A REPORT ON MANAGEMENT THESIS - II Health Insurance Scenario in Chandrapur City

Under guidance of: Ms. Ruchi Kachwah (Banking faculty)

Submitted by: Vikas R Sharma (8NBCP008)

INC CHANDRAPUR

ACKNOWLEDGMENT

Knowledge is an experience gained in life, it is the choicest possession, which should not be shelved but should be happily shared with others.

I express my gratitude to Ms. Ruchi Kachwah, Faculty (Banking), ICFAI NATIONAL COLLEGE for her valuable critiques, assistance and encouragement, which enabled me to carry on the thesis successfully. She gave me a wonderful opportunity to work on this thesis. Her time-to-time guidance and incessant support helped me to broaden my outlook on the thesis. I am highly obliged for her support throughout the SEMESTER. I also express my sincere gratitude to all the faculty and non teaching staff of college for providing help in preparation of this report.

I would like to thanks to all for give their valuable inputs and time.

Vi kas R. Sharma 8NBCP008 INC Chandrapur

CERTIFICATION
This is to certify that the Management Thesis II titled Health Insurance Scenario in Chandrapur City submitted by R. Sharma Enrolment No. 8NBCP008 during his Mr. Vikas

semester IV of

MBA of Class 2008 10 embodies original work done by him.

Signature of Faculty Supervisor Ms. Ruchi Kachwah (Faculty Banking) INC Chandrapur

CERTIFICATE OF COMPLETION

It is here by declared that Mr. Vikas R Sharma, Enrolment No. 8NBCP008 , MBA class 2008-10, of INC Chandrapur has successfully completed his management thesis II for SEM IV having topic Health Insurance Scenario in Chandrapur City under the guidance of Faculty Supervisor Ms Ruchi Kachwah.

Faculty supervisor Ms. Ruchi Kachwah Faculty Banking

Mr. Sarvesh Paranjape Campus Co-coordinator INC Chandrapur

Table of Content
Sr. No 1 2 3 4 5 6 7 8 9 10 11 12 13 Name Declaration Acknowledgment Certification Introduction Objectives Methodology Industry Profile Health Insurance Overview Data Interpretation Conclusions and Findings Limitations Questionnaire Reference Page No 1 2 3 6 8 9 10 14 19 31 33 34 37

Introduction
The topic for my thesis is Health insurance scenario in Chandrapur city. This will help me to understand the health insurance scenario in local market. I have studied my topic within Chandrapur city. I select this topic to check the awareness among the peoples of city regarding health insurance. Chandrapur is an industrial city. It has lot of industries working here specially coal mines. Popularly it is known as Black Gold city. It is one of the most polluted cities in country. This produces the adverse effect on the health of peoples. Also growing industries produce lot of employment here, as the standard of living of people in Chandrapur city is increasing day by day, purchasing power of people is also increasing. People are more conscious for services given by various Health insurance Companies. Services play important role to attract customers and also to achieve top position in market. Insurance is a vital economic activity and there is excellent scope for its growth in the emerging markets. The opening up of the insurance sector has raised high hopes among people both in the India and abroad. The recent detariffication in the non-life domain has provided a great deal of operational freedom of the player. Health insurance is insurance that pays for medical expenses. It is sometimes used more broadly to include insurance covering disability or long-term nursing or custodial care needs. It may be provided through a government-sponsored social insurance program, or from private insurance companies. It may be purchased on a group basis (e.g., by a firm to cover its employees) or purchased by individual consumers. In

each case, the covered groups or individuals pay premiums or taxes to help protect themselves from high or unexpected healthcare expenses. Similar benefits paying for medical expenses may also be provided through social welfare programs funded by the government. By estimating the overall risk of healthcare expenses, a routine finance structure (such as a monthly premium or annual tax) can be developed, ensuring that money is available to pay for the healthcare benefits specified in the insurance agreement. The benefit is administered by a central organization such as a government agency, private business, or not-for-profit entity.[

Objectives
For my thesis I have set following objectives, 1. To study the need of health insurance.
2.

To check the awareness among people regarding health insurance in Chandrapur city.

3. To know the customer preference for Health insurance company in Chandrapur city. 4. To study about benefits provided by various insurance plan. 5. To study about the factors influencing the investors decision. 6. To find out conclusion and give Suggestions.

Methodology
The objective of present study can be accomplished by conducting a systematic research. Market research: It is the systematic design collection analysis and reporting of data and findings that are relevant to different market situation facing the company.

The market research processes that will be adopted in present study consist of following steps: Developing the problem and research objectives: The research objective states that what information is needed to solve the problem. Developing the research plan: Once the problem is identified the next step is to prepare a plan for getting the information for the research. Collection and source of data: Market research requires two kinds of data that is primary data and secondary data. Primary Data: this data is collected using a well structured questionnaire , surveys etc. Sample Size: A sample size of 200 is selected. Survey was carried out in steps 1) First visit 2) Appointment or personal interview Secondary Data: this data is collected from sources such as magazines, internet etc Analysis of Data:

This involves converting the raw data into useful information. It requires tabulation of data and using statistical measures on them for developing conclusion.

Industry Profile

Types of insurance
Any risk that can be quantified can potentially be insured. Specific kinds of risk that may give rise to claims are known as "perils". An insurance policy will set out in detail which perils are covered by the policy and which is not. Below are (non-exhaustive) lists of the many different types of insurance that exist. A single policy may cover risks in one or more of the categories set out below. For example, auto insurance would typically cover both property risk (covering the risk of theft or damage to the car) and liability risk (covering legal claims from causing an accident). A homeowner's insurance policy in the U.S. typically includes property insurance covering damage to the home and the owner's belongings, liability insurance covering certain legal claims against the owner, and even a small amount of coverage for medical expenses of guests who are injured on the owner's property.

Business insurance can be any kind of insurance that protects businesses against risks. Some principal subtypes of business insurance are (a) the various kinds of professional liability insurance, also called professional indemnity insurance, which are discussed below under that name; and (b) the business owner's policy (BOP), which bundles into one policy many of the kinds of coverage that a business owner needs, in a way analogous to how homeowners insurance bundles the coverages that a homeowner needs.

Life
Life insurance provides a monetary benefit to a decedent's family or other designated beneficiary, and may specifically provide for income to an insured person's family, burial, funeral and other final expenses. Life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an annuity. Annuities provide a stream of payments and are generally classified as insurance because they are issued by insurance companies and regulated as insurance and require the same kinds of actuarial and investment management expertise that life insurance requires. Annuities and pensions that pay a benefit for life are sometimes regarded as insurance against the possibility that a retiree will outlive his or her financial resources. In that sense, they are the complement of life insurance and, from an underwriting perspective, are the mirror image of life insurance. Certain life insurance contracts accumulate cash values, which may be taken by the insured if the policy is surrendered or which may be borrowed against. Some policies, such as annuities and endowment policies, are financial instruments to accumulate or liquidate wealth when it is needed. In many countries, such as the U.S. and the UK, the tax law provides that the interest on this cash value is not taxable under certain circumstances. This leads to widespread use of life insurance as a tax-efficient method of saving as well as protection in the event of early death. In U.S., the tax on interest income on life insurance policies and annuities is generally deferred. However, in some cases the benefit derived from tax deferral may be offset by a low return. This depends upon the insuring company, the type of policy and other variables (mortality, market return, etc.). Moreover, other income tax saving vehicles (e.g., IRAs, 401(k) plans, Roth IRAs) may be better alternatives for value accumulation.

Non Life Insurance Motor insurance

Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy. Auto insurance provides property, liability and medical coverage: 1. Property coverage pays for damage to or theft of your car. 2. Liability coverage pays for your legal responsibility to others for bodily injury or property damage. 3. Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses. An auto insurance policy comprises six kinds of coverage. Most countries require you to buy some, but not all, of these coverages. If you're financing a car, your lender may also have requirements. Most auto policies are for six months to a year. In the United States, your insurance company should notify you by mail when its time to renew the policy and to pay your premium.

Health
Health insurance policies by the National Health Service in the United Kingdom (NHS) or other publicly-funded health programs will cover the cost of medical treatments. Dental insurance, like medical insurance, is coverage for individuals to protect them against dental costs. In the U.S., dental insurance is often part of an employer's benefits package, along with health insurance. Accident, Sickness

Disability insurance policies provide financial support in the event the policyholder is unable to work because of disabling illness or injury. It provides monthly support to help pay such obligations as mortgages and credit cards. Disability overhead insurance allows business owners to cover the overhead expenses of their business while they are unable to work.

Total permanent disability insurance provides benefits when a person is permanently disabled and can no longer work in their profession, often taken as an adjunct to life insurance. Workers' compensation insurance replaces all or part of a worker's wages lost and accompanying medical expenses incurred because of a jobrelated injury. Casualty Casualty insurance insures against accidents, not necessarily tied to any specific property. Crime insurance is a form of casualty insurance that covers the policyholder against losses arising from the criminal acts of third parties. For example, a company can obtain crime insurance to cover losses arising from theft or embezzlement.

Political risk insurance is a form of casualty insurance that can be taken out by businesses with operations in countries in which there is a risk that revolution or other political conditions will result in a loss.

Fire Insurance
There are three types of insurance coverage. Replacement cost pays the cost of replacing your property regardless of depreciation or appreciation. Extended replacement cost will pay over the coverage limit if the costs for construction have increased. This generally will not exceed 25% of the limit. Actual Cash Value provides replacement minus depreciation. When you obtain an insurance policy, the coverage limit established is the maximum amount the insurance company will pay out in case of loss of property. This amount will need to fluctuate if homes in your neighbourhood are rising; the amount needs to be in step with the actual value of your home. In case of a fire, household content replacement is tabulated as a percentage of the value of the home. In case of high value items, the insurance company may ask to specifically cover these items separate from the other household contents. One last coverage option is to have alternative living arrangements included in a policy.[ If a fire leaves your home uninhabitable, the policy can help pay for a hotel or other living arrangements.

Health Insurance Overview

Why Health Insurance? This is the first question that a planner needs to ask and answer. Why does the planner want to introduce health insurance at National / State / district / regional level? What is need? Is there a problem of access to health care? Is the target population finding it difficult to access health care? Is there a problem of access of financial barriers? Are the bills too high and the people too poor to pay these bills? Health insurance could be a way of removing financing barriers and improving access to health care. Is there a problem of impoverishment due to medical expenses? The population is able to pay the bills, but in the process has to borrow or sell their asset to meet their medical cost. This means that they may be pushed into poverty because of medical expense. Health insurance could be a way of providing financial protection against high medical expenses. Is there a problem of quality of health care? People have the capacity to pay, but are not getting good quality health care. Health insurance could be a way of negotiating with the providers for better quality health care. Health insurance means risk coverage to provide financial shelter in the event of Medical treatment incurred out of a sickness or injury. According to Money Digest February 2003: 1 in 3 Person will develop some life threatening cancer. 1 in 4 Person will contact heart disease before they retire. 1 in 20 Person Risk the chance of having stroke before the age of seventy According to World Bank Report

Some relevant studies reveal : 85 % of the working population in India DO NOT have Rs. 5, 00,000 as instant cash. 14 % have Rs. 5,00,000 instantly BUT will subsequently will face a financial crunch Only 1% can afford to spend Rs. 5, 00,000 instantly and easily.

99 % of Indians will face financial crunch in case of any critical illness. Hence the need for Health Insurance.

Let us look at what it costs in a good/ reputed hospital for treatment of Angioplasty Open surgery Liver Transplant Kidney Transplant Hernia surgery Rs. 2,00,000 to Rs. 3,00,000

heartRs. 2,50,000 to Rs. 4,50,000 Rs. 30,00,000 Rs. 18,00,000 to Rs. 30,00,000 Rs. 30,000 60,000 to Rs.

Cancer-Chemotherapy - Rs. 7000 to Rs. 10000 per visit and number of visits may be 4 to 20 means that cost can be as high as Rs. 2, 40,000. It is only that Health insurance policy taken by a person can take care of hospitalization costs of this magnitude. Who does not need Health insurance?

A person who is covered by his employer or is governed under some corporate rules for payment/reimbursement of Hospitalization costs need not go in for Health Insurance. A person who has no financial liquidity issue and who can make immediate payment of hospital bills of the order of Rs. 1,00,000 or 2,00,000 or even Rs. 5,00,000 need not go in for health insurance. In this case he is indirectly doing self-insurance which in simple term means that he will be making the payment himself as and when the need arises.

It means that all others should go in for Health insurance so that, as when they need hospitalization Health Insurance will take care of the same.

It means that by buying this Insurance one is buying peace of mind for the day, when one may need hospitalization.

Source of Health Insurance Plans

The health care industry is in the nascent stage in India. Although after independence, considerable progress has been made in the form of increased medical facilities, eradication of various diseases such as small pox, plague, etc., and increase in the life expectancy rate, still major efforts have to mad. Thus to understand nuance of the health insurance industry, first we have to go understand various health care providers. Indemnity Plans Under this plan, the organization from which insurance is purchased is separate from the insured. The insurance company either pays the provider or reimburses the insured for expenses incurred. The insured need to submit claims for receiving payment. The reimbursement is around 80% of the cost after the deductible is paid. The deductible is the amount not covered under the policy and is paid by the insured himself. Managed Care Plans Under the managed care plan, the user need to make monthly payment to the organization that provides the health services. Under this service insurance company may not involved at all. At present there are many insurance companies , offering both manage care and indemnity plans. HEALTH MAINTAINCE ORGANIZATION (HMO) HMO is organization which consists of physicians, hospitals which provide health care service to its members. The HMO plan provides outpatient care, x-ray, laboratory services, maternity care, mental health care, minor surgery etc. A monthly fee is paid by the member, which varies according to the number of people in the family. The advantage of health care is that it reduces the cost and manages the resources efficiently.

PREFERED PROVIDER ORGANIZATION (PPO) The PPO has both the characteristic of a HMO and an insurance plan. It provides greater flexibility than the HMO, with a network of doctors and hospitals. In addition to that it also provides insurance coverage for the medical services which are not provides insurance coverage for the medical services which are not provided by a HMO network. This organization is either administered by an insurance company or a service provider.

Types of Health insurance

The various types of health insurance plans are as follow Medical Expense Coverage This coverage is provided to pay for the followings: Hospitalization Prescription drugs Laboratory and X rays Dental expenses

These coverages are cost effective as they provide cover for the most important aspect of health care. Apart from this, if a person wants broader coverage, he or she can obtain major medical or comprehensive majot medical coverage. Long-Term Care Insurance Long term care is the delivery of medical and personal care other than the hospital care to people suffering from chronic disease resulting from illness or frailty. Due to increasing health services, the mortality rates have reduce and people are living for a longer period than before. Elderly people after reaching certain age cannot take care of themselves and thus require long-term care. Thus long-term care is an area of financial planning which should not be neglected by an individual.

Disability Income Insurance Disability income insurance provides weekly or monthly payments, when the insured is unable to work due to illness, injury or any other disease. Disability income insurance comes to rescue when the sole earning member of the family become sick for an extended period and there is an adverse impact on the financial condition of the family. Thus disability insurance should be obtained by every individual who is the sole earner for the family. Most of the employers provide disability insurance at advantageous rates. The coverage available is generally voluntary and the person may have to bear the whole cost. Social security programs also provide disability benefits, if the disabilities benefits last for at least one year.

Data Interpretation
1)

Which age group do you belong? b) 31-45 31-45 93 c) 46-60 46-60 57 d) 60 and above 60 and above 17

a) Under 30 Under 30 33

Interpretation: From the graph we can see that for the exact comparison we are taking the sample size of 200 of different age group of people randomly. This has to be done to avoid biasness.

2) What is your profession? a) Self employed b) Government sector

c) Private sector d) Others

Self employed Gov. sector 35 73

Private sector 57

Other * 35

Interpretation: *Other section consist of agriculture, poultry etc. From the above graph we can see that we have taken people of different profession to know there exact view on health insurance.

3) What is your annual income? a) < 1lakh C) 3 5 lakh < 1 lakh 7 1 -3 lakh 137 b) 1 3 lakh d) 5 lakh < 3 5 lakh 25 5 lakh < 27

Interpretation: From the above graph it is easily come to know as the different age group and of the different profession people will vary there annual income which will help in knowing there different view for topic.

4) Are you aware that the insurance is available at the below mentioned channel? a) Corporate agent c) Banks b) Agent d) All

Corporate agent 33

Agents 133

Bank 4

All 30

Interpretation: Here we come to know the mode of channel for the most of the people for getting there policy is directly from the agents only. Still banks have got very less acceptance by the people for getting insurance.

5) According to you is it important to take health insurance? a) Yes b) No

Yes 60

No 140

Interpretation: From the graph shown above we can interpret that majority of investors in Chandrapur city dont know the importance of health insurance.

6) Does your employer give you any kind of medical facility? a) Yes b) No

Yes 73

No 127

Interpretation Peoples working under government sector like WCL, MEL etc. are provided medical facility.

7) Have you taken any health insurance policy? a) Yes b) No

Yes 18

No 182

Interpretation: From the graph shown above we can interpret that majority of investors in Chandrapur city have not taken health insurance policy.

9)

How often do you invest in health insurance? a) Monthly c) Semi- annually Monthly 4 b) Quarterly d) annually Semi-annually 2 Annually 10

Quarterly 2

Interpretation: Here we came to know the mode of payment for the most of people for paying their premium is annually.

10)
a)

I find the service offered by my company is beneficial Strongly agree b) Agree Agree 9 c) Cant say Cant say 4 d) disagree Disagree 1

Strongly agree 4

Interpretation: From the above graph it is clear that most people gets benefit from health insurance policy. The people which are disagree are those who didnt get claims for there policy.

11) What mode of advertisement do you prefer for information regarding health insurance? a) Tele-media b) Direct briefing Tele-Calling 24 b) Paper media d) others Media 92 Direct briefing 10 Mails 74

Interpretation: Here we came to know most of the people get aware of the company plan and policy from mailers and media

12)

If you have surplus of Rs 1000 per month, what would you do? b) Invest Invest 52 c) Utilize Utilize 12 d) Insurance Insurance 33

a) Save Save 103

Interpretation: From the above chart, it is clear that people of Chandrapur city prefer saving instrument over Investment, and Insurance is their least priority.

13) If you have to invest monthly Rs 1000 in insurance, which insurance will you prefer? a) Investment plan d) Health plan b) Protection plan e) Child Plan c) Pension plan

Investment plan 64

Protection plan 53

Pension plan 33

Health plan Child plan 12 38

Interpretation: From the above chart it is clear that health insurance is least preferred type of insurance.

Conclusions
After interpreting the data following conclusions are made on the scenario of health insurance in Chandrapur 1. Chandrapur is industrial city; here most of the people are working under government undertaking sectors like Western Coal Ltd (WCL), Maharashtra Elektrosmelt Ltd (MEL), CTPS etc. The employees of these PSUs get medical facility under employee benefit scheme. 2. According to information collected in thesis 30% peoples knows the important of health insurance. 3. 36% people of total population are government sector employees and they get medical facility from their employer. Thus they do not need health insurance. 4. Only 9% peoples of total population other than government employee have some kind of health insurance. 5. In total 45% people (36% government employees + 9% health insurance holders) have insurance against health risk.

6.

30% people know the importances of health insurance, among them 9% are those who are already insured and 15% are government employees (Total 32 government employees).

Thus (30% - 16% + 9%) = 5% people are those, who know the importance of health insurance but because of some reason yet to have it.

7. 55% of people who have health insurance prefer annual mode of payment. 8. 77% of people who have health insurance got benefits from it. 9. 46% people of total population prefer media for information regarding insurance and 37% prefer mails. Peoples are reluctant for tele-calling and direct briefing. 10. 51% of people in city prefer saving instrument over investment (26%) and insurance (33%) for allocation of surplus money. 11. Health insurance (6%) is least preferred insurance plan by people.

Limitation
Procedural Limitation All data collected are generally limited by the method adopted. In the current research, the sole method of data collection being questionnaire, it limits the data generation available through that method. Geographical Limitation The research will be carried out with the help of insurance company, which are available and are based in Chandrapur city only and is not applicable to other parts. Situational Error: This may arise due to customer answers. Sample Error: The study takes into account a sample which may not be a good indicator of the population, but the study includes extensive interaction with the customers.

QUESTIONNARE
Name: Address: . .. .. Phone No: Gender: Male ( ) Female ( )

1) Which age group do you belong?

a)

Under 30 c) 46 60

b) 31 45 d) 60 and above

2) What is your profession? a) Self employed c) Private sector b) Government service d) others

3) What is your annual income? a) < 1lakh c) 3 5 lakh b) 1 3 lakh d) > 5 lakh

4) Are you aware that the insurance is available at the below mentioned channel?

a) Corporate agent

b) Agent

c) Banks

d) All

5) Does your employer give you any kind of medical facility? a) Yes b) No

6) According to you is it important to take health insurance? b) Yes b) No

Why .. ..

7) Have you taken any health insurance policy?

a) Yes

b) No

8) If yes which company?

9)

How often do you invest in health insurance?

a) Monthly c) Semi- annually

b) Quarterly d) annually

10) I find the service offered by my company is beneficial

a) Strongly agree c) Cant say

b) Agree d) disagree

10) What mode of advertisement do you prefer for information regarding health insurance? a) Tele-media c) Direct briefing b) Paper media d) others

12) If you have surplus of Rs 1000 per month, what would you do? a) Save c) Utilize b) Invest d) Insurance

13) If you have to invest Rs 1000 per month in insurance, which insurance will you preferred? a) Investment d) Health b) Protection e) Child c) Pension

References/BibliographyJournals: Service Marketing Personal Financial Planning Website: 1) http://www.ifingo.org 2) http://www.irda.org July 2008 ICFAI University press Sem III Course material