FM asks PSU insurance company to hike group health insurance premiums
The Finance Ministry is believed to have directed the four general insurance companies– New India Assurance, United India insurance, National insurance and Oriental insurance — to reduce losses in group health insurance segment.
In a letter written to all the companies, the ministry asked the companies to take up some remedial actions, including increasing premiums in the group health insurance segment.Â
The ministry also called for an increase in premiums in cases where claim ratio is 100 per cent. “The hike should take into consideration factors like medical inflation, margins and management expenses,†ministry said in the letter. Also no discounts should be given in stand-alone group health insurance policies for companies which pay out more than they earn.
The claim ratio of all the four insurance companies in group health insurance segment is much higher than the premium they earn. In 2011-12, PSU insurers collected premium of Rs 4,500 crore and paid the claims of around Rs 6,000crore and booked losses of Rs 1,500 crore.
These directives were issued by the ministry after it called a meeting with all the four chairmen of these companies, at the North block. The ministry has known to have asked them to implement these immediately.
As per the FM, brokerage or commission shall be restricted to a maximum of five per cent. “Unhealthy practices of letting the broker to hike the premium, by assuring him of brokerage at a higher percentage, shall not be entertained,†the letter said.
The ministry also cautioned insurers against such insurance policies of private sector companies. It asked the companies to obtain necessary financial details of these companies for the last three years. The ministry asked them to take these claims only if combined ratio is lower than 95 per cent.
In addition, the PSU insurers should now share data concerning premier, claims and major accounts to ensure that there is no competition between them in any corporate or group accounts. The ministry warned that any deviation from this instruction will be viewed seriously.
The ministry is also cracking down on frauds in the segment and asked these companies to share details on frauds amongst each other. “Action against the persons involved in frauds should be strict and lead to immediate cancellation of the policy. Even legal action against the insured may be considered in serious cases,†the ministry said.
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