Health insurance may get new law

The government is examining various amendments to the insurance law, including a special statute for health insurance, aimed at improving the functioning of domestic companies and increasing their penetration.

“There are several amendments being considered such as allowing foreign reinsurers to set up branches in India, allowing insurers to raise hybrid capital and having a special statute for health insurance,” Tarun Bajaj, joint secretary in the Union finance ministry, said on the sidelines of a seminar here on Tuesday.

In 2004, a committee set up by the Insurance Regulatory and Development Authority (Irda) had suggested that the minimum capital requirement for standalone health insurers be reduced to Rs 50 crore from Rs 100 crore. In addition, a reduction in the solvency requirement and providing other regulatory flexibilities were suggested. The move was proposed to make the business a more viable proposition for standalone players.

Though the government and Irda have not implemented the recommendations so far, standalone players have already entered the market. “Increasing health insurance penetration and ensuring affordable premium rates remain the key challenge,” Bajaj said.

“Health insurance has been growing at 50 per cent.” We have started seeing some product innovation. But the need of the country is very varied. Another issue is taking care of senior citizens, improving the coverage for senior citizens as suggested by the Sastry Committee Report.” he added

The government is working on a Bill to amend the Insurance Act, Irda Act and laws governing the Life Insurance Corporation and public sector general insurance companies. Among other things, amendments to the LIC Act are proposed to increase the company’s paid-up capital base from Rs 5 crore to Rs 100 crore.