After motor, IRDA turns to mediclaim covers

After motor insurance, the Insurance Regulatory and Development Authority (IRDA) has singled out group insurance products as the biggest contributor to the losses of health insurance companies.

The regulator has decided to step in by bringing in a new set of regulations.

IRDA chairman J Harinarayan said the regulator is currently working on strengthening underwriting practices of non-life insurers pertaining to health insurance.

According to Harinarayan, the regulator is taking everybody along before standardising treatment and other protocols in the healthcare sector, which has found a significant mismatch between premium collections and claim settlements.

Staying with his prognosis, he said it’s the absence of standardised protocols — right from registration of healthcare providers to treatment and costing - which is responsible for high claims ratio in health insurance, especially group policies.

“The companies are pushing topline growth for no particular purpose. And I don’t think it’s an effective strategy. In the short term, it might work, but in the long term, it will destroy the whole industry,” he said, adding individual health insurance claims at 60-70% would be in a comfort zone as against 100% and above.

“The ministry of health is now in the process of finalising some protocols for 100 odd standard healthcare treatment procedures to be announced shortly. Unless standard treatment protocols are prescribed, it will be difficult to go to the next step, which is the cost of treatment. There should be proper protocols in terms of costing as well, since costs vary depending on the location of the hospital and its specialisation and accreditation and standards,” he added.

The pecking order suggests that health is the second-biggest component, with motor mopping up the lion’s share. The IRDA, of late, has been working hard to put the stuttering motor insurance back on track by injecting a sense of discipline into the third party motor pool and other allied activities.

The rising traction of health insurance can be gauged from the fact that the sector accounts for about 25% of the non-life insurance pie compared with around 16% about five years ago, which is expected to go up to 32-33% by this year end.

For the previous year, the health insurance premium collection was pegged at Rs11,483 crore while it was at about Rs9,661 crore for the nine months ended December 2011.