Mumbai: Sensing a huge opportunity with some Indian states aggressively offering public health insurance schemes to their rural poor, private insurers are rushing in with offerings, ready to cut prices to win competitive bids invited by state governments.
Although there is no clear regulatory code to implement such group health cover schemes that involve an annual premium by the state government concerned for a year’s contract, insurers such as ICICI Lombard General Insurance Co. Ltd and Reliance General Insurance Co. Ltd have already won some projects.
Assam is said to have pioneered a state health insurance scheme in 2005 for its poor and ICICI Lombard won the contract that involved an annual premium of Rs25 crore.
The latest in the series is a family health insurance plan started by Mizoram for its entire population. The state government has signed a contract with Reliance General Insurance for a scheme that involves an annual premium of Rs28 crore.
More firms are expected to jostle for space in this segment since at least half a dozen states have firmed up plans for group insurance policies to cover rural health care.
Kerala, Uttarakhand, and Jammu and Kashmir are readying similar programmes to insure health of their rural population. In western India, at least three states—Maharashtra, Goa and Gujarat—are proposing health insurance programmes for poor women under the age of 40.
State-run insurer Life Insurance Corp. of India, or LIC, too, is readying to join the race. “Since this area is just emerged, we haven’t yet entered the group health insurance products, but we are exploring the possibilities,” said its chairman T.S. Vijayan.
Public health insurance is part of the rural health budget of states and the Union government contributes a small portion of this expenditure from the allocation for the National Rural Health Mission and other health and family welfare schemes.
Analysts tracking the insurance sector, however, have panned these state-initiated public health insurance schemes. “Unless the insurance regulator works out a framework for monitoring the implementation of such group health insurance schemes funded by governments, there are possibilities of schemes being abused by politicians as well as insurance companies,” said Ashvin Parekh, a director at accounting and consultancy firm Ernst and Young. “This is mainly because the beneficiaries themselves are not aware of such insurance policies and there aren’t enough efforts from the governments to effectively implement and propagate the same.”
According to Parekh, these schemes benefit people who negotiate the insurer, and the insurance firms hardly receive any claim requests.
“Since public sector insurers such as LIC are not active in this space, firms with one or two years’ experience are driving such products in the market now. The market for health insurance has just started picking up in the country,” said another analyst with a Mumbai-based international consulting firm who declined o be named.
According to insurance regulator C.S. Rao, chairman of Insurance Regulatory and Development Authority, currently tariffs are not regulated for group insurance products. He also said a bidding process is not a desired option.
“But the concern is whether the conditions and cover requirements are clearly conveyed by the state governments to the insurers before signing the contract. In fact, all these companies are now testing fresh waters and, hopefully, corrections can be done since these contracts are only for short periods,” Rao told Mint.