Health risk firms to start Indian operations

Stand-alone health insurance companies may soon start their operations in India. At least two domestic entities have evinced interest in foraying into this sector and have already taken application forms from the Insurance Regulatory and Development Authority (Irda) for this purpose.

C S Rao, chairman, Irda, said, "I am fairly confident of stand-alone health insurance companies coming into India. There have been two entities that have already taken application forms for this purpose and a few more have evinced interest too."

Incidentally, according to Rao, the companies that have applied are basically Indian in nature but he is not sure "in which form will they enter", thus indicating a possible foreign participation in the ventures.

Besides, the companies that have applied are not presently in the insurance business either. When asked whether they are into the healthcare sector, Rao said that "one of them is not". The Apollo Group was also reported to be keen on entering this business.

Global majors such as CIGNA, Aetna, Blue Shield and Blue Cross, according to Rao, have not applied in this regard. CIGNA is one the companies that was stated to have lobbied strongly for a reduction in the minimum share capital required for setting up a stand-alone health insurance company.

The minimum capital required for these companies is Rs 100 crore, which seems to have discouraged setting up of such ventures in India. This is turning out to be high for Indian companies who will need to put in 76 per cent of the stake.

Sangeeta Reddy, executive director, Apollo Group, is one of the members of the committee on stand-alone health insurance companies which has proposed the reduction of capital requirement to Rs 25 crore. The change in capital requirement will require a legal amendment. Irda will also be coming out with new guidelines for unit-linked insurance plans (ULIPs) besides a time table for detariffing.

"With regard to ULIPs, we do not want to come out with guidelines that can hamper the progress of the insurance companies as these plans have been the drivers of growth. However, we would also insist on better disclosures," Rao said.

The time table for detariffing is likely to be out within the next few months, he added.