Health Financing/Insurance

India health insurance seen rising, but concerns stay

Rising medical costs and life expectancy are seen attracting a lot of players to the Indian health insurance sector, even as a high claims ratio remains a concern, industry experts said recently. As many as three to four firms are keen to launch standalone health insurance companies if they find an Indian partner, said C.S. Rao, chairman of Insurance Regulatory and Development Authority (IRDA), the country’s insurance regulator. Under current Indian regulations, foreign firms cannot own more than 26 percent in an Indian insurance company. “We have a mandate to encourage health insurance,” Rao said on the sidelines of an industry conference. Last year, DKV, a unit of German reinsurer Munich Re, formed a health insurance joint venture in India with Apollo Hospitals group, whose flagship is Apollo Hospitals Enterprise Ltd. The total premium collection in health insurance was around 40 billion rupees in 2007, up from around 6 billion rupees in 2003, Rao said adding premium collection is expected to rise by half during the current year. Despite a penetration of just 2-3 percent, health insurance accounts for about 16 percent of the industry’s total premium collection, Rao added. “Health insurance is required on a long-term basis because people are living longer. They require medical attention over a longer period and medical expenses are also going up,” he said. Currently, Indian life insurance companies provide health cover as an add-on to their existing policies while non-life insurance companies provide it as part of their overall bouquet of general insurance products. India has 18 life and non-life insurance companies each and one reinsurance firm, according the IRDA Web site. At 4.8 percent, the country’s overall insurance penetration is one of the lowest in Asia. While interest in health insurance is building up, the sector is dogged by high claims, with the claims ratio as high as 120 percent, Rao said. The insurance regulator plans to take a series of measures including improving underwriting standards to cut down on the high ratio, IRDA director general D.V.S. Sastry said. The regulator also plans to introduce unique identification (ID) numbers for individuals as well as hospitals, which are expected to reduce duplication of claims, Sastry said.

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