IRDAI May Allow Life Insurers Enter Health Segment

The insurance regulatory body of India, IRDA is considering allowing life insurance providers to enter the health segment. However, the consideration of this possibility has been taken with a pinch of salt by the general insurance companies in India.

IRDA has set-up a 9 member committee comprising of Mr. MD G Srinivasan (the former Chairman of New India Assurance) as Chairman and Mr. MR Kumar (Current Chairman of Life Insurance Corporation of India) as Co-Chairman. This 9 member committee is set-up to study the feasibility of allowing life insurance providers to enter the health insurance segment.

Until now, health insurance policies were offered only by general insurance companies. However, this move by the IRDAI is a result of intense lobbying done by private life insurance providers who wish to tap the fast-growing business of the health insurance sector. The IRDAI (Health Insurance) Regulations, 2016 said that Life insurance companies until now only offer benefits based on health insurance policies, however, representations are received from life insurance companies to allow them to offer indemnity-based health insurance policies.

However, this representation of the life insurance companies is opposed by the apex body of general insurers. The representative of the general insurer’s body is quick to mention that not all life insurance providers are demanding for this proposal but a few life insurance providers. The source further added that this demand for allowing life insurers to enter the health segment is backed by certain arguments and viewpoints which the body of general insurers find incorrect.

The official in the body of general insurers is quick to point out inconsistencies in the argument put forward by the life insurance companies in their proposal. The general insurer’s body has presented the following points as their defence against the proposal:

1. The life insurance companies are not acting in their full capacity i.e. the IRDAI allows all the life insurance providers to offer benefit-oriented critical illness cover as a part of their other insurance policies. Even though they are allowed to market this insurance cover, most of the life insurance providers hardly market this product as not many of the customers are aware of the existence of this cover. Therefore, the general insurer’s body asks life insurance providers to market their products at their full-potential rather than demanding for the indemnity-based health insurance business.
2. Another major issue pointed out by general insurance providers is that life insurance providers are infamous for their mis-selling. Therefore, general insurers advice life insurers to rectify their short-comings before entering into uncharted areas.
3. Additionally, general insurers feel that life insurance providers are not equipped to handle the enormous claims as indemnity-based health insurance businesses work under tight time schedules.

The insurance industry business is booming and the share of health insurance products is highest. The statistics for FY 2017-18 show a record-breaking growth of 21.8% in health insurance premium collection. Therefore, pocket-sized life insurance providers are inclined to plunge back into this business as historically they were earlier selling the indemnity-based life insurance products.