Radhika Menon

Mumbai, July 7

TWO parties, including one from the US, have shown interest in setting up stand-alone health insurance companies.

According to Insurance Regulatory and Development Authority (IRDA) sources, the corporate hospital group, Apollo, and the US-based United Health Care have expressed interest in setting up stand-alone health insurance companies.

Though the concept of a stand-alone health insurance company is still subject to approval, these parties have approached the IRDA.

The Apollo group already runs "Family Health Plan", one of the largest third-party administrators in Asia that manages 47 lakh lives. In addition, the Apollo group owns 18 hospitals and a retail pharmacy chain in India.

Ms Sangeeta Reddy, Executive Director, Apollo Group, is one of the members of the committee on stand-alone health insurance companies. The report of this committee has proposed that the capital requirement for such stand-alone companies be reduced to Rs 25 crore. However, key areas of concern expressed were with respect to accreditation of hospitals and overcharging by healthcare providers under health insurance.

A senior official with a public sector insurance company said cross-subsidisation of group-mediclaim policies against the more profitable tariffed policies such s fire is the norm with general insurance companies. While this has led to accumulation of losses in health insurance, it might prove to be a disincentive to stand-alone insurance companies, he said.

Industry insiders say the entry of a foreign player such as United Health Care, (subject to FDI norms which is at present 26 per cent) could bring better underwriting practices with respect to health insurance.

Meanwhile, the parliamentary committee has asked the four major PSU general insurance companies and the PSU life insurer to submit detailed reports about the health insurance market. It has sought information regarding the scope for new entrants as well as the development of micro-insurance in the country.

It has also enquired about the feasibility of using the `operational dynamics' of the Agriculture Insurance Company for the purpose of health insurance. However, some PSU insurance companies, on the grounds of lack of infrastructure, have expressed their disapproval of this suggestion.

Health insurance for women and children, as well as protection for the poor against cancer and heart disease, are likely to be some of the other topics of discussion at the parliamentary committee meeting to be held later this month.

(This article was published in the Business Line print edition dated July 8, 2005)
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