By tying up with an international reinsurer, it hopes to diversify the mediclaim protfolio risk and gain expertise in designing products. In talks with Munich Re for mediclaim portfolio?

Radhika Menon

Mumbai, March 29

Indian health insurers are going overseas for cover. The New India Assurance Company has decided to seek international reinsurance for its loss-ridden health portfolio.

This would be the first time that an insurance company will be opting for reinsuring its health segment.

The company is understood to be in talks with leading international reinsurer Munich Re for a possible tie-up.

A senior official at New India Assurance said that the main reason behind seeking reinsurance was to make health insurance a more profitable venture. "Currently, the mediclaim portfolio is loss-making. By tying up with an international reinsurer, we would not only be able to diversify our risk, but also gain from its expertise in designing products," the official said.

While the individual mediclaim segment has a claim ratio of 105 per cent, in the case of group mediclaim, it is over 130 per cent. Since group mediclaim for corporates also covers maternity, the claims-to-premium ratio for pregnancy-related cases alone is about 220 per cent.

According to analysts, reinsurers would like to insure only certain layers of the segment. This means that they would, for instance, reinsure policies for individuals in the age group of 18-25, where the claims could be fewer.

Redesigning policies

New India Assurance is in the process of redesigning its health insurance policies and the search for a reinsurance tie-up is in line with the restructuring of the portfolio. The company plans to introduce caps on room rent and doctor's fees in the new policies.

The exclusion period for ailments such as cataract, hysterectomy, kidney stone is likely to be extended to from one to two years. "Since international reinsurers would be exposed to global best practices, their suggestions can help us make our policies acceptable and marketable", said the official

In the last financial year, New India Assurance raked in premium of Rs 504 crore from the health insurance segment. This contributes to 12 per cent of the total business of the company.

Other insurance companies may also explore the reinsurance possibilities overseas.

In fact, Swiss Re, another international reinsurer, is understood to have expressed interest in entering the segment of health reinsurance in India.

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