Abnormal Rise In Insurance Premium

   I submit below the copy of letters issued by AIBEA in protest against abnormal rise in Insurance premium.  My comments are given at the foot of this letter.


ALL INDIA BANK EMPLOYEES' ASSOCIATION

Singapore Plaza, 164, Linghi Chetty Street, Chennai-600001

ALL INDIA BANK OFFICERS’ ASSOCIATION

AK Nayak Bhavan, 14, 2nd Line Beach, Chennai-600001

 

chv.aibea@gmail.com/ aiboa.hq@gmail.com   98400 89920 / 98406 45081

16.10.2016

THE CHAIRMAN                                  

INDIAN BANKS’ ASSOCIATION

MUMBAI

Sir

Reg: ABNORMAL INCREASE IN THE  MEDICLAIM INSURANCE PREMIUM BY UIIC – REVISTING THE ISSUE

Our attention has been drawn to the information to the member banks in the matter of payment of Insurance Premium by in-service employees/officers and elders for renewal of the Policy from the year 2016-17.   

We observe that the huge increase in premium by the UIIC Ltd. is unfair and not in conformity with the understandings with our Unions while the Scheme was formulated.

Even as per the Matrix given by them last year, the increase is unjustified and abnormal.  Further, it is learnt that the Contract between IBA/Banks and UIIC stipulates that any revision or change in the terms has to be intimated atleast 3 months in advance.  We also find that even though the Scheme was introduced in the Banks after discussion and signing of the Settlement/Joint Note with the Unions, IBA has not taken the unions into confidence while such major revision in premium has been accepted by the IBA.

In terms of the existing policy, the premium stipulated as well as the proposed enhancement are as under.

FOR SERVING AWARDSTAFF EMPLOYEES:

EXISTING PREMIUM FOR 2015-16	REVISED PREMIUM  FOR 2016-17	% OF INCREASE
Rs. 4,930 + 690                   = Rs. 5620	Rs. 10,462 + 1,568                     = Rs. 14,950	112 %

FOR SERVING OFFICERS:

EXISTING PREMIUM FOR 2015-16	REVISED PREMIUM  FOR 2016-17	% OF INCREASE
RS.6,573  + 920            = Rs. 7,513	Rs. 1,3935 + 2090                       = Rs. 16,025	112 %

FOR RETIRED EMPLOYEES / OFFICERS :

EXISTING PREMIUM FOR 2015-16	PROPOSED PREMIUM FOR 2016-17 ( WITHOUT DOMICILARY TREATMENT COVERAGE)	% OF INCREASE
AWARD STAFF-                Rs. 4930+ 690 = 5620	10,452 + 1,568 = 12,020	112 %
OFFICERS -                        Rs. 6573+920 = 7513	13,935 + 2,090 = 16,025	112 %

EXISTING PREMIUM FOR 2015-16	PROPOSED PREMIUM FOR 2016-17 ( WITH DOMICILARY TREATMENT COVERAGE)	% OF INCREASE
AWARD STAFF-                            Rs. 4930 + 690 Rs. 5620	13,000+ 1,950=14,950	165%
OFFICERS -                     Rs.  6573 +920 = 7513	17,400+ 2,610= 20,010	165%

Thus, it can be observed that the premium has been unilaterally enhanced by 112% for in service employees and by 112 % / 165 % for retirees without any reference to the IBA/ Banks/ Unions/ employees/ officers/ retirees.

The Policy/Agreement also provides for revision of premium based on a given matrix which provides as under:

Claim ratio  of: loading in premium

Claim ratio of	Loading in premium
111 – 115%	5%
116-120 %	7%
121-125 %	10%
126 – 130 %	13%
131 – 135 %	15%
136 – 140 %	18%

Now when the reported claim ratio is around 182% and around 200% for in service staff and retired staff respectively, the revision in premium also has to be in that proportion and cannot be disproportionately and unilaterally fixed by UIIC to the detriment of the Banks or the employees/officers/retirees.   But UIIC has increased the premium and doubled the rates as shown above and that too at short notice without any discussions.

You will appreciate that the elders’ group consist of Pre 1986 retirees, family pensioners, subordinate cadre employees, part time employees and retirees prior to  November 2002 for whom the quantum of pension is quite insufficient, when compared to the retirees after the settlements inked on 25.4.2010 and 25.5.2015.

Further, IBA vide its letter HR /2015-16/XBPS/J/1644 dated 27th November 2015 had taken up with UIIC authorities based on their direct communication (which they should not have) to member banks that the domiciliary treatment coverage is not applicable to elders and requested them to extend with the facility.  But UIIC Ltd. has chosen to violate our Agreement and denied this important benefit to the elders’ claims.

We would like to draw your pointed attention to the understanding arrived at between the 9 constituents and IBA on 25 5 2015 that the revised medical scheme would also be extended to the elders subject to the payment of the same premium by them.  The coverage for the serving employees has the domiciliary  treatment and also the Corporate Buffer for the over and above the limits specified (ie Rs. 4,00,000 & Rs. 3,00,000) and denial of the same by UIIC is not acceptable and IBA is also bound to honour the agreement with the unions in this regard.

Lacs of employees/officers and retirees and their family members are covered by the scheme and such unilateral and high-handed decisions of the UIIC have raised lot of apprehensions in the minds of the workforce and retirees.

Already employees/officers/retirees are facing many problems at the hands of TPAs, and the unilateral and unfair decisions of the UIIC have added fuel to fire.  We strongly feel that a public sector institution like UIIC cannot afford to behave in this manner.

There are breach of the contract committed by UIIC viz.,

1. Denial of domiciliary treatment reimbursement for elders
2. For change of terms and conditions three months’ notice period not adhered too.

It would be appropriate on the part of IBA to arrange for a tri-partite meeting with the Insurance Company authorities along with Unions and IBA at the earliest

Already elders are handicapped on account of non-resolution of demands like 100% DA for pre-Nov. 2002 retirees, improvement in Family Pension formula, periodical updation of pension, etc., and this heavy dose of increase in premium is creating lot of problems and there is possibility that many of them would be unable to renew the policy in the above circumstances .  Hence the steep increase in premium amount needs to be revised downwards.

We also feel that IBA should strongly pursue the matter with the IRDA about the manner in which the UIIC Ltd. Is handling the whole matter of revising the premium at their sweet will,

Awaiting the response from the IBA.

Yours faithfully,   

                                                  

                       S. NAGARAJAN                               C.H. VENKATACHALAM                                         

                  GENERAL SECRETARY                          GENERAL SECRETARY

                                AIBOA                                                   AIBEA

ALL INDIA BANK EMPLOYEES' ASSOCIATION

Singapore Plaza, 164, Linghi Chetty Street, Chennai-600001

ALL INDIA BANK OFFICERS’ ASSOCIATION

AK Nayak Bhavan, 14, 2nd Line Beach, Chennai-600001

 

chv.aibea@gmail.com/ aiboahq@gmail.com   98400 89920 / 98406 45081

16.10.2016

To

Consumer Affairs Department                    

Insurance Regulatory & Development Authority

3rd Floor, Parishram Bhavan

Basheer Bagh,

Hyderabad.

Sir

Reg: Insurance Linked Hospitalisation/Medical Expenses Reimbursement Scheme in Banks - Unilateral and abnormal increase in premium and non-adherence to clauses of contract by United India Insurance Company Ltd. (UIIC Ltd.) – Intervention of IRDA requested

All India Bank Employees Association and All India Bank Officers Association ( AIBEA and AIBOA ) are  Industry level negotiating Unions with Indian Banks’ Association (IBA) in the matter of service conditions more particularly periodical wage revision  and other related matter for the entire workforce of employees and officers.

We have entered into an understanding/settlement with IBA for introduction of Insurance linked Hospitalisation/Medical expenses Reimbursement  Scheme for the serving and retired employees/officers and the Settlement/Joint Note was signed on 25.5.2015.  By virtue of the same, IBA/all banks entered into an Agreement with M/s United India Insurance Co Ltd  for extending the benefits under Health Coverage Policy.

The premium for the period from 1.10.2015 to 30.9.2016 was fixed for the in-service employees/officers ( Officers Rs. 6,573 + Service Tax and Workmen Staff  Rs.4,930+ Service Tax). The same quantum of premium was also agreed to be made applicable to the retired officers and employees but the Policy was made effective from 1.11.2015 to 31.10.2106.

It was clearly stipulated that the retirees would also be reimbursed  expenses incurred for the domiciliary treatment as that of the serving employees.   On this basis, the retired employees and officers subscribed to this Policy and paid the premium amount also.  However, subsequent to issuing the Policy and unilaterally and suddenly, UIIC Ltd, had directly written to the member banks (which they should not have) that the company would not be in a position to reimburse the expenses of retirees for domiciliary treatment.  There are 2.05 lacs retirees from  35 banks who have subscribed for the scheme.  It was a bolt from the blue and totally an unfair action on the part of UIIC.

Further, it is learnt that there is also a contract clause in the agreement that 3 months’ notice period will be given for any change of terms & conditions including the quantum of premium amount.  Deviating from this condition in the Agreement, UIIC Ltd has failed to honour the terms of contract and has now unilaterally and abnormally increased the premium for the next year both for in-service employees/officers as well as for the retirees.

The unilateral change in the premium is as under:  

FOR SERVING AWARDSTAFF EMPLOYEES:

EXISTING PREMIUM FOR 2015-16	REVISED PREMIUM  FOR 2016-17	% OF INCREASE
Rs. 4,930 + 690                   = Rs. 5620	Rs. 10,462 + 1,568                     = Rs. 14,950	112 %

FOR SERVING OFFICERS:

EXISTING PREMIUM FOR 2015-16	REVISED PREMIUM  FOR 2016-17	% OF INCREASE
RS.6,573  + 920            = Rs. 7,513	Rs. 1,3935 + 2090                       = Rs. 16,025	112 %

FOR RETIRED EMPLOYEES / OFFICERS :

EXISTING PREMIUM FOR 2015-16	PROPOSED PREMIUM FOR 2016-17 ( WITHOUT DOMICILARY TREATMENT COVERAGE)	% OF INCREASE
AWARD STAFF-                Rs. 4930+ 690 = 5620	10,452 + 1,568 = 12,020	112 %
OFFICERS -                        Rs. 6573+920 = 7513	13,935 + 2,090 = 16,025	112 %

EXISTING PREMIUM FOR 2015-16	PROPOSED PREMIUM FOR 2016-17 ( WITH DOMICILARY TREATMENT COVERAGE)	% OF INCREASE
AWARD STAFF-                            Rs. 4930 + 690 Rs. 5620	13,000+ 1,950=14,950	165%
OFFICERS -                     Rs.  6573 +920 = 7513	17,400+ 2,610= 20,010	165%

Thus, it can be observed that the premium has been unilaterally enhanced by 112% for in service employees and by 112 % / 165 % for retirees without any reference to the IBA/ Banks/ Unions/ employees/ officers/ retirees.

The Policy/Agreement also provides for revision of premium based on a given matrix which provides as under:

Claim ratio  of: loading in premium

Claim ratio of	Loading in premium
111 – 115%	5%
116-120 %	7%
121-125 %	10%
126 – 130 %	13%
131 – 135 %	15%
136 – 140 %	18%

Now when the reported claim ratio is around 182% and around 200% for in service staff and retired staff respectively, the revision in premium also has to be in that proportion and cannot be disproportionately and unilaterally fixed by UIIC to the detriment of the Banks or the employees/officers/retirees.   But UIIC has increased the premium and doubled the rates as shown above and that too at short notice without any discussions.

Lacs of employees/officers and retirees and their family members are covered by the scheme and such unilateral and high-handed decisions of the UIIC have raised lot of apprehensions in the minds of the workforce and retirees.

Already employees/officers/retirees are facing many problems at the hands of TPAs, and the unilateral and unfair decisions of the UIIC have added fuel to fire.  We strongly feel that a public sector institution like UIIC cannot afford to behave in this manner.

We fervently appeal to you to intervene in the matter for breach of contract by UIIC Ltd  and also  advise them appropriately in the matter of the steep increase in the premium  amount stipulated w.e.f 1.10.2016/1.11.2016.

Yours faithfully,   

                                                  

                       S. NAGARAJAN                               C.H. VENKATACHALAM                                         

                  GENERAL SECRETARY                          GENERAL SECRETARY

                                AIBOA                                                   AIBEA

My Comments are as follows:

It is a matter of pleasure that at least AIBEA has taken initiative to oppose abnormal rise in premium . Decision taken by Insurance company is totally improper and unjustified.

I too strongly oppose the whimsical rise in premium demanded by insurance company and I expect consumer forum will realize the gravity of the matter and penalise or advise the company suitably.

It is really sad that IBA and banks as well as individual banks have thought it unnecessary to protest the rise or at least negotiate for reduction .

Danendra Jain