The Hindu Business Line : Life insurers may get to sell health cover

Better-equipped
They already have norms for medical underwriting.
Wider reach in terms of distribution, agency force.
Medical check-up infrastructure already available.

Mumbai , April 3

Life insurance companies may soon be able to distribute health insurance policies.

An IRDA committee has recommended that since life insurance companies have a wider reach in terms of distribution network and agency force as compared to general insurers, they may be allowed to distribute health insurance.

The report of the IRDA's group on "Innovations in health insurance policies" was recently submitted to the Finance Ministry.

Currently, life insurance companies offer health riders or health-oriented policies with a life cover component.

The IRDA report said: "Life insurance companies already have guidelines for medical underwriting and we could work further to develop underwriting guidelines for health insurance... The distribution of life insurance has already been integrated to take care of the medical check-ups for life insurance policies and the same infrastructure and process could be used to deliver health insurance policies".

Low penetration

The penetration of health insurance is currently woefully low at just one per cent of the entire population.

The motive behind setting up this committee was to improve this dismal statistic.

The other changes suggested by the committee with respect to improving the delivery of health insurance include the standardisation of claim processing procedures of insurance companies, third-party administrators (TPA) and hospitals. Hence, TPAs and hospitals have been asked to develop a standardised format for billing.

International code

According to an IRDA official, employees at TPAs and insurance companies are also being trained to use the ICD-10 code (The International Statistical Classification of Diseases and Related Health Problems).

This classification is used for recording the diseases and health-related problems and the World Health Organisation (WHO) produces the latest version of the classification. Currently, the lack of a code has meant a delay in claims settlement, said the report.

Insurance companies have also been urged to give a standardised and concise definition of what is `pre-existing disease or conditions' (such as asthma, angina, heart disease and diabetes), since it is the root cause for disputes between policyholders and insurers. Companies have been also asked to design various formats of policies that cover pre-existing diseases.

For instance, policies could soon have waiting or exclusion period depending on age bands. Hence, an individual between 0-40 years will have no waiting period while in the case of the age band of 61-65 years this exclusion might be for five years.

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