Private non-life insurers have managed to slash their losses in health insurance – which happens when claims far exceed premium payments – by 11 per cent. They have done this by refraining from underwriting their loss-making policies.
Private insurers lost Rs 243.98 crore in 2008-09, down from Rs 273.83 crore in 2007-08.
Compared with this, state-owned non-life insurance firms — New India Assurance, Oriental Insurance, National Insurance and United India – saw a 96 per cent jump in health insurance losses, which zoomed to Rs 1248.73 crore in 2008-09 from Rs 638.27 crore in 2007-08.
M Ramadoss, chairman and MD of Oriental Insurance, said large volumes and a higher share of group health insurance caused big losses.
Group policies tend to be priced lower and Third Party Administrators, which act as intermediaries between hospitals and insurers, have been unable to control claims made through hospitals.
Sanjay Dutta, Head of health insurance at ICICI Lombard General said, “We were able to reduce losses by resisting from underwriting loss making group health business. We also worked with corporates and restructured their covers by introducing limits and sub-limits so that the employee does not end up spending his entire sum insured.”
The four public sector insuers earned net premium payments of Rs 3,095 crore in 2008-09 as against Rs 2175.69 crore in 2007-08, a rise of 42 per cent. On the other hand, the private insurance companies received Rs 1,601 crore in 2008-09 as against a net premium of Rs 960 crore, a growth of 67 per cent.
Pavanjit Singh Dhingra, vice president at Prudent Insurance Brokers said, “The solution for insurers is to get reduced rates from hospitals, regulate the claim cost at the hospital end and increase the premium appropriately.”
According to insurance officials, the claims ratio - the share of claims payable as a percentage of premiums received is in excess of 180 per cent for group health policies.
The public sector insurers have raised premium rates for group health covers this year, and also pooled their own resources to share losses, besides cutting the distribution commission on group policies in their efforts to pare losses.reducing the distribution commission on group policies from 17.5 per cent to around 5 per cent, cutting down maternity benefits and pre-existing benefits in smaller group covers, and making the employee pay a part of the claim amount called co-payment.