Govt insurers to share losses in corporate health insurance

With mounting losses in corporate mediclaim – health insurance policies sold to companies — the four government-controlled non-life insurance companies have decided to share their losses and premium incomes in a bid to jointly tide over their common problem.

With mounting losses in corporate mediclaim – health insurance policies sold to companies — the four government-controlled non-life insurance companies have decided to share their losses and premium incomes in a bid to jointly tide over their common problem.

HT Image

The four firms, New India Assurance, Oriental Insurance, United India and National Insurance, control 65 per cent market share in health insurance.

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. Insurers are keen to reover the losses and at the same time wish to avoid undercutting each other in a price war.

According to an internal circular issued by United India Insurance, for a new group health insurance policy where the premium is more than Rs. 1 crore, 31 per cent of the total premium will be picked by the insurer that gets the business while the balance will be shared among the other three insurers, with each taking 23 per cent.

The losses will also be shared in the same proportion as the premium. Similarly, for renewal policies, the main insurer will pick up 70 per cent of the total premiums while the other three insurers will share 10 per cent each.

“Group mediclaim is a bleeding business, and we have decided to share the risk to minimise the claims outgo,” said a senior executive of United India Assurance.

The chairman-cum-managing director of one of the insurers said, “All the four PSUs have decided to share the claim experience and the quote (price) we will charge for the corporates so that we don’t end up undercutting each other.”