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Are low health premiums viable, asks insurance regulator
Monday, 13 December 2010, 15:38 IST
Chennai: The Insurance Regulatory and Development Authority (IRDA) Saturday expressed its concern at the low premium charged by some government health insurance schemes and the rampant undercutting of rates by public sector general insurers.
"The premium rate per head under the Arogyasri scheme (in Andhra Pradesh) has come down to 
75 per head from around 80 while the coverage has widened. The insurer Star Health (Star Health and Allied Insurance Company Ltd) is bringing down its losses and it says will make a profit. But to succeed, the expenses must have to be tightly managed," IRDA chairman Hari Narayan said here.
Speaking to reporters on the sidelines of an insurance seminar, Narayan added: "Is it possible to expand the scheme to the entire population and can the expenses be tightly managed? I am raising questions and there is no solution now. We have to see the experience of Tamil Nadu government's scheme managed by Star Health."
He also cautioned the government owned non-life insurers on the repercussions of indulging in rate wars.
"The insurers are managing with investment income. If the Sensex goes down to 9,000 points then insures will not have a cushion," he said.
On the complaints of life insurers that IRDA takes a month to approve a product, he said: "The products are being approved fast. At an average, the life insurers should factor at least two months for getting their products approved."
He denied that IRDA would meet promoters of life and general insurance companies individually to discuss their financial position.
"We have separate councils for life and general insurance whose meetings our representatives attend. I don't know how far it is possible to go beyond the CEO (chief executive officer) and talk to the promoters," he said.
Officials of life insurance companies told IANS that overseas insurance regulators meet the promoters or CEOs every year and take stock of their operations and set deadlines to correct deviations.
Narayan said IRDA has started playing disciplinarian role in addition to a developmental one.
On the merger proposal submitted by Royal Sundaram Alliance and Reliance General Insurance, he said the proposal was being studied and a decision would be taken once the guidelines for mergers and acquisitions for non-life insurers are released.
Speaking about its proposed grievance redressal mechanism, he said the regulator was testing a software whereby the status of a claim with any insurer could be monitored centrally.
"The beta testing of the software is on. We have to debug it and then roll out," Narayan said.
Asked about general insurers employing appointed actuaries on a part-time basis even after ten years of opening up of the sector and the availability of young actuaries, he said: "Actuarial science offers good growth prospects. There is dearth of qualified actuaries."
He said IRDA is exploring possibilities of leveraging technology to reduce cost of operations for life insurers like holding polices in demat form, simplifying policy wording, as well as taking the products to rural areas.
Source: IANS
75 per head from around 80 while the coverage has widened. The insurer Star Health (Star Health and Allied Insurance Company Ltd) is bringing down its losses and it says will make a profit. But to succeed, the expenses must have to be tightly managed," IRDA chairman Hari Narayan said here.
Speaking to reporters on the sidelines of an insurance seminar, Narayan added: "Is it possible to expand the scheme to the entire population and can the expenses be tightly managed? I am raising questions and there is no solution now. We have to see the experience of Tamil Nadu government's scheme managed by Star Health."
He also cautioned the government owned non-life insurers on the repercussions of indulging in rate wars.
"The insurers are managing with investment income. If the Sensex goes down to 9,000 points then insures will not have a cushion," he said.
On the complaints of life insurers that IRDA takes a month to approve a product, he said: "The products are being approved fast. At an average, the life insurers should factor at least two months for getting their products approved."
He denied that IRDA would meet promoters of life and general insurance companies individually to discuss their financial position.
"We have separate councils for life and general insurance whose meetings our representatives attend. I don't know how far it is possible to go beyond the CEO (chief executive officer) and talk to the promoters," he said.
Officials of life insurance companies told IANS that overseas insurance regulators meet the promoters or CEOs every year and take stock of their operations and set deadlines to correct deviations.
Narayan said IRDA has started playing disciplinarian role in addition to a developmental one.
On the merger proposal submitted by Royal Sundaram Alliance and Reliance General Insurance, he said the proposal was being studied and a decision would be taken once the guidelines for mergers and acquisitions for non-life insurers are released.
Speaking about its proposed grievance redressal mechanism, he said the regulator was testing a software whereby the status of a claim with any insurer could be monitored centrally.
"The beta testing of the software is on. We have to debug it and then roll out," Narayan said.
Asked about general insurers employing appointed actuaries on a part-time basis even after ten years of opening up of the sector and the availability of young actuaries, he said: "Actuarial science offers good growth prospects. There is dearth of qualified actuaries."
He said IRDA is exploring possibilities of leveraging technology to reduce cost of operations for life insurers like holding polices in demat form, simplifying policy wording, as well as taking the products to rural areas.
Source: IANS
