Rising medical costs, slowdown and rising premium rates on employee health insurance policies are forcing corporates to cut benefits in these covers.
According to insurance officials, several companies have cut on these benefits. However, officials refused to share the names of these corporates due to a confidentiality agreement.
“Companies are introducing various steps such as co-payment of claims (where the employee pays a part of the claim amount), premium sharing for extending coverage to parents, introducing sub-limits, capping the amount according to diseases, reducing the sum insured of the policy to manage the rising costs,” said Kanchana TK, vice president, Marsh India Insurance Brokers, a leading insurance broker who designs and places employee benefit policies for over 350 corporates.
Healthcare cost is rising annually at 15 per cent in metro cities and health insurance premiums are hardening in a detariffed and deregulated market.
Group health insurance business has mostly been a loss-making business for non-life insurers. According to industry data for 2007-08, the premium underwritten was Rs 2,758 crore while the claims paid by insurers was Rs 2,904 crore. Non-life insurers had a claims ratio of 105 per cent. Add to it the distribution cost and the total claims ratio for the industry rises to around 120 per cent.
According to Sanjay Datta, head, (health and personal accident insurance) at ICICI Lombard General Insurance, “Group health insurance premium has increased by 10 to 15 per cent for corporates with a loss ratio. We have suggested several measures to companies such as co-payment, capping room rent and introducing disease specific caps. Some of the companies have introduced a 20 per cent co-payment.”
Till 2007, premium rates for property and engineering lines of business were decided by the Tariff Advisory Committee. Since these rates were high and profitable, insurers would underwrite group health at a low premium if the corporate had a property cover. However, with the lifting of price controls from property and engineering lines, insurers have mostly stopped cross subsidising.