Oriental Insurance to restructure mediclaim policy

Our Banking Bureau
27 October 2006

The company has raised the premium on various policies, ranging from 5 per cent (for a Rs1 lakh mediclaim policy for a 25-year-old person) to 30 per cent (for a similar policy for a 48-year-old person).

OIC has been sustaining huge losses on its mediclaim policies. On every Rs100 premium on average, the company pays Rs120 by way of claims, incurring a claim ratio of 120 per cent. Besides raising premiums, OIC has also put a cap on hospital room rents, and made it compulsory for people aged above 45 to undergo compulsory medical check-up.

One of the reasons for the mediclaim losses is that most customers visit specialised hospitals even for ordinary ailments, and stay at single occupancy rooms. Room rent itself accounts for over 50 per cent of total claims in many cases.

Healthcare financing through mediclaims was introduced in India only in the mid-1980s, by the four subsidiaries of government-owned General Insurance Corporation (GIC), of which OIC was one. Following the liberalisation in the insurance sector, GIC has been converted into a re-insurer, and the four government general insurance companies are competing with the new private insurers.

But mediclaim policies are also the ones that account for the highest number of disputes. According to a study by the Indian insurance ombudsman, 70 per cent of the complaints that are made relate to mediclaim policies. Complaints relate to disputes on pre-existing illness, inflated charges by hospitals, and also claims by insurance companies that the policy-holder did not need hospitalisation.