Insure your staff at a lower cost
22 Jul, 2013 11:11 AM
There has been a 10-15 per cent drop in group health insurance premium paid by companies this year thanks to competition among non-life insurers
Rising competition among non-life insurers has helped companies get a discount on group health insurance covers this year. According to insurance officials, this year, on an average, there has been a 10-15 per cent reduction on the premium paid by companies, compared with last year. This is despite the fact that the corporate health insurance business is a bleeding portfolio for most non-life insurance companies. Like previous years, this year too employers have capped the benefits to ensure that claims cost do not blow out of proportion thus increasing the premiums.

A senior official of New India Assurance Company, said, “Premiums have not risen this year for our clients because of competition. Since prices have increased over the past three years, the per capita premium has increased by a maximum of 5 per cent this year.”

KG Krishnamoorthy Rao, managing director and chief executive officer at Future Generali India Insurance, said, “The premium has not increased on group health insurance covers; it has fallen. Overall where the claims ratio is 80-90 per cent, for such companies, the premium has reduced by 5-10 per cent of the premium they paid last year.”

The group health insurance business was around Rs 7,000 crore in 2012-13 and has been growing at 15-18 per cent. The business is loss making for non-life insurance companies with a total claims ratio of 120 per cent. That means for every Rs 100 collected as premium, the total outgo on claims paid, agent’s commission, TPA fees and administrative cost results in a total cost of Rs 120 for an insurance company.

So have the benefits too remained the same? A recent survey by a private non-life insurer ICICI Lombard General Insurance, titled ‘Trends in Employee Benefit Programme 2013,’ covering 500 corporate clients, revealed that a whopping 76 per cent companies adopted co-payment and room rent limits. Co-payment is the proportion of the claim amount that has to be first borne by the employee before his full claim is paid. Similarly, there has been a significant reduction in parental coverage. Around 43 per cent employers had a sum insured of less than Rs 2 lakh.

Manasije Mishra, chief executive officer, Max Bupa Health Insurance, said, “Employers have been steadily reducing the medical benefits for employees. Companies are opting for lower sum insured, introducing room rents, capping disease cost, introducing co-payment and stopping covering parents to control insurance cost. Some companies are now providing cover only to the employees. The average cover under group health insurance has remained between Rs 2 lakh and Rs 3 lakh for the last 10 years, which is grossly inadequate.”

Adds the head of a leading TPA, “Most corporate mediclaim policies cap the cost for various diseases. For instance, the cost of a cataract operation is capped at Rs 24,000 in many group health covers, which is inadequate in a city like Mumbai.”

“Good quality healthcare comes at a price. An individual should have a minimum cover of Rs 5-10 lakh depending on his affordability. Another alternative would be to enhance the basic cover offered by the employer by buying a super top-up policy,” added Mishra.

Top-ups and super top-ups: A top-up health policy is an additional cover for people who already have an existing insurance policy, be it an individual plan or a mediclaim from the employer. Top-up plans maximise the payability of the claim amount, but do not provide cashless hospitalisation. Since they have high deductibles, they are much cheaper. The expenditure that arises out of single illness beyond the limit of the existing cover is reimbursed. Experts suggest a super top-up policy is always better than a top-up plan. For instance, a person has a group mediclaim of Rs 3 lakh, and has bought a top-up cover with a threshold of Rs 3 lakh. Assuming he gets hospitalised twice in a year with bills of Rs 2.5 lakh and Rs 2 lakh, respectively, the top-up plan will not be triggered, as sum insured is not exhausted in single hospitalisation.

A standard top-up plan will pay for a claim provided you exceed the sum insured in a single hospitalisation. Just like a top-up, there is something called a super top-up cover.

Says Sudhir Sarnobat, director,, said, “A super top-up plans takes into consideration the total bills in a year and not just the single instance of hospitalisation. So in case of three bills of Rs 1 lakh twice and Rs 2.5 lakh once, your total bill is Rs 4.5 lakh. Thus, the super top-up plan will get triggered (above threshold limit of Rs 3 lakh). The super top-up cover will pay you above your basic cover, whereas, a top-up cover will not.”
Source : Financial Chronicle

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