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The introduction of TPAs was made by Insurance Regulatory and Development Authority (IRDA) in order to infuse a new management system and to regulate the healthcare services and costs. In other words, the prologue of TPAs was made on the expectation to ensure better services to insurers as well as to insured. While introducing TPAs certain conditions, code of conduct/role defined by the IRDA. In this study an attempt was made to examine the perspective of Insured towards TPAs and role played by TPA towards policy holders in respect of guidelines set by IRDA. so as to come out with conclusive finding in relation to parameters where parity and deviation exist between role defined and role played. The present study is mainly based upon Primary data colled threw questionnaire , IRDA Notification Dated 17th Sep 2001 and past research undertaken in this area. The results of the study provided that there is lack of knowledge about coverage and exclusion in policies; failure to meet the expectations of parties involved by TPAs ; delay in settlement of claims; failure to meet the service responsibility; indirect cost to consumer; cost of healthcare and management increases.
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INTRODUCTION
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The health infrastructure in India is facing daunting challenge of meeting the health goals and complexities emerging from the changing disease pattern. The proliferation of various healthcare technologies and increase in cost of care has necessitated the exploration of health financing options to manage problems arising out of increasing healthcare costs. Health insurance is emerging fast as an important mechanism to finance the healthcare needs of people. Further, the uncertainty of disease or illness is accentuating the need for insurance system that works on the basic principle of pooling of risks of unexpected costs of persons falling ill and needing hospitalization by charging premium from a wider population base of the same community. However, the complexity of health insurance industry has been much talked about but less understood especially in Indian scenario. With the advent of third party administrators (TPAs) this sector has assumed a new dimension. TPAs are presumed to infuse new management system and enrich knowledge base of managing healthcare services and costs. Their presence is aimed at ensuring higher efficiency, standardization and improving penetration of health insurance in the country. TPAs potentially have a wider role to play in standardization of charges and managing cashless services in health insurance. However,
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their actual roles and responsibilities have remained less understood, less clear and much debated. There are questions that in what ways the TPA is going to influence the developments in the health sector. The influence of TPAs to a large extent would be determined by their activities, the way they organize their services and their revenue generation model. In present form, TPAs earn their major revenue from fees charged as commission on insurance premium. Insurance Regulatory and Development Authority (IRDA), the regulatory body for insurance sector in India has standardized this rate. Besides this, TPAs have a potential source of revenue from benefit management, medical management, provider network management, claim administration and information and data management. However, the insurance sector still faces challenge of institutionalizing the TPA services and there is substantial scope for improvements. TPAs also face challenge of developing appropriate system of financing their operations. These include lack of data to determine price of products and ability to negotiate payment rates with providers, a regulatory framework that does not recognize the unique feature of health insurance products, lack of quality assurance measure for health providers, and lack of consumer awareness about the benefits of health insurance. The studies strongly argue broader role of
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IRDA in amending current regulations so that some of the sources of malpractice could be stemmed. We carried out a survey study of Perception Of Policy Holders and Role Of Third Party Administrator (TPA) involved in the health insurance industry. This paper attempts to present and discuss the finding of this study. The study focuses on developing an understanding what policyholders think about the role played by TPAs in the insurance industry. In the present survey we focus on Mediclaim policyholders in Indore, Madhya Pradesh. The paper specifically aims to: Understand the perception of Policy Holders about the performance of TPA system; Understand awareness among the policyholders of health insurance Role of TPA in respect to guidelines set by IRDA.
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REVIEW OF LITERATURE
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Parekh (2003) examined the training aspects of the TPAs and concluded that there is a dearth of knowledge and training in the TPA community and training for the leadership team alone is inadequate. The lack of training at most insurance companies is also woefully insufficient and alarming. So the study suggested that IRDA should arrange for adequate training facilities for TPAs which will enhance their knowledge and the ultimate benefit will be reap by the community. Sureka (2003) conducted a study on the TPAs and its regulator and concluded that TPAs are forced to provide service to the policyholder for an obsolete product the Mediclaim policy which was introduced at least almost two decades ago. Beside this if the policyholder is made to pay for the services he is availing, then why is the insurer imposing a TPA on the policyholder? The study provided that a policyholder should have the right to accept or refuse the services of a TPA for such absolute products. Gupta, Roy and Trivedi (2004) examined the role of TPAs and the issues that required to be taken into consideration while evaluating their usefulness and functioning in India. The study based on a series of meetings, discussions and interviews with various TPAs, insurance companies and providers. No doubt the TPAs face different barriers in terms of capital, capacity and connections, but still they are providing cashless transaction at the time of service delivery to the
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customers. The IRDA and Health Ministry should come together so as to ensure TPAs which in turn will ensure active role of the TPAs in Community and Universal Health Insurance Schemes. Bhat and Babu (2004) provided that introduction of IRDA has paved the way for (TPAs) third party administrators who are playing the role of insurance intermediaries in setting up of managed health care systems. The objective behind setting up of TPAs was to ensure better services to policy holders and to mitigate the negative consequences of private health insurance. However the TPAs face immense challenges in the health sector because of demand and supply side complexities of private health insurance and health care market. IRDA has defined the role of TPAs as insurance intermediary in the management of claims and reimbursement, but at the same time their role is not well defined in controlling the cost of health care and ensuring appropriate quality of care. Mohapatra (2005) provided that TPAs form a vital link between insurers, healthcare service providers and policyholders. Beside this also provided that for a smooth functioning of the system, the TPAs should be judiciously governed and meticulously regulated. Under the present dispensation, the issues of standardization/ governance between the TPA and the providers is left to the vagaries of market forces, the respective parties flexing their muscles to browbeat one another,
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forcing the TPAs to negotiate local agreement. Further it is recommended that IRDA constitute a consultative mechanism consisting of representative from providers, insurers, TPAs and consumer bodies to attack the various issues affecting smoother governance. If need be, necessary changes can be brought about in the regulatory compliances. Bhat, Maheshwari and Saha (2005) ascertained the experiences and challenges faced by hospitals and policyholders in availing the services of TPA in Ahmedabad, Gujarat. The results of the study shown that only a small percentages of respondents have knowledge about existence of TPA, there is substantial delay in settlement of claims between TPAs and health care providers, administrators of hospital perceive burden in terms of efforts and expenditure after the introduction of TPA. The study concluded there is no mechanism to appraise the performance of TPAs and regulatory body need to focus attention on developing mechanism, in order to strengthen the TPAs so as to ensure smooth delivery of TPAs services in the emerging health insurance market. Ruchismita, Ahmed and Rai (2007) highlighted the challenges in financing health in India and examined the role of health insurance in addressing these challenges. The study provided with an operational framework for developing sustainable health insurance model under national rural health mission which will respond to the contextual
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need of different states. Moreover innovative pilots of partner agent model led micro insurance could give useful insights for designing a national level programme, led by an apex body could systematically impact the health system in the country. Jaswal (2010) examined the cashless hospitalization which was evolved during the last decade, as an integral part of health insurance claim offering, making claim under health insurance policy indeed a customer friendly process. The study concluded that the practice to pay claims through physical cheques is quite outdated and inefficient; it would benefit all, if newer methods of payment like electronic fund transfer were to be implemented. Moreover, Indian medical industry being unregulated, there are no standard treatment guidelines or uniform medical protocols which are followed by medical professional all over the country, in all hospitals.
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India has developed an extensive network of healthcare infrastructure. The system envisages availability of publicly funded healthcare to all, regardless of their ability to pay. However, over a period of time due the expansion in size and shortfall in budgetary support, the public healthcare system has lagged behind in terms of its ability to meet the challenge of fulfilling the health needs of large segment of population. To meet this challenge partially, private healthcare sector has grown in size and scope. Consequently the present healthcare system is characterized by having providers belonging to ownership of both public and private and providers practicing in different systems of medicine. Both public and private facilities provide health services, but the bulk of the curative services are skewed towards the urban areas and dominated by the private sector. According to the recent Human Development Report (2013), India ranks 136 out of 187 countries in terms of public spending on health, while in terms of private spending, the country ranks 18. Increasing per capita income in the country is further increasing the need of health expenditures. For every 1 percent increase in state per capita income, per capita public health expenditure has increased by around 0.68 percent while for every 1 percent increase in real per capita income the real per capita expenditure of on health has gone up by 1.95 percent (Bhai and Jain 2004a and 2004b). Private health
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expenditure in nominal terms is growing at 18 percent per annum. With the proliferation of medical technology and new treatment protocols, the health care costs are increasing. These developments justify the need for health insurance. Though the need for health insurance is high but its growth has been slow. One of the reasons for its slow growth has been regulations in this sector. Table 1 presents the major events in development of insurance sector in India. With the passage of the Insurance regulatory and development authority (IRDA) Bill 1999, the industry has undergone a transformation. It has opened the insurance sector for private players. This openings up of insurance sector and growth of private healthcare system, particularly characterized by setting up of corporate hospitals, poses lot of challenges to be addressed by the insurance industry and its regulators. Some of the key challenges faced by the industry are summarized below.
An estimated one-third increase in claim amount due to the moral hazard, the adverse selection problem and/ or the provider-induced demand;
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Rationalizing the cost structure of treatment in a private healthcare sector that is characterized by uncontrolled and unregulated expansion. Currently more than one-third of reimbursements are made towards doctors fees, followed by diagnostic charge which accounts for about one-fourth ; Lack of actuarial data, lack of standardized billing and under reporting of information by private providers. High administrative cost insurance companies. took on an average 121 days to settle the claim
The evolution of a new body for cash-less claim processing in the form of Third Party Administrators TPAs marks a new chapter towards addressing some of the problems of health insurance industry.
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Third Party Administrator (TPA) was introduced through the notification on TPA-Health Services Regulations, 2001 by the IRDA. Their basic role is to function as an intermediary between the insurer and the insured and facilitate the cash-less service of insurance. For this service they are paid a fixed percent of insurance premium as commission. This commission is currently fixed at 5.6% of premium amount.
The core Product or service of a TPA in ensuring cashless hospitalization to policyholders. Intermediation by TPAs ensure that
policyholders get hassle free services, insurance companies pay for efficient and cost efficient services, and healthcare provider get their reimbursement on time. By doing this it is expected that TPAs would develop appropriate systems and management structure aiming at controlling costs, developing protocols to minimize
treatments/investigation, improve quality of services and ultimately lead to lower insurance premiums. However, the system is currently going through teething troubles. Cash- less policies, where the insurer directly pays the hospital bills to the healthcare provider, have not very fully materialized
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As of April 2013, 31 TPA Health services are registered with IRDA. They, in their current form in India are suffering from weak hospital networking, delay in issuing of identity cards to policy holders, poor standardization of billing procedures for hospitals. The industry is feared to be suffering from an informal nexus among corporate insurance and low on individual. The current survey attempts to understand the concern of awareness among policy and awareness among
policyholders in Indore, Madhya Pradesh about the performance of TPAs and their Role.
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METHODOLOGY
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We chose to study Indore, Madhya Pradesh as it has emerged a major healthcare destination. Proximity to markets good purchasing power, availability of resources, good infrastructure and an official vision towards growth of entrepreneurship are some of the factors that enabled Indore to achieve high growth of private healthcare facilities. Indore is the centre of health care in central India. Indore is home to 51 public health institutions, including 1 district hospital, 2 civil hospitals, 8 primary health center, 21 sub-health centers, 13 civil dispensaries, 2 poly clinics, 2 maternity home, 1 TB hospital and 1 TB sanatorium which is higher than any other city in state.[14] The city hosts a good number of private hospitals too. The prominent hospitals of Indore include Maharaja Yeshwantrao Hospital, Bombay Hospital, T. Choithram Hospital, CHL Apollo, and Dr Jafrey's Indore Chest Centre etc. and with the new additions like leading hospital brands including Fortis ,
Medanta and Max Hospitals it is all set to become a centre for quality health care treatment in years to come. Indore also has some specialized hospitals located outside of the core city. These hospitals include Choithram Netralaya for comprehensive eye care and the Bombay Hospital which is the largest private hospital in central
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India and recently begged the India Healthcare Award for Multi Specialty Hospital of the Year The share of in -patient between public and private sector in Indore is 44.7 percent and 55.3 percent as against national average of 50.4 percent and 49.6 percent (Indore Medical Association). Indore has about 104 doctors per 100,000 persons and 97 beds per 100,000 persons. On the other hand, Indore is also known for many innovative models of health care delivery system in the non-government sector. A large number of facilities, mainly in the urban areas and now even in some rural areas, are set up and managed by charity trusts run by the corporate sector, philanthropists or religious organizations. Large private sector health care facilities cater to the high-and middle-income groups. With a mix of centralized and decentralized health care delivery, Indore represents in average Indian city in terms of health indicators and is chosen for the survey. Introduction of TPA affects primarily three stakeholders namely the healthcare providers/institutions, insurance companies and policyholders. Based on literature review of previous findings questionnaire was prepared for policyholders of health insurance and secondary data was collected for IRDA. The questionnaires were responded by policyholders. The objectives of these questionnaires were to understand the perception awareness and
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experiences of policyholders with TPA. The key variables included in the questionnaires and rationales for choosing the variables are discussed below in brief.
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reduce the moral hazard and provider induced demand. TPAs could also do comprehensive review of records and maintain constant communication with healthcare providers and families and evaluate the outcome of treatment and have adequate data to compare it across different services providers. TPAs can also play important role in tracking the case of the insured at the hospital and streamline the claim process. They collect all the bills, reimburse them and send all necessary documents for the consideration of claims to the insurer. This gives them an opportunity to design and develop information systems which would allow them to analyze data regarding hospital admissions, ascertain the health needs of patients and check for effective treatment protocols, tracking documents pertaining to each case and tracking shortfalls in claims. This study examined these different roles played by TPAs for providers and policyholders perspectives.
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information, documents and bills pertaining to the treatment. Documents are examined and after processing sent to the insurance company for reimbursement. TPAs have the responsibility of managing claims, getting reimbursement from the insurance company and paying to the healthcare provider. It is expected that with the introduction of TPA services, the claim settlement process would be simplifies. IRDA has suggested that all claims should be settled in seven days. Outsourcing claim-processing services may help in reducing the claim period, but settling claims in seven days looks very ambitious target in current scenario.
examination conducted by the Insurance Institute of India, Mumbai. Apart from this, she should have undergone practical training of at least months in the field of health management. TPAs should have access to competent medical professionals to advise insurance companies and clients on various matters..
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Policyholders will be directed to an empanelled hospital with which TPA has tie-up arrangement. However, policyholder has a choice to go to any hospital. But cashless facility will be available at only empanelled hospitals. To put in short, the jobs of TPAs is to maintain database of policyholders and issue them identity cards with unique identification numbers and handle all the insurance policy related issues including claim settlements.
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Sample Characteristics
Out of the 50 policy holders interviewed, 76% are male respondents while 24% are female respondents. The mean age of respondents is 48 years. Most of the respondents belong to nuclear family i.e. 76% while there were only 6% large families and 18% belong to medium family size of 4 to 6 persons in family. A large part of respondents were married i.e. 68% and only a small portion of 32% were single. All the respondents selected have taken claim ones in the duration of owing their policy. Major people took claim ones even owing policy for a long time of 5years or above. Sample Characteristics Age Of respondent Family Size Year Since Insured Mean 48.59 4.32 3.34 Standard Deviation 11.61 1.44 2.85
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FINDINGS
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Period Since Insured Ones 1 Years 2 Years 3 Years 4 Years 5 Years and above Total 3 4 2 3 6 18 Twice
4 Times
5 Or Above
Total 3 7 10 14 16 50
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3 5 3 3 14
3 5 2 10
3 3 6
2 2
Hospital Network
TPAs have allied with different hospital in town and cities to provide healthcare facilities to people. So that the policy holders can avail cashless facilities in that hospital and the process of claims become easy. Usually TPA have vast hospital network hence people can get cashless medical facilities at ease in each and every location yet there are some places where allied hospitals of TPAs of some respondents were not available hence they have to face problems yet they can get admitted in any hospital and claim non cashless claim. Out of 50 respondents 18 respondents were fully satisfied from their TPAs hospital network while only 2 respondents were at uncomfortable situation while 9 respondents response was neutral towards this which meant they had no problem due to the hospital network.
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Awareness
Expenditure Coverage
40 30 20 10 0 Yes No Expenditure Coverage
Expenditure Coverage
Yes 36
No 14
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Disease Disease Awarness Completely Aware Aware Netural Little Idea No Idea Coverd Not Coverd Cashless Service
28 25 11 4 7 3 23 9 6 7 5 12 8 2 9 19 10 10 10 7 13 0 2 2 5 41 16 9.6 14 32.4
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comprehensive records of communication between healthcare providers and families and evaluate the outcome of the treatment thereby reduce the chance of moral hazards and provider induced demand. But out of 50 respondents Arrangement of special consultation was done by TPA only for 3 respondents while TPA paid no heed in providing special consultation to Other Respondents. According to respondents only 10% TPA visited hospital during patients admission TPA were more attentive towards the financial matters as enquiring about room rates and rent and length of stay. TPA is not working in accordance with role defined by IRDA.
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ACTIVITIES DURING PATIENT ADMISSION TPA arrange for Special Consultation TPA Ask about treatment Protocol TPA enquire about room rent and rates TPA enquire about length of stay TPA came to Hospital Average Response
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Claim Settlement
IRDA one of the objectives behind introduction of TPAs was to streamline and simply the claim settlement process. TPAs which were authorized by IRDA and appointed by insurance companies agree upon providing cashless facility to policyholders i.e. the policyholders are not required to make payment to hospital rater TPAs will make payment.
Agreed Time Schedule 1 week To 1 month 1month to 2 month 2month to 3 month 3 month and above
Response 34 12 4 0
Percentage 68 24 8 0
Vs
Actual Time Of Claim Settlement 1 week To 1 month 1month to 2 month 2month to 3 month 3 month and above
Response 12 28 8 2
Percentage 24 56 16 4
Earlier for this hospitals were paid directly by the patient himself, but with the introduction of TPAs, now the hospitals are paid by them. But before paying to the hospitals they examine all the documents, duly process them
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and thereafter submit the same to insurance company for reimbursement. The time agreed for claim settlement with TPA is less than 1 month, but even after 74% Claims were delayed by TPA and even some TPA provide more than 1 month period for settlement of claims. The claims of only 26% respondents were met on time. TPA take 1 to 2 month for settlement of major claims and even delay some claims to more than 3 months. According to IRDA if a claim if delayed for mare then 30 days Insurance company has to provide interest over the claim amount at 12% per annum and pay to the insured but still TPA after such delay dont pay the interest is major cases.
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CONCLUSION
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This study discusses the perception of health insurance policy holders and role of TPA in relation with IRDA guidelines. The knowledge of Policy Terms and services are known by a small part of respondents while a large part of respondents are unaware of the policy terms. General awareness about TPA and service they provide is low. TPAs are the interference between the insurer and the insured and they are in position to educate policy holders about policy and health coverage. However their role in consumer education does not infuse much confidence on their intentions or ability to do so. TPA service needs to focus on development of their competence and capacities and take care of various operational issues in provision of services. This will need significant amount of investment on developing their human capital. TPAs have role in containing cost of healthcare and standardize its quality. However the current level of services raises doubt on their ability to take this task seriously and effectively in near future. Currently there is no mechanism in place to appraise the performance of TPAs. IRDA present role of TPA appraisal is more based on financial factors rather than customer satisfaction. There is a need to link incentive of TPA with their performance rather than fixed percentage of policy premium.
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The study shows the need of future research to examine the impact of TPA on health sector functioning. This study doesnt indicate the effect of TPA on Healthcare services this shows the perception of policy holders and the role played by TPA in serving the policy holders. We propose that impact of TPA will bring changes in economies and service deliverance.
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References
Parekh, N. R. (2003) TPA Training For Whom Journal of Insurance Regulatory and Development Authority, March. Sureka, G.P (2003) TPAs and The Regulator, Journal of Insurance Regulatory and Development Authority Gupta, I., Roy, A. and Trivedi M. (2004) Third Party Administrators Theory and Practice Economic and Political Weekly, Vol. 39, No. 28. Bhat, R. and Babu, K.S. (2004) Health Insurance and Third Party Administrators Issues and Challenges Economic and Political Weekly, Vol. 39, No. 28. Mahopatra, S. K (2005) A Healthy Ground For TPAs Journal of Insurance Regulatory and Development Authority, May. Bhat, R., Maheshwari, S. and Saha, S. (2005) Third Party Administrators and Health Insurance in India: Perception of Providers and Policyholders Indian Institute of Management Ahmadabad. Ruchismita, R., Ahmed, I. and Rai, S. (2007) Delivering Micro Health Insurance through the National Rural Health Mission Institute for Financial Management and Research centre for insurance and risk management, a strategy paper, August. Jaswal, M. (2010) Understanding the TPAs Journal of Insurance Regulatory and Development Authority, August
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FIGURES
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Gender Of Respondents
Male
Female
Figure 1
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Age Of Respondents
Figure 2
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Single
Married
Figure 3
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Family Size
Family Size
38
1 to 4
4 to 6
More then 6
Figure 4 Page 47
Annual Earning
18 16 14 Axis Title 12 10 8 6 4 2 0 Annual Earning 0-2 Lakhs 2 2-5 Lakhs 16 5-7 Lakhs 17 7 Lakhs and Above 15
Figure 5
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Yes 36
No 14
Figure 6
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Figure 7
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Figure 8
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Chart Title
30 25 20 15 10 5 0 Disease Coverd Disease Not Coverd 1 25 23 2 11 9 3 4 6 4 7 7 5 3 5
Figure 9
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Figure 10
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50 45 40 35 30 25 20 15 10 5 0
No Yes
45 5
Figure 11
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Claim Settlement
Claim Settlement
Delayed On Time
26%
74%
Figure 12
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Claim Settlement
20
Figure 13
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SAMPLE QUESTIONNAIRE
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