New India Assurance, National Insurance and United India Insurance are following Oriental Insurance Company in raising health insurance premium rates by 50 to over 100 per cent.
New India and United India Insurance will also be introducing a system of co-payment, unlike Oriental Insurance, apart from increasing the premium rates.
Co-payment is a system where insurers pay only a certain percentage of the claim, say up to 90 per cent, and the balance 10 per cent or so of the medical expenses have to be borne by the insured. The three insurers will launch their revamped mediclaim products next month.
The increase in premium by the three insurers is expected to be over 100 per cent for people above 55 years of age and by over 50 per cent for people above 20 years of age. For people up to 20 years of age, the premium rates will either be flat or marginally lower than earlier.
United India has already filed a revised mediclaim product with the Insurance Regulatory and Development Authority (Irda) in September, said its Chairman and Managing Director M K Garg. New India Assurance and National Insurance are in the process of filing their revised products with the Irda this month.
"We are restructuring our mediclaim. Our actuaries are working on the premium rates and we hope to launch it by mid-January," said V Ramasaamy, chairman and managing director of National Insurance company.
There will be reduction in premium by 15 to 20 per cent for younger age groups and a hike in premium by 100 per cent for older age groups, said a senior official of National Insurance.
New India's mediclaim product will not only have a higher premium, but policyholders above 40 years will also have to bear 10 per cent of the claim amount for both reimbursement as well as cash-less hospitalisation schemes.
The increase in premium will depend on the age of the policyholder and the region in which medical treatment is sought.
The newer mediclaim products will also have an increased list of excluded diseases, which will be covered from the third year of the policy. New India will increase the floor for minimum sum insured from the present Rs 15,000 to Rs 1,00,000.
Room rent in the event of hospitalisation will be capped at 1 per cent of the sum insured, while it will be a maximum of 2 per cent of the sum insured for the insured admitted in intensive care units.
Oriental Insurance, which launched its revamped mediclaim in September, has hiked the premium by 50 per cent for 56-65 years, 100 per cent for 66-70 years, and a hike of 150 per cent for people above 70 years. The hike for people in the age group of 36-45 years is 10 per cent and for 46-55 years 20 per cent.
A close observation reveals that though the frequency of claims is low, the severity of claims is high. Take for instance Oriental Insurance. It covered over 32 lakh (3.2 million) lives in 2005-06, but only 120,000 people made claims.
This means out of every 100 people, only four made a claim. Similarly, the claim frequency is 17 per cent for New India Assurance, 8 per cent for National Insurance and 3.4 per cent for United India Insurance.
The claims frequency is just four for Oriental, but the incurred claims amount is over Rs 400 crore (Rs 4 billion), which translates into an incurred claims ratio of 120 per cent. If the commission expenses, TPA fees and acquisition costs are added to the incurred claims ratio, the total claims ratio is over 140 per cent.
M Ramadoss, chairman of Oriental insurance, said, "Though only 120,000 people have reported a claim, the severity of the claim is high. Individual claims are of bigger amounts."
