As everyone is aware that before any group policy is incepted or renewed, there are few steps to be executed which are as follows
- – Various levels of negotiations with the Insurance Companies through insurance brokers
- – Drafting of MOU for terms with the insurance company
- – Intimation of the policy terms to the members
- – Collection of premium by JIO from members
- – Sending detailed list of members with amounts of coverage by JIO to Insurance Company
- – Issue of payment for Premium by JIO to Insurance Company
- – Commencement of Group Insurance Policy.
Initial discussions with the National Insurance Co had started in May 2016 and MOU was signed in July 2016. Under the MOU, Phase 7 – Part 1 policy (including Gold, Silver and Women Plan) was issued in 23rd Sept. 2016, which is still continuing. It was further decided that the same terms and same amount of premium will be applicable for renewal of Phase 1.
Based on the MOU and promise of National Insurance Co to continue the same terms for other renewals also, JIO had intimated all the members that the Phase 1 policy expiring in Oct 2016 will be renewed with National Insurance Co. The premium amounts for Rs 5 Lakhs family floater policy which was Rs. 16,985/- in 2015 with ICICI Lombard shall now be Rs. 13,107/- by National Insurance. Similarly premiums for other sums insured shall also be reduced.
JIO collected the premiums from members and made payment to National Insurance co alongwith details of members in last week of Oct. 2016.
Before the policy could be issued the Senior Officer who had signed the MOU and had promised the renewal, got retired. The new senior officer reviewed the performance of the earlier years of Phase 1 and observed that the claim ratio was 180 % (i.e. the insurance company had paid claims of Rs 180 against premium receipt of Rs. 100). Further the reduced premium made the claims ratio to almost 200%. He was of the view that the company does not have a capacity to bear such a big loss and hence he denied to renew the policy.
If we talk about National Insurance Co, then it is important to note that the very first phase of JIO Mediclaim was issued by National Insurance Co and they have contributed much in the welfare of members by issuing claims to the tune of 300% of the premium amount.
However, due to various legal obligations and considering the loss in this group policy, the National Insurance Co denied to renew the JIO Mediclaim policy.
After further negotiations, the insurance co offered revised terms for renewal with 52% Co-pay (i.e. the insurance co will pay only 48% of the claim and the balance 52% is to be paid by the member). All the JIO directors were of the view that policy with 52% Co-pay is completely unacceptable. After deliberations of almost 45 days, further negotiations were stopped with National Insurance and the advance premium paid was received back by JIO.
JIO then started negotiations with other insurance companies for renewal. However, it was difficult to convince the companies for taking policy with very high past claim ratio. Further, the fact that the premium amounts have already been collected from the members posed additional problems.
However, because to Aashirwad and Guidance of GURUJI, JIO has been able to strike a deal with Star Health and Allied Insurance Co Ltd. The terms of the policy have been modified to some extent and the new premium amount have been negotiated.
This is the main reason why other Renewals also got delayed.