Health cover may cost 30% more

Insurers paying Rs 120-150 in claims for Rs 100 they receive as premium annually.

Your health insurance bill is likely to shoot up from next year with insurers planning to raise premiums by up to 30 per cent and limiting expenses that can be claimed under the policies.

The move comes in the wake of general insurance companies, which offer medical insurance, facing claims ratios of 120-150 per cent during the last two years.

This means they are paying Rs 120-150 for every Rs 100 that they receive as premium annually. During a meeting with health ministry officials last month, insurance company representatives indicated that the premium would have to be raised by up to 30 per cent to cover the losses.

"If things continue the way they are, the insurance companies have no option but to hike premiums," a senior executive with a state-owned insurance company said.

Insurers' attempts at fixing price bands have run aground with the Delhi Medical Association (DMA) earlier this month taking the four state-owned general insurance companies and their third-party administrators (TPAs) to court for attempting to fix package rates for cash-less insurance.

Deepak Mendiratta, chief (Health Plan and Health Insurance Administration), Max Healthcare, argues, "The TPAs are armtwisting the hospitals on tariffs. What is their authority to do cost containment for us?"

So far, the insurers have managed to bear the losses as medical insurance is cross-subsidised with fire insurance, which has a claim ratio of around 20 per cent.

"We want insurers to prove the solvency of their individual business and will ask them to prove the viability," CS Rao, Chairman, Insurance Regulatory and Development Authority (IRDA), told Business Standard.

With talks of standalone medical insurance companies and detariffing (fire insurance comes under tariff), the current medical insurance business will become unviable.

State-owned insurers are planning to restrict the coverage of policies. For instance, those above 60 years may not get a cover for ailments like cataract. They are also toying with the idea of loading, or payment of higher premium, for senior citizens.

Private insurers have already moved ahead and are either refusing to cover senior citizens or are charging a higher premium.

The state-owned companies are also considering limiting benefits. For instance, the room rent under the policy is proposed to be capped at a certain level to avoid misuse of the cover.

Such attempts have met with limited success though. Oriental's Good health Insurance Policy launched in May last year collected just Rs 5 crore. New India's Health plus policy on similar lines is not faring any better.

The private players are watching on the sidelines. "Our (claim ratio) is consistently above 100 per cent," an insurance manager with one of the private insurer, said.

CLAIMING LOSS

Insurance companies are paying Rs 120-150 in claims for every Rs 100 that they receive as premium annually

Insurers had earlier tried to set package rates for cash-less insurance, but were opposed by the Delhi Medical Association

Till now the insurers have managed to bear the losses as medical insurance is cross- subsidised by fire insurance