Irda to look into price undercutting in group health insurance segment

The insurance regulator expressed concerned over low premiums quoted by companies, as well as a high incurred claims-premium ration

The Insurance Regulatory and Development Authority (Irda) might take an exception to undercutting by non-life companies in the group-health space.

Speaking at a summit organised by the National Insurance Academy, M Ramaprasad, member (non-life), Irda, said the regulator will look into the group-health space, which constitutes 55 per cent of the health segment; retail health makes up the rest.

Claims in group health are much higher than in the retail side of the business, he said, adding the high claims, 100 per cent at one point, was a matter of concern.

Experts said unhealthy competition is eroding the group-health space. The regulator is looking into this matter and will look at having higher capital requirements or solvency rates for those insurance companies that quote unviable prices.

To retain corporate accounts, certain non-life sector insurers are offering high discounts. Industry players say there is not just transfer of accounts from private to public, but also from one private non-life insurer to another. Industry experts said it was not sensible to offer discounts to large profitable firms, as such companies were capable of purchasing insurance without a subsidy.

Health insurance, which has an almost 23 per cent market share in the general insurance space, has seen the incurred claims ratio touch 96.43 per cent in FY13, against 94 per cent in FY12. While for public sector general insurers, the incurred claims are still less than 100 per cent, private sector general insurers have seen it cross 100 per cent. This means that the claims incurred are more than the premiums paid for such private general insurers.

On the health insurance space, as there is differences in pricing for similar kind of treatments in hospitals, Irda and its bodies are looking into having standardised protocols and standard costing mechanisms.  

Ramaprasad said a geo-code system is being envisaged to map hospitals across India. This data will be used to monitor hospitals for any fraud, claims processing and other treatment-related standardisation.

Irda has undertaken a project through the Insurance Information Bureau of India to have a health directory where detailed information about the various medical procedures and cost in hospitals would be provided.