Soon,
health insurance cover may cost more
Get ready to shell out
more premium for your individual health cover. Insurers may soon go for a
correction in the prices of individual health insurance plans.
“Any hike in the
premium of health policies should be justified by the concerned insurer before
the regulator. Health insurers who are having a stress at their loss ratio and
have completed three years of business in this portfolio may go for a price
correction,” said a senior official from the industry.
Higher loss ratio is a
growing concern among health insurers. Loss ratio is the amount that insurance
companies need to pay out of their own pocket for claim settlement. For
instance, if the insurance company pays out Rs60 as claim for every Rs100 from
the collected premium, then the loss ratio is 60%.
An official said, “Top
players are having a loss ratio of around 80-90% which is not healthy for the
smooth running of the business.”
Despite efforts from
insurance companies, health insurance has not picked up as per their
expectations. The data released by Insurance Regulatory and Development
Authority reveals that the premium mop up of health insurers went down to 18.6%
during 2011-12 as against 34% in 2010-11. The premium collection from the
health sector was at Rs13,354 crore during the last financial year.
Experts feel the shrink
is because of the dip in sales of group policies. Corporate group policies
started losing its sheen as companies cut budgets on employee health plans.
This in turn has put greater pressure on the margins of insurance companies. As
a result, they have also hiked the premiums of corporate policies following
high claims ratio.
Even the public sector
companies will be hiking rates for health insurance premium. This is because
finance ministry sent them a letter directing them not to underwrite policies
causing heavy losses. Also, the insurers were asked to reduce discounts on
individual as well as group policies.
The combined loss ratio
(which is the sum of loss ratio and expense ratio) of PSU insurers is now above
100% and it is a matter of worry for the industry.
“Medical inflation, on
an average, is 17% year-on-year, and the premium has to go up in order to cope
up with the rise in cost,” said an official from a health insurance company.
Source: www.dnaindia.com
06.06.2012
Better to be
strong than pretty and useless
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