Health cover set to cost 25% more
MUMBAI: Public sector non-life companies are set to revise health insurance rates by 20-25% with the regulator moving fast on approvals of new plans. A proposal to increase premium rates has been pending with theInsurance Regulatory and Development Authority (IRDA) for some time and the current schedule of rates has been in force for nearly five years now.
State-owned insurers say that their combined ratio in health insurance is over 120%. In other words, the money they spend by way of claim payment and administration costs exceeds premium income by 20%. The regulator is in agreement that the ratio has to improve for the business to be solvent. However, while the PSU insurers say that rates should rise marginally every year to keep pace with medical inflation, the regulator wants them to have consistency in pricing for at least three years.
Since health insurance policies are annual contracts, companies do not charge 'level' premiums like in life insurance and instead calculate premium afresh every year based on the insured person's age. As a result, even without any revision in rate schedule, policyholders end up paying more as they move from one age bracket to another.