Health covers may cost 20% more

The author has posted comments on this articleTNN | May 2, 2013, 06.49AM IST

MUMBAI: The insurance regulator has cleared a hike in health insurance rates for policies issued by New India Assurance, the country's largest non-life insurer. The new rates are on an average 20% higher than the old ones which were in force from 2007 and will come into effect from next month.

The rate hike could trigger similar revisions among other state-owned non-life insurers since New India, being the largest, sets the benchmark for rates.

TOI had reported in its January 26 edition that public sector insurers are set to revise health insurance rates by 20-25%.

Announcing the imminent hike, G Srinivasan, chairman, New India Assurance, said, "Our rates have not been revised since 2007. The revision in rates will result in an average increase of around 20% but it will vary from segment to segment." For renewal policies, the new rates will take a bit longer to be applicable as the insurer would have to provide a three-month notice.

At present, for an individual aged up to 35 years in Mumbai, the cost of a Rs 5-lakh health insurance cover is Rs 5,410, which goes up to Rs 6,078 after factoring in service tax. Going by what insurers say, the cost could go up to Rs 7,300 after the hike. But this would vary according to the individual's health profile and location. Premium varies with location because of variations in cost of treatment. Insurers have been complaining that losses in health insurance have been over 120%. Besides raising rates, the state-owned non-life companies are trying to reduce losses in health insurance by floating their own third-party administrator (TPA) — a separate entity that will manage the health insurance business and network with hospitals. According to Srinivasan, the TPA was expected to be incorporates by January next year.

Announcing the results on Wednesday, Srinivasan said that the company has earned a net profit of Rs 843.66 crore — the highest in five years and up almost five times from last year's Rs 179.31 crore. The net worth of the company rose to Rs 7,737.36 crore from Rs 7,057 crore in the previous year. The company trimmed its underwriting losses to Rs 1,800 crore from Rs 2,200 crore following a reduction in claims-to-premium income ratio.

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