Six years after the insurance regulator IRDAI prohibited life insurance companies from offering health insurance products, it is mulling over allowing it again. It could be good news for policyholders as premium rates for health insurance policies are expected to come down because of intense competition among general, health and life insurance companies.
“The profitability of a life insurance product depends on the product pricing. We expect the products to be priced appropriately by life insurers to ensure the profitability of these plans,” says Rushabh Gandhi, Deputy Chief Executive Officer at IndiaFirst Life.
Mediclaim policy, which reimburses hospitalisation expenses to policyholders, is the most popular type of health policy. But after the ban in 2016, the life insurers are only selling fixed benefit plans such as cancer insurance and other disease-specific plans. If the proposal is passed experts say it will increase the available choices for policyholders in the market. Second, the penetration is expected to go up which is currently low at 1 per cent for the entire general insurance industry. Leveraging on the distribution capacity of life insurers, which currently have at least 2.5 million individual agents, the health insurance penetration is expected to get a boost at an affordable premium rate.
Gandhi adds, “The industry is quite prepared with the roll-out if the decision is made. Life insurers already have the necessary infrastructure in terms of distribution coverage and policy servicing to offer these plans in the market. In fact, this is an opportunity to further elevate the experience from what it was before 2016 when these policies were being offered by life insurers.”
There is, however, also a flip side to it as health insurance is a kind of product which needs a lot of handholding at the time of claim settlement. Health insurance companies already have a dedicated claims team including Third Party Administrators (TPAs) for the seamless claim process. With health insurance not being a core business of life insurers, it is yet to be seen how efficient life insurers could be in claim services if the proposal gets through.
Life Council had formed a committee under the leadership of Vibha Padalkar which had made a representation to this effect couple of years back. "We expect a favourable view from the regulator on the recommendations made by the committee. Officially we are still waiting for the revert from the regulator on the proposal," says Gandhi.
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