Company mediclaim may come with costs

The benefits of your company’s group mediclaim cover  may now come with costs attached. Reason: insurance firms have increased the premium amount for group policies and your employers are not going to bear the burden alone. They are passing on some of the cost to their employees, insurance companies and brokers told DNA.

“Premiums have increased dramatically in the last year. Earlier, insurance companies were quoting a premium much lower than the claims they were paying,” says Rahul Aggarwal, who heads Delhi-based multi-insurance distribution firm Optima Insurance Brokers. “But no more… the premium has gone up by almost 200% for many companies so they are looking at various ways to reduce the claims.”

One such option is co-payment, saying that if a claim is made, then 10% or 20% of the amount will be borne by employees, Aggarwal says. “A Bangalore-based multinational in the financial-services space, another Delhi-based software firm and a multi-national involved in automation and instrumentation are among those who have taken the co-pay option under their group mediclaim policy,” Aggarwal says. How will employees sharing the claim amount help the employer as the money is to be paid by the insurance company? This will ensure that employees use the insurance policy more responsibly.   


Amarnath Ananthanarayanan, chief executive officer, Bharti AXA General Insurance, says, “This makes the employee more responsible. It (corporates asking for co-pay option) is becoming widespread.” Aggarwal adds, “If they are asked to share a part of claim, they will choose a not-so-sophisticated hospital.”

Another method being employed by companies is to ask employees to pay the premium amount for benefits such as insurance cover for parents. “Insurance companies say they will not cover those in the 60-year age band. The parents of the policyholder will not be covered, only wife and children,” says Sohanlal Kadel, chairman and managing director, Hyderabad-based Kadel Insurance Brokers. “In some cases, the employee is being asked to pay a portion on the premium if he wants his parents to be covered,” Aggarwal confirms.

In these cases, experts say it was better to use the option of an individual policy that covers the family. “From an employee point of view, if he is being asked to share the premium, he might as well take a policy himself. That way, even if he leaves the company five years later, the premium he has paid won’t be wasted,” says Deepak Yohannan, chief executive officer, MyInsuranceClub.com.

The rationale for these measures is that if lower insurance claims are made, then the company has to pay lower premium at the time of policy renewal at the end of each year. DD Asawa, regional manager, Oriental Insurance Company, says, “Corporates are quoted insurance premium based on the claims experience. If a corporate has made adverse claims under its group mediclaim policy in one year, then the premium will be higher in the next year. There is also medical inflation to contend with and employee strength is also increasing so premium will be commensurate with the same.”

Ananthanarayanan adds: “The rates are going up because the loss ratios are going up. It could either be because people are falling sick more often or that medical inflation, which exceeds the general inflation numbers, is rising. Bed rates in hospitals are increasing by 10% each year.”

As a result, companies are asking employees to share the claim amount. “Since the past six months, a majority of companies are choosing the co-pay option. Of the total claim, a said percentage is collected from employees and the balance is paid by the insurance company,” says Asawa.