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Raise in premium Rates is now solely dependent on the intensity of competition between insurers
The ever rising competition among General insurance companies is becoming a reason big enough for employers to cheer as Group health insurance premium rates may not experience any raise this year.
The numerous claims in the corporate insurance segment are no solid indicators for the insurers to increase the premium rates as the competition among insurance companies is very tough. It is so tough that premium rates expect a fall of 5-10 per cent at the policy renewals in April this year.
Corporate health insurance is the health cover purchased by companies for their employees. It is not at all profitable for general insurance companies as evident from its claim ratio of 110% (meaning, they receive Rs. 100 as premium, after paying for claims amounting to Rs. 110). Insurers are however considering adopting different approaches taking into account the capability and readiness of the companies to pay premium. Options like – ‘co-pay’, ‘eliminating the benefits’, ‘obstructing the room rent availability’, ‘and putting barriers on covers for senior citizens’.
Insurance companies cross-subsidize group health insurance as they receive majority of insurance business from other business units like fire, property and engineering. Group health insurance has sustained the status of accommodation business for quite many years. Two years ago, it was planned to raise the insurance premium rates for group health exponentially so as to give it a single business unit status. But off late, insurers have started considering it as an accommodation business only.
In order to recover from the losses experienced due to high competition, the insurance companies are thinking at providing not just a hospital reimbursement policy to corporate companies but also various other health insurance linked products, such as outpatient department coverage for parents and larger deductible super top-up cover that the employee can purchase to back his group plan.
Health insurance industry in India stands tall in terms of competition with 23 general insurance companies and five standalone health insurance companies.
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