No free cover for HDFC Bank cards

After ICICI Bank withdrew free insurance cover to its credit cardholders, HDFC Bank has followed suit.

The country's second largest private bank has decided to withdraw free insurance covers provided to its customers holding silver credit cards effective from October 15. The bank has stated this in the credit cards section on its website.

Bankers said banks deciding to withdraw insurance cover provided to credit card customers owing to rising insurance premium cost. Recently, Punjab National Bank (PNB) announced that it is halving accident insurance cover provided to its debit card holders.

ICICI Bank withdrew insurance cover on its credit card in April 2006 to cut down on costs. It only provides free insurance cover to its platinum card customers, with the risks underwritten by ICICI Lombard.

PNB is reducing the cover provided to its debit card holders to Rs 1 lakh from Rs 2 lakh with effect from August 25, 2006. PNB has around 18 lakh debit card holders.

K S Bajwa, general manager, PNB, said "We offer personal accident cover free to our debit card holders. This year the insurance company quoted a premium that is four times higher than last year's premium saying the claims outgo is higher than the premium."

So, we had to either stop giving insurance cover like some other banks or reduce the cover."

An insurance official said, "In some cases, in group personal accident policies, the loss ratio is 80 to 120 per cent while in individual personal accident policies the loss ratio is just 50 to 60 per cent. Claims ratio has gone up."

PNB has a contract with National Insurance Company for the last three years. National Insurance suffered a claims ratio of 150 per cent during the period.