Steep increases in premium rates for group health insurance policies witnessed in last two to three years may be a thing of past, with premium rate expected to increase by just 10-15 per cent annually in the coming years, according to a survey named as called ‘Periscope 2011’ by Vantage Insurance Brokers and Risk Advisors.

Group health insurance policies are loss making business for non-life insurance companies with most having a claims ratio of over 120 per cent. As a result, non-life insurers have been increasing the premiums rates on employee group health insurance policies after detarrification in 2007.

“In 2010, the average rate of increase in premiums was 40 per cent over 2009. However, the average rate of increase was only 28 per cent in 2011 and that too for 58 companies (surveyed). Since medical cost is rising, we expect health insurance premiums to rise, but the rate of increase would be lower at 10-15 per cent if hospitals charge reasonably,” said Arvind Laddha, chief executive officer of Vantage Insurance Brokers and Risk Advisors.

“We saw a steep hike in 2010, so the premium base increased, while claim ratio fell. As a result, we saw insurers lowering the premium rates for group health covers in 2011. Now, with companies introducing so many restrictions in group health covers, the losses would be curtailed,” added Laddha.

The study said that large companies having a big workforce would look at self insurance. “If a company has a large employee force of around 50,000, it would have enough risk spread. However, the challenge would be non-availability of robust historical claims and non-availability of tax exemptions,” added Laddha.

To contain costs, employers have introduced several restrictions in employee health insurance policies pointed the study. The most common is room rental restriction with 87 per cent of the employers adopting this in 2011. Co-payment on claims in the second most popular risk control measure and was adopted by 45 per cent of the employers. Co-payment is a mechanism where the employee bears a part of the claim amount. For 2012, companies said they would make the employees pay a part of the health insurance premium and negotiate competitive package rates with hospitals.

The survey said that 60 per cent of the surveyed employers are seeking to control claims through employee awareness and 50 per cent of companies surveyed are looking at implementing health and wellness initiatives to encourage employees to take better care of their health.

The survey results were based on a national survey of 285 employers, representing 4,90,000 employees, including all major industry such as IT/ITES/BPO, financial services, manufacturing, advertising and media and retail.

falaknaazsyed@mydigitalfc.com