No decision taken yet on allowing life insurers to sell health covers, says IRDAI boss Debasish Panda

The Insurance Regulatory and Development Authority of India (IRDAI), in 2016, had barred life insurance firms from offering indemnity-based health products. However, after six years the insurance regulator is again evaluating its benefits and pitfalls. However, the discussions are still at the initial stage and no decision is taken yet.  

“No decision has been taken yet. It is still at the initial stage. Will need thorough examination/evaluation of pros and cons,” confirmed Debasish Panda, Chairman, IRDAI.

Currently, there are 24.50 lakhs life insurance agents in the country. Compared to that there are 3.60 lakh agents in general and health insurance category. With the entry of life insurers, the number of agents will increase by 600 per cent, increasing health insurance penetration significantly in the country. 

There are, however, some pitfalls if the proposal gets through. For example, the claims department in life insurance companies is oriented towards payment of the claim on death or maturity of the policy. However, health insurance claims are logged by 7 per cent of the insured during the year. 

According to S K Sethi, Director, Ria Insurance Brokers, “Life insurers should not dissipate the energy, time of their manpower, training resources, time of the claim department as it will affect their ownership, life insurance target and affect their sales activity effort seriously in providing service to their existing and potential clients.”

Sethi adds, “Health savings plans by life insurers can be a good beginning provided Government gives separate limit of Rs 1 lakhs for tax exemption. The condition has to be that client can withdraw money from this account for hospitalization purpose only. It is a good idea which needs discussion among all stakeholders.”   

Rushabh Gandhi, Deputy Chief Executive Officer at IndiaFirst Life counters by saying: “The industry is quite prepared with the roll-out if the decision is made. Life insurers already have the necessary infrastructure in terms of distribution coverage and policy servicing to offer these plans in the market. In fact, this is an opportunity to further elevate the experience from what it was before 2016 when these policies were being offered by life insurers.”

Mediclaim policies, which are indemnity-based health plans, are quite popular and the best-selling health plans in the country. However, in a 2016 Health Insurance Regulation, IRDAI had asked life insurance companies to withdraw indemnity-based health plans from the market. Life Insurers since then have been allowed to only offer fixed benefit health plans. Life Insurers have been requesting the regulator to allow life Insurers to launch and sell indemnity-based health plans. 

"We expect a favourable view from the regulator on the recommendations made by the committee. Officially we are still waiting for the revert from the regulator on the proposal," says Gandhi.

What is the global practice? Do global regulations allow life companies to do general insurance? “Regulations vary from country to country. The concept of composite insurance companies exists in some countries wherein, these insurance companies are allowed to sell both Life and General insurance products,” says Gandhi.
 

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