibility of errors is significantly reduced, issues such as legibility of handwriting are eliminated and the reliability and transparency of the process tremendously increases. Enhancing the utility of such platforms with support from application-based technology, access to claims information can be made as simple as making an e-commerce purchase on a mobile app.

By giving way to tighter, more structured and rule-based (coded) information exchange and transactions throughout the claims cycle, the possibility of fraud from any party also comes down. When any iterations or additions are made to the claim that are over and above the guidelines used by the platform, a simple SMS-based escalation can be used to notify everyone involved.

Enhanced Customer Service: The electronic platforms in question employs technology that does not require any complex software installation or long training hours, making it easy to adopt by any institution. Internet has brought the world closer and made our lives simpler and it is this tool that is changing the way businesses are emerging and interacting with their customers. The surge of e-commerce companies is testament to that. Similarly, a technology platform can do the same for health insurance, where the policyholder needs to only provide their customer Id and all the requisite data gets immediately populated ready to be transferred to the insurer at the click of a button. The same flexible platform can be molded to use on a mobile phone where, the insurance desk at the hospital can submit claims and respond to queries on the go and the patient can monitor the progress of the claim, raise queries and maintain history easily.

By bringing the policyholder in the loop of the process, giving him/her the access to his policy information and past utility history, he/she will be empowered and made aware at every stage regarding the status of the claim and will not be required to maintain carry documents at the hospital.

The buzzword called data: Electronic platforms enable the collation of structured data that can be used to analyze policy usage patterns and research on preventive measures. Rich data resulting from such technology implementation will allow researchers and data scientists to analyze the data and get insights into how men, women, and elderly are using health insurance policies, what are the common diseases, what kind of health insurance policies do diabetics need, how can policies be changed to suit the needs of different groups of people, and more. Moreover, electronic data can help to highlight increasing instances of fraud and misuse of policy. For example, if healthcare facilities in a particular region are recommending diagnostic tests or procedures that are not required. Recorded data of such instances will help to raise a red flag and enable action. Existing policies can also evolve to better suit the needs of the consumers.

Thus, electronic data will not only allow a structured and transparent method of delivering health insurance but will also make healthcare delivery more customer-friendly by making health insurance more suitable to the needs.

Conclusion: Implementation is not enough

Just like the way the banking sector has moved online and is enabling customers to make payments using mobile phones and keep a tab on their bank accounts using mobile applications, the insurance sector too, will progress towards moving online from offline. But, mere introduction and implementation of technology infrastructure will not ensure adoption, and optimum utility. Achieving a triple goal – improving outcomes, enhancing customer service and reducing costs will require healthcare IT systems to be as efficient and functionally effective as possible, and require buy-in from all key stakeholders. Technology upgrade should be sought to improve customer service and lower costs and not the other way around.

The empowered app-using online patient is already here. Hence, it is important that healthcare providers keep the patients’ needs and perspectives in mind at every touch point. The healthcare industry now needs to focus on what can be done to achieve a delighted customer from a loyal customer, what is that extra mile effort that can be put in to reduce the emotional trauma typical in these situations. Thus, technology implementation decisions must be made by walking in the shoes of a patient, mapping all the touch points and the glitches at each point, and then finding solutions to address the same.

The first step towards this is eliminating myths and empowering oneself with knowledge, and the regulator and the government has a huge role to play here. By suggesting and mandating technology implementation guidelines geared towards consumer awareness and benefit, as well as the overall wellbeing of the sector, delivery of health insurance can catch up with the other sectors benefiting from technology.


Michael Beaty, L. S. (2015). Eliminating the Disconnect. KPMG. USA: KPMG.





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