Part of claim amount is borne by the employee; this results in lower premium outgo for India Inc

Faced with rising outgo on account of health insurance premiums, India Inc is increasingly shifting to the co-payment model, whereby up to 25 per cent of the claim amount will have to be borne by the employee. The insurance company will pay the balance.

Co-payment provides tangible benefits to companies in terms of reduced insurance premium.

Typically, the co-payment ratio for the employee ranges from 10-25 per cent. So, for every claim of Rs 1 lakh the policyholder has to shell out Rs 10,000 from his/her pocket, before the insurer pays up the remaining Rs 90,000.

According to Sanjay Datta, head of underwriting and claims, ICICI Lombard General Insurance, “Employers are increasingly resorting to co-payment to ensure optimal utilisation of benefits by policyholders. For example, the insured may not go in for a deluxe room when he is footing a part of the claim.”

Most general insurers feel co-payment in health insurance policies will also ensure that hospitals don’t jack up the prices for the insured.

For New India Assurance, the country’s largest insurer, almost 20 per cent of their group health insurance policies have a co-payment clause, said general manager Segar Sampathkumar.

According to a recent report by ICICI Lombard General Insurance, the preference for co-pay has increased to 18 per cent of all group health insurance policies in fiscal 2012-13 from 16 per cent in the year-ago period.

However, other cost containment measures, such as applying sub-limits on the claim amount on common illnesses, such as cataract or kidney stone have fallen to 10 per cent in FY13 from 34 per cent during the previous fiscal.

Interestingly, industry experts say, many insurance companies have started introducing co-pay clause for individual health insurance policies sold to senior citizens. For instance, New India Assurance has a co-payment clause for new policies sold to individuals over the age of 55
http://www.thehindubusinessline.com/industry-and-economy/banking/health-insurance-firms-moving-to-copayment-model-to-cut-costs/article5045494.ece

IRDA allows banks to act as insurance brokers

Insurance Regulatory and Development Authority (IRDA) has allowed banks to act as brokers and sell products of more than one insurer so as to increase the penetration of the sector across the country.

There is no capital requirement for insurance broking business carried out by banks, according to IRDA (Licensing of Banks as Insurance Brokers) Regulations, 2013.

To qualify for the license, each bank will have to have the principal officer, an officer of general manager or equivalent category, who is appointed exclusively to carry out the functions of an insurance broker.

The license, once issued, will be valid for three years from the date of issue, it said, adding that the renewal of license can be applied 30 days before its expiry.

Every insurance broker will, before the commencement of the business, deposit and keep deposits with any scheduled bank as sum of Rs 50 lakh, it said.

The business of the insurance broker will have to be carried out in the such a manner that not more than 50 percent of the premium emanates from any one client.

“Not more than 25 per cent of insurance handled by the insurance broker in any financial year is placed with the insurance company within the promoter group, separately for life and general insurance business” IRDA said.

It also said the calculation of non-Indian interest in the applicant company shall be as per the limits applicable to the banking sector as decided from time to time by the government or the Reserve Bank.

While The Reserve Bank of India’s (RBI) approval is required for banks to become brokers, IRDA is of the opinion that in case of any dispute arising out of insurance transactions, its jurisdiction should prevail. It added that the laws applicable to insurance contracts shall be enforced and information in this regard shall be furnished to the RBI.