Separate norms for health risk companies soon

Soon standalone health insurance companies will be governed by separate regulations. At present, health insurance companies are governed by the Insurance Regulatory Development Authority of India (Irda) regulations. Since the nature of health insurances is different, the Irda is framing separate regulations for health insurance companies.

Unlike the 150 per cent solvency margin for life and non life insurance companies, health insurance companies will have risk-based capital adequacy norms, besides different investment regulations, market conduct and disclosure issues.

Says C S Rao, chairman, Irda, "General insurance regulations are not fit for health insurance companies as the parties involved are different like service providers, TPAs, and agencies. Today, there is no hurry as we have only one health insurance company.

Over a period of time, we need to build up regulations for health insurance as we may require them when there are large number of companies. A separate regulatory framwork would help in the proper functioning of health insurance companies. We are looking at how to exercise, supersive and control these companies."

When asked if the regulations will apply to life or general insurance companies who are also doing health insurance business, Rao said, "The disclosures and market conduct requirements (being framed) will apply to those companies who do health insurance business."

Irda is keenly studying British, US and European standalone health insurance companies and the regulations that govern them.

At present, Star Health and Allied Insurance company is the only standalone health insurance company in the country. Besides, Apollo Group and Germany-based Deutsche Krankenversicherung have applied for a licence to set up a health insurance company called Apollo DKV Insurance Company.

United States major health insurer, Aetna has hired Mckinsey to conduct a feasibility study for entering India. Similarly, United Healthcare, Cigna and Bupa have also evinced interest in setting up health insurance companies in India.

India provides a huge market for health insurance and it is estimated that the health insurance market potential is a minimum of Rs 15,000 crore while so far only 10 per cent of it has been tapped upto 2004-05.