The Insurance Regulatory and Development Authority of India (Irdai) is planning to develop long-term health insurance products as part of its efforts to penetrate deeper into the health insurance segment. Currently, health insurance policies are renewed annually, or for two years in some cases.
“We are looking at long-term health insurance products to expand our reach. Such long-term health policies could carry a tenure of over 3-5 years. There is also a proposal to bring in long-term products for group insurance as well,” TS Vijayan, chairman, Irdai, said at the sidelines of an ICICI Lombard event marking the company’s milestone of 1 lakh policies in long-term two-wheeler insurance. ICICI Lombard is the first general insurance company to have launched long-term product for the two-wheeler industry.
“We have appointed a committee to evaluate the proposal, which include industry experts besides companies. The committee will bring in a report for long-term health insurance products soon,” Vijayan said, adding that the issue is pricing of products, which has to be streamlined. The insurance regulator is also mulling long-term products in the four-wheeler segment.
Vijayan clarified that claim experience has to be looked into because that is vital for longer-term offerings. On the industry, he said insurance penetration has to increase as the extent of risk cover is a measure of its stage of development. “In the US, almost 80% of the assets are covered by insurance whereas it is just 7% in India,” he said.
He said there was an unmet need for long-term products in non-life sector as well.
Asked about FDI, TS Vijayan said about 6-7 insurers have approached Irdai seeking permission to increase FDI. Refusing to give names, he said they wanted approval to raise the FDI ranging from 36% to 49% in both life and non-life sectors.
Meanwhile, ICICI Lombard has sold 1 lakh policies of its long-term product, which offers 2-3 options to two-wheeler owners, after it had started actively marketing the product in July this year. Bhargav Dasgupta, CEO, said about 40% of its online two-wheeler insurance sales were coming from the long-term product and the response suggests a new trend in this segment. “Long-term products are going to be a game changer in the two-wheeler segment where renewal of insurance was a major issue.”