MUMBAI, MAY 14:
Rising medical treatment costs and high claims ratios are likely to force health insurers to increase premium rates by 15-20 per cent this year, say industry experts.
New India Assurance (NIA), for instance, recently got IRDA (Insurance Regulatory Development Authority) approval to increase the premiums on its health insurance policies.
As NIA is the largest general insurance company in India and sets the benchmark for the industry, other insurers are expected to follow suit.
“Our present premium rates were fixed almost six years ago. The old rates have not kept up with the inflation in medical costs.
“The health insurance premium rates vary for different segments depending on the claims experience, but the average increase across segments this year is around 20 per cent,” said G. Srinivasan, Chairman and Managing director, NIA.
According to industry experts, the average claims ratio with regard to health insurance, including group and individual, is around 120 per cent for general insurers.
That is, for every Rs 100 collected by way of premium, the general insurer pays out Rs 120 in claims, thereby making the portfolio loss-making.
V. Jagannathan, Chairman and Managing Director of Star Health and Allied Insurance, said despite the rising costs of medical treatment the insurer has hiked the premium for only one product.
“Medical inflation rates have been rising around 15 per cent every year. We have requested the regulator to allow us to increase the health insurance premium rates by 10-15 per cent,” said Amarnath Ananthanarayanan, Managing Director and Chief Executive Officer, Bharti AXA General Insurance.
Apart from increasing premium rates, most private insurance companies such as ICICI Lombard, Future Generali and Bajaj Allianz General Insurance have shifted to in-house settlement of claims to improve efficiency.
The four public sector general insurers — New India Assurance, Oriental Insurance, United India Insurance, and National Insurance — are currently in the process of floating their own third-party administrator (TPA), aimed at minimising fraudulent claims and lowering the claims ratio.
According to Srinivasan, the TPA is expected to be operational by January next year.