Pvt players eye health risk biz

Private life insurance companies are mulling the idea of venturing into health insurance sector by designing comprehensive, standalone health insurance policies.

Given the huge potential in the segment, life insurance companies were mulling to offer comprehensive long-term health insurance products, said P Nandagopal, chief executive officer, Reliance Life Insurance.

While medical insurance products were short-term, he claimed that life insurance companies had an edge over general insurance firms in terms of a more comprehensive medical channel network.

A slew of innovative customer friendly products from life insurance companies would hit the market in 2-4 months. The average growth registered by the insurance industry as a whole over last year was 15 per cent.

While premium from the non-life segment was at Rs 25,600 crore in 2007, it was estimated to grow over Rs 50,000 crore by 2011-12. Nearly 25 million people have been covered under health insurance schemes, but the penetration is still very low, admitted Sanjiv Bajaj, joint managing director, Bajaj Capital. "This was only 12-13 per cent of the total population."

Premium income from the health insurance segment was Rs 3,300 crore, with a growth rate of 40 per cent last year. Bajaj said that if the industry would continue to grow at this rate, it should reach Rs 16,000 crore by 2011.

Health insurance is going to be the largest growth segment in the coming years, he claimed.

Regarding premium value, Nandagopal said it should be competitive at par with the value added. "Well, it makes sense to devise policies for 5-10 years as it would add more value to it, and at a competitive price," he added.

"The main issue with consumers of the mediclaim policies is claim settlement and the renewal price. They fear that once a claim is submitted, the policy becomes null and void, hence a long term contract is a right step ahead for the life insurance companies," said Binay Agarwal, senior vice president, ICICI Prudential Life Insurance.

According to him, long-term policies are much more practical for the people above 40 as the risk of coverage increases with age.

"These policies are a sort of long-term guarantee, which would keep on covering irrespective of the age and number of claims," he added.

"Life insurance companies would not come out with conventional mediclaim policies, rather it makes much more sense to go for a product which would include package for a long-term basis," said Gaurang Shah, MD of Kotak Mahindra Old Mutual Life Insurance.

He added that mechanism regarding the claims and the distribution would be different from that of the other policies.

"The current policies mostly cover surgical benefits. Such policies that would cover the entire gamut of health aspects, would require a different approach altogether. The challenge would be on how we manage these aspects," Shah added.