Corporates may have to shell out 10-15 per cent more for group health insurance premiums from next year as the insurance regulator is planning to crack down on insurers offering heavy discounts.

Insurers usually offer discounts to corporates and subsidise it by imposing higher premiums on retail policies.

TS Vijayan, Chairman, Insurance Regulatory and Development Authority (IRDA), said the regulator has collected data on group health insurance policies from insurers and asked them to justify the cost to determine if they are treating individual and group customers at par.

Activist Gaurang Damani, who has filed a public interest litigation (PIL) in the Bombay High Court seeking transparency in health insurance, said there is an immediate need to stop discrimination between different sets of policyholders with reference to claims settlement.

Rising claims ratio
According to information submitted by the Insurance Information Bureau in reply to the PIL, the incurred claims ratio for insurers under group health has been increasing every year since 2010-11, while for individual health insurance the ratio has fallen over the same period.

G Srinivasan, Chairman and Managing Director of public sector insurer New India Assurance, said group health insurance premiums will rise next year on those accounts where insurers do not have good claims experience.

“Insurers are quoting low premiums for group health insurance over the past few years due to intense competition. This is harmful for retail health policyholders as insurers are cross-subsidising corporates,” said KG Krishnamoorthy Rao, MD and CEO of Future Generali Insurance.

According to insurance brokers, over the last two-three years, most of the private general insurers have stayed away from group health business and the same has moved to public sector general insurers.

Mukesh Kumar, Executive Director, HDFC ERGO, said: “We have cautiously moved away from the group health business, which is loss making and where there is no potential to recover the loss. So in case we feel we are not getting the right information from the corporate, we don’t go after that business. Currently, our group health portfolio is one-third of what we used to underwrite.”

Smaller cities
ICICI Lombard, the largest private sector general insurer, also saw de-growth in the group health insurance space last year and this year is focussing on tier-2 and -3 companies where there is less competition, said Amit Bhandari, Vice-President, Health Underwriting & Claims.

The squeeze on group health insurance for insurers comes as corporates are unwilling to pay more. Bhandari said: “There is a huge cost pressure for corporates.

“We are advising them to opt for restricted network policies where we are tying up with low-cost tertiary care hospitals. We are now seeing increasing adoption of that.”

Deepa Nair
This article was published on December 24, 2015, in BusinessLine (The Hindu)