Premiums tied to city

If you happen to live in the major metros of India, you may have to shell out a higher premium for your health insurance than people who stay in smaller towns. Mahua Venkatesh reports.

If you happen to live in the major metros of India, you may have to shell out a higher premium for your health insurance than people who stay in smaller towns.

Some standalone health insurance companies such as Max Bupa and Apollo Munich are bringing differential pricing for insurance products.

Reason? They want to offer a fair and structured pricing to customers based on their city of residence.

Moreover, in case a patient needs to be transferred to a major metro for treatment, his health insurance product with lower pricing would be applicable there as well.

Max Bupa, a joint venture between Max India Ltd and UK-based healthcare services major Bupa, recently introduced a product with differential pricing in some cities. Sources said the product will soon be extended across the country.

"Customers living in small towns pay a lower premium, reflective of health care costs in that area, and don't bear the high cost of healthcare services in metros which they may rarely use," Manasije Mishra, CEO Max Bupa said.

With competition intensifying, insurance companies are looking to expand into smaller towns, which are comparatively untapped at present.

"Smaller towns have huge potential and it makes sense to have a lower pricing for those purchasing health insurance products where health care costs are far less," said Gopal Verma, founder chairman, e-Meditek, a third-party administrator.

The health insurance market in India is expected to grow five-fold by 2015 to cover 10% of the population, according to a study by economic consulting firm Nathan India pointed out.