The Hindu Business Line : IRDA wants India-specific mediclaim policies designed

THE health insurance business has the potential to generate Rs 1 lakh crore as premium and this calls for specialised health insurance companies, according to Mr P.C. James, Executive Director, Insurance Regulatory and Development Authority.

It is also time that a suitable model of health insurance cover is evolved since the existing mediclaim model here and the health insurance products available in the developed countries have their own infirmities, he said.

Speaking at an interactive session on `Doctors, Hospitals & Health Insurers', organised by CII, Coimbatore, here today, he said the general insurance market in India is valued at about Rs 17,000 crore. But the potential premium in the health insurance sector was estimated to be around Rs 1 lakh crore and it could accommodate a large number of players.

But this was an `extremely difficult' subject' and IRDA was looking at `stand alone' health insurance companies since insurers engaged in motor insurance were not in a position to offer health insurance, he said.

He said there were three or four models of health insurance available globally - the tax model followed in the UK and Canada, compulsory social insurance model adopted in some of the EU countries and the private health insurance model in vogue in the US.

These models have their own merits and demerits and many of them were failing. The universal health insurance, which India was aiming at, required various inputs. He said 76 per cent of the Indian population was paying for its medical expenses from its own pocket resulting in family savings built over a long period being wiped out at one stroke. IRDA was in the process of developing certain models for the poor like micro insurance.

He said the health insurance scenario in the country was unique in that most of the population was in the informal sector which made collection of the insurance premium a tough one. Nearly 25 per cent of the population was below poverty line and this segment could not afford to pay the insurance premium. The fact that 70 per cent of the people live in rural areas made the task of reaching out to them difficult. There was a need to focus on the consumer by hospitals, insurance companies, government, regulators etc.

Describing the prevailing mediclaim cover as `defective and obsolete', Mr James said the IRDA had asked insurance companies to look at many more new products starting from micro insurance to international coverage.

He said that there was a need to formulate a new health insurance model for India since the prevalent systems from abroad could not be replicated here.

He said the IRDA had taken initiatives in data management and warehousing and was looking at stand- alone health insurance companies since it was a very big portfolio. Stating that health financing was `inescapable' whether by government, community, insurance companies or by individuals, he said there was a need to create awareness about it. The services of all concerned in the health care insurance sector should be aligned and the focus should be on enhancing affordability and reducing cost.

Ms Nandini Rangaswamy, Chairperson, CII - Coimbatore, said the traditional model of health funding and provision by the government had failed to provide universal health security in the country and health insurance had become imperative.

Dr Ramkumar Raghupathy, Convenor, healthcare panel, CII - Coimbatore zone, said health insurance had come to stay with the introduction of cashless payment system, third-party administration and safeguards against manipulations.

Later speaking to newspersons, Mr James clarified that the regulator would not determine what type of health care products should be introduced. It was for the parties involved to come out with new products and interactive meetings to develop suitable products.

With regard to the exclusion of pre-existing diseases from insurance coverage, he said the IRDA had asked the insurance companies to have a re-look on the issue. He said IRDA has given options to soften the policy conditions.

Foreign companies were more eager to enter this sector but this involved policy issues like cap on foreign investment.

But "health insurance companies are absolutely required and we are trying to promote them," he said.

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