NEW DELHI: You may soon be able to buy an indemnity-based health insurance policy from your life insurer. The Insurance Regulatory and Development Authority of India (IRDAI) has set up a committee to study the feasibility of such a move, set to allow life insurers to sell around two dozen more products, even as the general insurance industry has expressed reservations.
Currently, life insurance companies are only allowed to sell fixed-benefit-based health insurance policies, where a fixed amount is given to the policy buyer in the event of a covered medical emergency. On the other hand, indemnity-based health insurance policies see the customer reimbursed for the costs of treating a covered condition up to the insured amount.
“Historically, health insurance is recognised as one of the important elements of health care and health insurance premiums have been registering a significant CAGR of around 20 per cent in the preceding 10 years in India,” noted IRDAI while pointing out that representations have been received from life insurers to allow them to offer indemnity products too.
While the regulator had allowed life insurers to sell individual and group indemnity-based health plans in 2013, it had rolled back the move three years later mandating that life insurers could offer only combined health and savings products. The regulator also allowed general and health insurers to offer health policies with tenures of 1-3 years.
The nine-member committee which has been formed by the regulator will be headed by G Srinivasan, chairman and managing director of the National Insurance Academy, with other members being the Life Insurance Corporation (LIC) chairman MR Kumar, the heads of Oriental Insurance, HDFC Life, HDFC Ergo, Star Health and Allied Insurance along with the secretary generals of Life Insurance and General Insurance Council.
The panel has been asked to submit its recommendations on the issue within two months of the date of the order.
The rationale for expanding the base of companies offering health insurance policies is based on the low penetration levels of health insurance in India, despite the over 20 per cent growth the IRDAI says the segment has seen over the past decade.
However, general insurers have a different view, sources note, pointing out that the demand to open up the segment has come from only a few companies. General insurers also note that life insurance companies have not taken advantage of the existing health insurance products in the fixed-benefit category. But, analysts note that consumers will stand to benefit from the entry of more players in the market while life insurers may be able to leverage their distribution networks to increase health insurance penetration.
Low reach
IRDAI has set up a committee to study the feasibility of indemnity-based health covers. The rationale behind expanding the base of firms offering health insurance policies is based on the low penetration levels of health insurance in India, despite the over 20 per cent growth the segment is said to have seen in last decade.
