The Insurance Regulatory and Development Authority is likely to allow the entry of stand-alone health insurance companies with low equity base into the Indian market. These companies are, however, expected to be given licences to operate on a regional basis only.
While the guidelines would be issued following the recommendations of a committee, constituted by the insurance regulator, IRDA sources indicated that the capital requirement would be linked to the risk underwritten by the health insurance companies. "The initial capital requirement would be linked to the business projections of the licence seekers," a source said.
At present, the regulator has permitted both life and non-life insurance companies to underwrite health insurance companies. These companies are, however, required to have a minimum equity base of Rs 100 crore (Rs 1 billion).
The new private insurers have not given primacy to the health insurance business. While the general insurance companies are selling policies modeled on the Mediclaim scheme, offered by state-owned insurers, the life insurers are only offering critical illness riders.
The finance ministry was pushing for the entry of stand-alone health insurance companies to increase the coverage in the country and had asked IRDA to review the capital requirement clause.
Initially, the regulator was not convinced about the issue and wanted to improve upon the current rules only. A large number of international players like Aetna, Cigna and Bopa, specialising in health insurance, were earlier planning to set shop in India, but walked out following the Rs 100 crore capital requirement.
IRDA chairman CS Rao said the committee examining the issue, which has representatives from the insurance sector and the health and infotech ministries, was expected to submit its report soon.
In order to permit stand-alone companies, the government would need to amend the Insurance Act, 1938, and recognise health insurance as a separate business. At present, only general, life and reinsurance businesses are recognised under the law.
