Changes in Act to encourage stand-alone health insurance companies

Mumbai: The government will encourage setting up of stand-alone health insurance companies, which could provide cover even for routine OPD treatment in hospitals and nursing homes without getting admitted, under the amendments proposed to the Insurance Act.

The finance ministry is pushing through these provisions through amendments in the Insurance Act, 1938, a finance ministry official said.

"The bill has a provision for setting up stand-alone health insurance companies, for which investment requirement could be reduced from Rs100 crore to Rs50 crore," the official said

He said, at present, very few companies like Star Health Insurance are offering solely health insurance. With the lowering of the investment limit, the government expects more and more companies, including hospital chains, to sell insurance products as also routine treatments.

The proposed comprehensive insurance bill is currently in a limbo as the Left parties are opposing it since it also contains a provision of raising FDI limit from 26 per cent to 49 per cent.

The finance ministry claims that the Left parties, which are opposing the bill on political grounds, have also supported this move.

At present, health insurance forms part of the miscellaneous business underwritten by general insurers. The government wants to define the segment as a separate category of business to cover contracts that provide sickness benefits or medical, surgical or hospital expenses benefits. The amendments would also apply to overseas travel and personal accident covers.

General insurers, who often complain of reeling under losses, do not seem to be happy with the proposal to include outpatients in the ambit of health insurance policies, saying that they could be saddled with more claims, many of which would be fictitious. But government officials contend that rules could be worked out to protect insurers from unnecessary claims and check losses.

The proposed amendments to the law will soon make it almost impossible for insurance companies to deny you the mandatory third party motor cover that transfers the financial liability of death or injury in a road crash to insurers.