Two years after introducing sub-limits in health insurance policies, non-life insurers are now deleting the clause from new plans to attract retail customers. Sub-limits imposed specific restrictions on room rents, doctors’ fees and operation theatre charges.
They were introduced to cut losses in the health insurancesegment. Industry executives said Apollo Munich and Tata AIG General have removed sub-limits from new health insurance products, while other non-life insurers are contemplating a similar move.
But, for group insurance policies, such limits will continue as these policies cannot have unlimited benefit, industry executives said. “More companies are looking at each line of business separately without cross-subsidy,” said Antony Jacob, MD & CEO, Apollo Munich, a standalone health insurance company. Tata AIG’s MediPrime and Apollo Munich’s Optima Restore are the recent products that have done away with sub-limits.
Earlier, insurance firms had introduced restrictions on different claim categories within a policy to cut losses in the health segment, particularly group policies. The average industry claim ratio, which is the claim paid versus premium earned, in retail health insurance is nearly 60-70 %. For every Rs 100, the industry pays claim of Rs 60-70.
For group policies, the insurer pays more than Rs 110 against Rs 100 earned. “Companies are trying different price points. Premium charged on products without sub-limits and co-pay is 15% higher then those which have limits across the country,” said Rahul Agarwal, MD & CEO, Optima Insurance Broker.
“Retail health market is very lucrative. Also, fraud management has become better with monitoring of claims online,” he said. Some insurance companies have started in-house third-party administrations to monitor claims and bring down the cases of loss and claims.
The segment is growing at 25% to 30% on a year-on-year basis. Retail health insurance contributes more than Rs 5,000 crore to the income of the industry while the size of the industry is Rs 12,000 crore.
Group business comprises a large chunk of health insurance. Also, in a bid to attract policyholders, insurance companies are offering covers for alternative treatments such as unani, ayurveda and homoeopathy. The regulator has formed health insurance forum to discuss the issues in the segment with different stakeholders.
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