Insurers pin rider to group health cover

General insurers are saying no to group health insurance covers to employees of companies, which do not avail of property insurance from the same company.

Premium rates at which group health covers are provided take into account receipt of other profitable business, so that risks underwritten are profitable on a client basis.

"If health insurance is taken from one company and fire and engineering cover from another, then standalone health cover becomes unviable at discounted rates," a public sector general insurance company official said.

Several insurers have stopped selling standalone group health insurance policies to companies owing to a high overall claims ratio of 180 per cent.

Kolkata-based National Insurance Company had a claims ratio of 136 per cent in 2004-05 in its combined health insurance portfolio. It reduced the claims ratio to 128 per cent in 2005-06 by refusing standalone group mediclaim.

Corporates pay Rs 800-Rs 1,200 premium per employee in group covers against Rs 1,800-Rs 2,200 in the case of individual health covers sold by insurers.

Group covers provide the insured maternity benefits, cover for the new-born from day one, cover for all pre-existing illnesses and similar benefits to 4-5 dependent family members. But individual covers provide limited insurance with at least 12 diseases excluded in the first year.

A senior official of National Insurance said, "We stopped accepting standalone mediclaim from corporates. Software companies particularly would buy fire cover from a private insurance company and health insurance from us. This led to severe losses in the health insurance portfolio. Now we give health insurance to corporates which also give us other business."

Deepak Mendiratta, managing director of Health and Insurance Integrated, said "Insurers are waking up. Once detariffing happens, fire rates will fall. Then insurers will not be in a position to offer discounts on group health insurance. Thus, group mediclaim rates will rise."

Corporates which buy group cover are unwilling to pay premium arrived at by insurance companies after taking into account the risks involved.

Of the total health insurance business in the industry, retail health insurance constitutes 60 per cent, while group health insurance is 40 per cent.

Sandeep Dadia, director at Enam Insurance Consultants, said, "These are positive signs. The solution is to make each portfolio profitable. The industry should move towards managed healthcare. Preferred provider organisations should emerge where the insurer ties up with a chain of hospitals and gives volume of business to them and in return they offer better rates."

The total health insurance premium collected was Rs 1,354 crore in 2003-04 to Rs 1,732 crore in 2004-05 and estimated at over Rs 2,100 crore in 2005-06.Public sector insurance companies account for 82 per cent of the total health insurance market in the country.

Enam's Dadia said, "Group health insurance is under-priced. Medical inflation (cost of healthcare) in metros is 10-15 per cent per annum but the premium for group mediclaim has barely been revised in the last many years."