Be prepared to shell out more on health insurance

Tags: Insurance

PSU non-life insurers file for up to 40% rise in premium rates

Are you planning to buy a health insurance policy or likely to renew your health insurance plan over the next few months? Be prepared to shell out more. The public sector non-life insurance companies that control 60 per cent of the health insurance business have filed for an upward revision in health insurance premium rates ranging between 15-40 per cent with the insurance regulator.

United India Insurance has filed for a 15-20 per cent increase in premium rates for its family floater policy called Family Medicare, while National Insurance Company sought a 20-40 per cent increase in health insurance premium rates. New India Assurance has already sought an increase in premium rates a few months ago, while Oriental Insurance is working on a plan to increase health insurance premium rates and have consulted their actuarial department to decide on the quantum of increase.

Speaking to Financial Chronicle, Asha Nair, director and general manager, United India Insurance, said, “We have filed for revision in rates for our family floater policy called Family Medicare with Irda. The premium rates will be increased by 15-20 per cent in this product.”

“Since we had raised the premium rates in individual mediclaim policy two years ago (in 2010-11), we may look at a revision in premium rates for the individual mediclaim policy next year. We will try and control the loss ratios in health insurance through health audits and monitoring,” added Nair.

A senior official of New India Assurance, the country’s largest non-life insurance company, refused to disclose the amount of increase, but said, “The last time we had increased the health insurance premium rates was in 2007. In the past six years, we have not increased the premium in our health insurance product while medical costs have been rising by 8-10 per cent annually. So, we have filed for a revision in premium rates a few months back and expect to get the regulator’s approval within a month.”

“Including group health insurance, our incurred claims ratio is around 98 per cent while the combined ratio (the total of claims paid, agent’s commission and administration expenses) for health insurance is 122 per cent,” said the New India Assurance official.

A senior official of Oriental Insurance, said, “We are working on repricing of our existing mediclaim product whose rates have not been increased in the past six years. The premium rates were last increased in the year 2006. We will be consulting the actuarial department to decide on the increase.”

“We have also filed for a top-up cover with the regulator, which will allow people to buy higher sum insured, that is, Rs 20-25 lakh, as offlate people are finding Rs 10 lakh cover insufficient due to the steep increase in healthcare costs,” said the official.

The four public sector general insurance companies have a combined ratio of over 120 per cent. That means, for every Rs 100 collected as health insurance premium, the total outgo on claims paid, commission paid to the agent/intermediary, third-party administrator’s fees, and administrative cost results in a total cost of Rs 120.

On January 18, PTI had reported state-run National Insurance Company (NIC)’s plans to increase the cost of health insurance premium to offset losses, quoting company sources. The hike could be between 20 and 40 per cent for NIC health products, sources in the city-headquartered firm added. Meanwhile, speaking on the sidelines of an interactive session of Indian Chamber of Commerce, NIC chairman and managing director NSR Chandraprasad said: “We expect to get the Irda approval on health insurance tariff in a month’s time.”

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