The IRDAI Chairman also assured that the regulator would be happy to help the stakeholders of the Insurance Industry in minimising risks.
The health insurance policy that you have taken from your bank, office or other organisation may no longer be damn cheap as Subhash Chandra Khuntia, Chairman, Insurance Regulatory and Development Authority of India (IRDAI) has indicated that the loss ratio in Group Health Insurance is currently at an unsustainable level.
While praising insurance brokers for procuring about 43 per cent of the Group Health Insurance business, at the 16th Annual Insurance Brokers Summit 2020, the IRDAI Chairman also cautioned the insurance industry stakeholders of making the segment unsustainable by offering the group health cover at throwaway prices due to cutthroat competition among the insurance providers and intermediaries.
“I would like to give a word of caution here, that though your share in Group Health Insurance is very high, but I think, the loss ratio in the Group Health Insurance is also very high, and probably it is not very sustainable at present. So, I think, the insurance companies and intermediaries, and even the policyholders need to unite to create a sustainable atmosphere. Because in other industries, if there is unfair competition, then the industry suffers, but the clientele do not suffer. This has happened in Airline Industry, perhaps in Telecom also, here and there this is happening. But we can’t afford that kind of a situation in Insurance Industry. Because Insurance is an industry for protection – so, if the industry suffers, the clientele will also suffer. As a regulator, we would not like that to happen,” Khuntia said.
“So, I think, this is something you all keep in mind – one should not overcharge, but one shouldn’t also undercharge. So, that is why, for each line of business, we have to look at the loss ratio and the combined ratio. Create an atmosphere to improve efficiency, so that the premium may come down,” he added.
“So, I think, here also brokers can go out and work with the clientele – because you are working for the clientele, for the customers – and (find ways) how to prevent risks from developing, how to manage risk, so that it doesn’t assume disproportionate size,” Khuntia further said.
The IRDAI Chairman also assured that the regulator would be happy to help the stakeholders of the Insurance Industry in minimising risks and for that wellness should be addressed along with health insurance, so that the requirement of hospitalisation comes down.
“Not only health, but in every case, wherever protection is being sought through insurance, we should create a situation that the development of risks should be minimised in the first place,” said Khuntia.
Although the IRDAI Chairman said that he wants that the Loss Prevention Association be revived and work with clients to reduce risks, but it is clear that the premium of Group Health Insurance or of any other insurance can’t be kept at unsustainable level to create existential issue for the Insurance Industry.
So, with the increase in the cost of providing the group health cover, there are chances that either the free health cover given by your employer may be reduced, or the employer may start charging premium for providing health insurance cover.
Also, the gap between the rate of premium between personal health insurance cover and the group health cover may also get reduced.