As loss-burdened general insurers take a hard look at rates, heavy discounts on premiums for companies providing group health insurance to employees may soon be a thing of the past.
For the first time, insurers are trying to standardise the information on employees’ medical history for pricing group health policies.
Currently, group health insurance is a loss-making portfolio as companies drive hard bargains to bring down premium rates. Also, increasing competition has resulted in severe undercutting, with premium rates declining 5-10 per cent this fiscal, said industry experts.
According to the insurers, the move to standardise the collection of medical data is expected to increase group health insurance premium rates by about 15 per cent, especially in accounts where heavy discounts were provided. General insurers have been increasing premium rates for retail health insurance, though it is a profitable portfolio, and providing heavy discounts on group health insurance rates for corporates.
Recently, the regulator expressed concern on the heavy discounts offered to corporate clients. At present, general insurers rely on information and data supplied piecemeal by intermediaries or clients. In most cases, the numbers are inconsistent or incomplete and there is inadequate disclosure on such basic aspects as the overall claim payout the previous year or the increase in number of employees covered. Segar Sampathkumar, General Manger of New India Assurance, which holds the largest health insurance portfolio in the market, said there is a need to reform the current system and standardise nomenclature to ensure there is no misrepresentation of information collected. He said this will ensure that brokers are responsible for the data they collect from companies. Sanjay Datta, Chief, Underwriting and Claims, ICICI Lombard General Insurance, said the standardisation will ensure there is clarity on the information collected.
Gurpal Dhingra, Director of Prudent Insurance brokers, said: “The lack of standardised data and information is one of the main reasons for poor pricing of group health policies and big losses suffered by most insurers because claims have been disproportionately large compared to premiums paid.”