Recently, Debashish Panda, the new chairman of IRDAI, said that the time has come for life insurers to re-enter the health sector.
Recently, Debashish Panda, the new chairman of IRDAI, said that the time has come for life insurers to re-enter the health sector.
Insurance giant Life Insurance Corporation (LIC) is keen to re-enter the mediclaim segment once the regulator provides clarity on the issue, its chairman has said.
LIC Chairman MR Kumar said, “We are already working on a lot of long term health protection and guaranteed health products. And we are evaluating the suggestion given by the regulator IRDA recently.” PTI When asked about the same during his earnings call over the weekend.
The chairman further added, “I don’t think it will be difficult for us as we are already offering some health products.”
Mediclaim policies, which are indemnity-based health plans, are the best selling health insurance products in the country. However, in 2016, the Insurance Regulatory and Development Authority of India (IRDAI) asked life insurers to withdraw indemnity-based health plans from the market. Since then life insurers have been allowed to offer only fixed benefit health plans.
Under indemnity-based health insurance plans, the insurer provides reimbursement of money spent on medical treatment up to the sum insured. For fixed benefit health insurance plans, a fixed amount is paid out of the sum insured for pre-determined diseases or medical conditions.
Recently, the new IRDAI chairman Debashish Panda had said that life insurance companies have re-entered the health sector as he gave a mandate to the industry to ensure that every citizen has a health insurance policy by 2030. .
However, Mr. Panda later clarified that the regulator was only evaluating the pros and cons of allowing life insurers to sell health insurance policies and no decision has been taken yet.
Globally, in most markets, life insurers sell health policies.
At present, there are 24.50 lakh life insurance agents in the country, while there are only 3.60 lakh agents in the general and health insurance category. If life insurers are allowed into the health insurance sector, the number of agents will increase by 600%, which will significantly increase the reach of health insurance in the country.
However, according to industry watchers, there are some problems with this proposal. For example, the claims department in a life insurer is oriented towards payment of claims upon death or maturity of the policy, but health insurance claims are filed by about 7% of the insured during the year.
But others say that life insurance companies already have the necessary infrastructure in terms of distribution and policy servicing to offer these plans. In fact, this is an opportunity to elevate the experience of pre-2016, when these policies were being offered by life insurers.
Although regulations vary from country to country, the concept of composite insurance companies exists in some countries, where life insurance companies are allowed to sell both life and general insurance products.
Over the weekend, national insurer LIC had reported a manifold growth in net income in the June quarter to ₹682.9 crore, driven by record premium income, as against a modest ₹2.94 crore a year ago.
Profit increased despite the insurer reporting lower margins, which the management attributed to a changed product mix and booking less than 50% of profit from equities, which fell to ₹5,076 crore from ₹11,368 crore in June 2021.
But a record 61 per cent jump in new policy sales buoyed the bottom line, Chairman Kumar told reporters on the earnings call.