Life insurers seek IRDAI nod to sell indemnity-based health insurance

Life insurance companies have approached the Insurance Regulatory and Development Authority of India (IRDAI) for permission to start selling indemnity-based health insurance products once again, although general insurance companies are not too happy with the proposal.

“Given the low penetration of health insurance in the country, there is enough scope and also requirement for sale of more of these products. Life insurance companies already sell protection for critical diseases such as cancer cover, and also have a huge distribution network across the country, which can be used to sell health insurance,” said two persons familiar with the development, adding that they have approached the regulator on the issue.

The IRDAI had, in 2016, issued new health insurance regulations, under which it had barred life insurers from selling indemnity-based health insurance products, either as an individual or a group policy, and also from offering single premium health insurance products under the unit-linked platform.

It had allowed only general insurers and health insurers to offer individual health products with a minimum tenure of one year and maximum of three years, provided the premium remains unchanged for the tenure.

“Life insurance companies now can no longer offer comprehensive protection to a customer who may be looking for term insurance as well as health insurance and have to refer them to another company. This also poses to be a major challenge,” noted an executive with another insurance company.

Life insurers have to tie up with a general or health insurance company to provide health plus life products.

Sources said life insurance companies have proposed reviewing the current bar to IRDAI Chairman Subhash Chandra Khuntia, although the regulator is yet to take a view on it.

However, many general insurance companies are not happy with the recommendation as they are of the view that they have better wherewithal to not only sell insurance but also process and settle claims.

“There is a view that general insurance companies have the infrastructure and expertise to handle indemnity-based claims. Also, the IRDAI regulations very clearly say that general insurance companies can sell health insurance. So, what is the need to disturb this at present,” noted a representative of the general insurance industry, adding that this has been an ongoing debate.

According to IRDAI data, the penetration of non-life insurance sector in the country stood at 0.93 per cent in 2017, against 2.76 per cent for life insurance.

The government and insurers have been hopeful that Ayushman Bharat will increase awareness and penetration of health insurance.