In 2004-05, the claims-to-premium ratio for the PSU insurers was 127 per cent.

Radhika Menon

Mumbai, Jan. 29

THE Insurance Regulatory and Development Authority (IRDA) has sought a review of all existing health insurance products.

This comes in the wake of recommendations made by a committee set by the regulator. The recommendations include redesigning policies for segments where the premium is linked to the maximum cover available on the policy. The regulator has submitted its report to the Central government.

A senior IRDA official said a committee on product innovation in health insurance has recommended that the existing health insurance products be reworked. "The existing health insurance products need to reviewed. The premium for these products should also be determined in a way so that the insurance companies are able to maintain sufficient profitability and solvency from the health insurance segment," said the official.

In 2004-05, the health insurance segment had generated premium of Rs 1,732 crore, of which the four State-run non-life insurance companies contributed Rs 1,427.9 crore. However, the claims-to-premium ratio for the PSUs was 127 per cent in the same year. The companies have also not hiked their health insurance premium in the past five years and the existing health insurance product has not been modified for 15 years.

The IRDA official said that while products with a lower premium should be designed for people from the lower socio-economic strata, the maximum sum assured should also be increased from Rs 5 lakh to Rs 1 crore.

"Serious diseases like cancer can set people back by as much as Rs 1 crore, going by rising medical costs. Hence, there should be cover that meet all the health insurance needs of the population," the official said.

The regulator has also recommended the efficient use of the ombudsman and other grievance redressal mechanisms since 40 per cent of the complaints regarding health insurance come from this segment.

The regulator had recently issued a show-cause notice to the four non-life general insurance companies for reportedly increasing the minimum sum-assured to Rs 1 lakh and insisting on a family cover. However, the companies are now working on new products that will soon be filed with the IRDA for approval.

A senior official at a PSU general insurance company said that the new health insurance products will have premium linked to the sum-assured and sub-limits will be fixed for the treatment of various diseases.

There could be a cap, for instance on the room-rent charges and doctor's fees. If the sum-assured of the policy purchased is Rs 1 lakh, then the room rent could be capped at one per cent or Rs 1,000 per day.

The official said, "We are considering increasing the current one-year exclusion period for ailments like cataract, hysterectomy, kidney stone to two years. Also, new policyholders above 45 will not be covered for ailments like cataract".

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(This article was published in the Business Line print edition dated January 30, 2006)
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