The Hindu Business Line : Health insurance cost may go up

THE cost of health insurance may go up soon. The public sector insurance companies, which account for 82 per cent of the health insurance market, are planning not only to hike the premium on health polices but also to fix limits on cost of treatment of different diseases.

According to insurance companies, there has not been a hike in the health insurance premium in the last five years and all the companies have been suffering losses on this account.

Insurers are also making medical tests compulsory for new policyholders above 45 years of age.

Mr M. Ramadoss, Chairman and MD, Oriental Insurance Company, said the company has made it mandatory for new policyholders above 45 to take medical tests because the clause regarding `pre-existing diseases' is the main reason for disputes regarding health insurance. "This is to make sure that there is clear understanding regarding the policy," he said.

A formal decision on the hike in the premium is expected to be taken by the General Insurers (Public) Sector Association, a body that representing four public sector general insurance companies shortly. However, PSUs have individually issued guidelines for new insurance policy holders above 45 to undergo basic medical tests like ECG and blood test.

Competition as well as the accumulation of losses in the health insurance portfolio has pushed the public sector units to opt for a revamp of the health insurance, another senior insurance company official said.

Currently, the focus is on designing multiple products that cater to various segments of the population. These products will have limits fixed on the cost of treatment of some of the common ailments such as cataract and heart diseases, the official said.

Products will now be designed to cater to various segments of the population. So, a product for the lower income group will have a lower premium and lower limits in terms of cost of treatment and vice versa, he said.

The PSUs dominate the market with respect to health insurance. In 2004-05, the four public sector insurance companies - New India Assurance, National Insurance Company, Oriental Insurance Company and United India Insurance Company notched up health insurance premium of Rs 1,427.9 crore, while the eight private players contributed Rs 304.27 crore. This is, however, just a fraction of the health care spend in the country, which is believed to be Rs 1 lakh crore.

Mr Pawan Bhalla, CEO, Raksha Third Party Administrator, said the current premium structure does not factor in the cost of inflation and advancements in technology in health care. Customers are now undergoing expensive tests such as laproscopy and other laser treatments.

The claims to premium ratio of the public sector general insurance companies in the case of health insurance was around 127 per cent in 2004-05. Insurance companies currently cross-subsidise group health insurance covers against the more lucrative fire and engineering policies.

With de-tarrifing of the fire and engineering portfolio, insurance companies will now have to sustain health insurance as a stand-alone portfolio.

Mr K. Badri, Vice-President, Finance, Family Health Plan, a TPA run by the Apollo group said that at present there is only one type of product for the entire country. South India is subsidising the North because average cost of treatment in south is lower. Similarly the individual is subsidising the corporate, he said.

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