Life insurers gearing up to enter health insurance segment
The entry of Life Insurance Corporation of India (LIC) with an ambitious target
of Rs5,000 crore within three months has kindled the interests of other life insurers
to look at health insurance segment in serious earnest. (See LIC
targets Rs5000 crore from health insurance).
P Nandagopal, CEO, Reliance Life Insurance Company Limited, “We are looking
at the health insurance segment seriously.”
S V Mony, secretary general, Life Insurance Council of India, “More and
more companies are interested in coming out with a health insurance product.”
for the two leading private life insurers, Bajaj Allianz Life Insurance Company
Limited, with its Care First policy, and ICICI Prudential Life Insurance Company
Limited with its Crisis Cover and Hospital Care policies, no other life insurer
has a product that could be termed as health insurance product.
all the life insurers have “me-too” critical illness policies under
which a lump sum is paid to the policyholder on the diagnosis of a listed ailment.
R Ramakrishnan, a consulting actuary, life insurers are better placed to propagate
the message of health insurance than non-life insurers.
are content with targeting corporates for business, whereas life insurance agents
approach individuals for selling policies.”
Nandagopal, “Health insurance is actually a distribution game and life insurers
are adept at it.”
apart, life insurers have a vested interest in keeping their policyholders healthy
and alive, so as to reduce their death claims; and a health insurance policy would
be an insurance policy for the life insurers.
they can also capture the morbidity data efficiently, which the non-life insurers
have not been able to do so for the past several years.
to Mony, life insurers can get a better mix of policyholders – children,
youth, middle-aged, and even senior citizens – to have a better portfolio,
unlike non-life insurers who typically get only middle-aged claim-prone people
to that, K S Gopalakrishnan, chief financial officer, Aegon Religare Life Insurance
Company Limited, and an experienced actuary, says, “A health insurance product
will be a de-risking strategy for domestic life insurers. Today, the entire Indian
life insurance industry is riding on the unit linked insurance products. Any fall
in the stock market would severely impact life insurers.”
he says is true. It may be recalled that Aviva Life Insurance Company Pvt Limited
was depending solely on actuarial funded products. With the Insurance Regulatory
and Development Authority (IRDA) banning actuarial funded products, the company
now finds itself in a tight spot, as it has to come out with a suite of products,
the insuring public, life insurers are a better bet when it comes to health insurance
as the policies are usually long term in nature. Presently, non-life insurers
refuse to renew policies once a claim is lodged, or if they sense a possibility
of a claim in the near future.
industry officials say there is no regulatory hurdle for life insurers to get
into the health insurance segment in a big way, by launching a healthcare reimbursement
policy. The only hurdle they face is the moral hazard of the players involved
in the entire healthcare chain – patients / policyholders, doctors, hospitals,
laboratories and others.
there is a fraud bureau that would act fast in punishing fraudsters, then the
insurance industry and the insuring public would be benefited,” says Ramakrishnan.
the case of Janashakthi Insurance, a Sri Lankan life insurance company, he says,
“The Company offers health insurance reimbursement cover as a rider to the
life insurance policy. The basic policy period is for 20 years. After the maturity
of the life insurance policy, the health insurance policy continues.”
a health cover is given as a rider to a life insurance policy, a policyholder
can get tax deductions for life insurance premiums and health insurance premiums
under the relevant sections of the Indian Income Tax act. The one worrying aspect
for life insurers in coming out with a long term health insurance reimbursement
product, is factoring the inflation in their premium calculations.
the entry of life insurers in what was earlier purely their domain, is a cause
of worry for non-life insurers, and more so for the specialised stand alone health
V Jagannathan, chairman and managing director, Star Health and Allied Insurance
Company Limited, “The threat is serious, and we are gearing ourselves up
to meet the new competition.”
feels non-life insurers can partner with life insurers for this business.
life insurer can reinsure their entire health insurance portfolio with a domestic
non-life insurer,” he adds.
Goyal, CEO, Bajaj Allianz Life is of the view that non-life insurers will not
be impacted much because of life insurers getting into health insurance segment.
60 per cent of non-life insurer’s health insurance business comes from corporates
with whom they have better relationship,” he remarks.
it is learnt IRDA has recently asked LIC to clarify some points relating to the
officials are confident of satisfying IRDA and launch the health insurance product