Health insurance biz to touch Rs 35,000 crore by 2014-15

Rising middle-class incomes, inflationary pressure on healthcare costs and the popularity of state-sponsored healthcare schemes will help the health insurance business in India touch the Rs 35,000 crore mark by 2014-15, says the ‘India 2011 – Insurance Industry Report’ released by India Insure Risk Management and Brokerage Services.

The health insurance business has been growing at a steady pace over the past few years and accounted for 25 per cent of the overall business of the general insurance companies in 2010-11, against 23 per cent in 2009-10 and 20 per cent in 2008-09, retaining its second position after motor insurance. The sector earned a net premium of Rs 8,528 crore in 2010-11, against Rs 6,241 crore in the previous financial year.

According to the report, health insurance has been the fastest growing market segment registering a compounded annual growth rate (CAGR) of 32 per cent for the past six years. The growth drivers include an ageing population, increasing healthcare costs, improving per capita income and awareness and increasing employer-sponsored health insurance cover.

“Increased coverage under government schemes like Rashtriya Swasthya Bima Yojana (RSBY), innovative products to reach the rural sector, reduction in premiums and switching from hospitalization cover to health managed programmes under insurance, will all result in the health insurance sector growing to about Rs 35,000 crore by the year 2014-15,” the report says.

According to the report, the healthcare spend in the country is expected to double and touch Rs 2,25,000 crore by 2014 and with just 3 per cent health insurance penetration in the country, there is a huge market for health insurance in India.

The attitude of the Indian middle class towards the need for health insurance is also changing with factors like increase in lifestyle diseases, apart from rise in healthcare costs.

The report also questions why the industry focused only on hospitalization, which was only 20-25 per cent of an individual’s healthcare, spend, ignoring 75 per cent of the market. The insurance industry could also do well to develop new and innovative products in segments, such as micro-insurance health products and ‘health plus life’ products that provide life cover, along with health insurance to subscribers.

PSU to handle revised health insurance scheme

The state government has finally set the ball rolling for the Chief Minister's Comprehensive Health Insurance Scheme that would benefit 1.34 crore families in Tamil Nadu. One of the most popular welfare schemes of the previous DMK regime, it is now in the process of a revamp with the new government replacing the earlier private health insurance company with a public sector firm.

On Monday, the Tamil Nadu Health Society, the implementing agency for the revised scheme, convened a pre-bid meeting to clarify doubts. The first round of unsuccessful bidding saw nine firms, including the Star Health and Allied Insurance Company (Star Health), which managed the scheme under the earlier DMK government. In the latest round, only four firms - United India Insurance Company, New India Insurance Company, Oriental Insurance Company and National Insurance Company - took part after the state restricted it to public sector companies. "The decision to choose among public sector firms was taken by the cabinet. The government thought it would be hassle free and there would be more transparency in the operations," said a senior official. Bidding is open till November 21.

"The new scheme will have extensive benefits as it covers more than 900 surgical procedures, including life saving interventions like cardiac, renal, neurological procedures and neonatal/ pediatric procedures which were hitherto not covered," said a senior official.

The scheme has been allotted Rs 750 crore for the current fiscal. After negotiations with the 12-member State Empowered Committee, Star Health, the lowest bidder in the previous round, reduced its offer to Rs 508 from Rs 510 towards premium per family. But it was still high for the state-sponsored scheme.

As per the plan, the sum assured is Rs 1 lakh per annum per family, while Rs 1.5 lakh for certain specific procedures like renal transplantation and more than one cardiac valve replacement. Under the new scheme, a family which has an annual income of Rs 72,000 is entitled to avail the benefits.

The successful bidder will have to ensure the availability of a minimum of 50 networked hospitals in Chennai, 20 networked hospitals each in the districts of Coimbatore and Madurai, six networked hospitals each in other districts excluding government hospitals. There will be a minimum of 50 networked hospitals in the areas under each region of the state.

Max Bupa aims to breakeven by 2015

Max Bupa Health Insurance, one of the hottest players in the health care insurance business in India, hopes to reach a break-even in operations by 2015. The company, which started operations in mid-2010, is 76:24 joint ventures between Analjit Singh promoted-Max India and UK-based BUPA.

The chief financial officer of the company Neeraj Basur said, Max Bupa Health Insurance has an equity assurance of Rs 700 crore from the joint venture partners, of which, over Rs 300 crore has been infused so far. “We hope to break even in the 5^th year of operations as we had targeted,”

Being one of the most recent players in the business, Max Bupa has been trying to decide itself from other players by present unique products and special services. For instance, the company was the first to offer health insurance products with a sum insured of over Rs 15, 00,000, after which many other companies jumped into the fray, according to Basur.

In an industry where the average size of sum insured in health insurance covers is Rs 2, 00,000, Max Bupa offers health insurance products with covers ranging from Rs 15, 00,000-50, 00,000.

“We have a decent number of customers who have taken our Rs 50, 00,000 products. It depends on the customer needs. There is certainly a segment that sees value in these kinds of products. Those customers who want to ensure there are no hassles or running around when there is a health problem and if they can afford to pay that kind of premium, they go for it,” Basur observes.

Also, with the increasing medical costs and inflation driving prices up, people find it essential to move to policies with higher sum insured to ensure that they have enough coverage in the next ten years, he says.

Being a pure play health insurance player, Max Bupa has no insurance intermediaries or third party administrators, which makes the claims settlement process easy for the customers. Also, unlike most players, who get a bulk of their business from group health insurance schemes, the individual, retail customers are the focus for Max Bupa.

The company, which clocked a new business premium of Rs 46 crore for the first half of this financial year, hopes to complete its first full year on a strong note. “We have already crossed the 100,000 mark in customer base, which is pretty good for a 14 month old company. We hope to close this financial year with a total premium of Rs 70 crore,” Basur said.

Save Non life insurance Govt companies-Govt to disinvest

There is news that Indian government is in consultation to sell stakes in major Non life insurance companies. These are New India Assurance, National Insurance, oriental and United India. Is this move done to get more cash for government or it wants to modernize these players.

In Non life segment- the two major categories come are -
1. Health Insurance
2. Motor Insurance

With these companies who have large market share - it will certainly change the industry.
For customers - what this can do.

These companies are considered honest in terms of claims but to get claim in these companies is a very tedious work.

With selling the stake- may be new teams will get appointed who will look after the concerns in delay of claims etc.

The other motive behind this govt move can be to insure these companies do not get into large losses and with public participation in capital, they make find there way to profitability.
To comply with norms all these companies will have to have independent directors which will help in restructing.

Government plans to list general insurance companies

The government has started consultations on listing public sector general insurance companies besides selling shares in small lots at a time when it is facing a cash crunch.

Senior government officials told TOI that the finance ministry has started internal discussions on listing of the four general insurance companies - New India Assurance, National Insurance, Oriental Insurance and United India Insurance.

At the same time, the four companies are unlikely to hit the market together. Instead, listing of these companies will span a period of time just like public sector banks, where Punjab & Sind Bank was listed only last year, while State Bank of India has been listed for several years.

Given that New India is the largest player in the business, it is likely to be the first off the block.

UPA-2 has usually sold shares in small lots along with listing or follow-on issues by public sector companies. Punjab National Bank is the only instance of the Center disinvesting its stake in a financial sector company at the time of listing.

Listing of state-run players will also set the stage for some of the private sector general insurance companies tapping the markets.

But listing the public sector players is not going to be easy as their accounts are usually delayed. Most will also need to restructure their boards to comply with the listing norms, including a set of independent directors.

Rejig on at four PSU general insurers

While the government is planning to list public sector general insurance companies, over the last few years, it has tried to improve corporate governance standards and initiated an organizational rejig at four general insurers that are wholly-owned by it.

For instance, the insurance companies have started adopting core solutions, which is an electronic interface, allowing customers to transact across the country much like banks where you can now deposit or withdraw funds at any of the branches.

They have been asked to factor in the possible claims into their accounts since settlement in cases such as motor insurance takes years.

During the last fiscal, the state-owned general insurance companies saw a decline in their net profit on account of lower investment income as also due to higher provisions for motor insurance losses.

For instance, United India reported net profit of Rs 130 crore against Rs 707 crore a year ago, while National's profit fell to Rs 75 crore from Rs 225 crore in the previous year. Oriental Insurance bucked the trend reporting profit of Rs 54 crore against losses in 2009-10.

For general insurance companies, especially the public sector players, profit is usually a function of income from investment. For instance, New India Assurance's asset base was estimated at nearly Rs 40,000 crore at the end of March.

Similarly, the market value of United India's investment was almost Rs 16,000 crore. Thanks to their pre-nationalization legacy, they are major shareholders in the top companies in India which helps them cover the losses they incur on their insurance business.

Claim tax benefits for your medical expenses

It is rightly said that “health is wealth”. To ensure good health of ourselves and our families, medical costs are usually on the higher side, which may include medical insurance premium, medicines and hospitalisation costs, among other things. There is, however, some relief from taxes for such expenses.

Medical insurance: In times of rising medical costs, it is wise to invest in medical insurance for yourself and your family. By doing so, one not only ensures medical cover for oneself and the family during a medical emergency, but also gets relief from tax benefits associated with the expenses.

As per Section 80D of the Income Tax (I-T) Act,1961, a deduction can be claimed by an individual for the premium paid towards medical insurance or any contribution made to the Central Government Health Scheme. The deduction can be claimed up to Rs 15,000 per annum or the amount paid, whichever is lower. Here, family would mean spouse and dependent children of the individual.

In addition to the above, an individual can also claim deduction for the medical insurance premium paid up to Rs 15,000 per annum for parent(s) or the amount of premium paid, whichever is lower. Further, these deductions are increased up to Rs 20,000 per annum in case the premium is paid for a senior citizen (65 years old or more).

For example, if a person buys health insurance for himself and his parents, who are senior citizens, then the total premium that can be deducted from his taxable income will be Rs 35,000 per annum (Rs 15,000 for self plus Rs. 20,000 for parents).

It is imperative to note that for claiming an exemption under Section 80D, the payment for the same should be made by any mode other than cash. In addition, only medical premium paid under the medical insurance scheme of General Insurance Corporation, approved by the central government, or any other insurer, approved by the Insurance Regulatory and Development Authority (Irda) shall be eligible for the tax benefits specified above.

Reimbursement of medical expenses of employees: Reimbursement of expenditure actually incurred by the employee for his or his family member on medical treatment (domiciliary medical expenses) is exempt for up to Rs 15,000 per annum. Any reimbursement that is above the said limit would be liable to tax as income in the hands of the employee. Family for this purpose includes spouse, children, parents, brothers and sisters of the individual or any of them wholly or mainly dependent on the individual.

Generally, the employers insist on submission of original medical bills by the employee before making the said reimbursement prior to providing an exemption.

Dependent with a disability: In case an individual has incurred any expenditure on a dependent with a disability, then he would be allowed maximum deduction of Rs. 50,000 per annum or Rs 1,00,000 per annum, depending on the severity of the disability of the dependant under Section 80DD of the I-T Act. The expenditure could be on account of the medical treatment (including nursing), training and rehabilitation or an amount paid/deposited under any scheme framed in this behalf by the Life Insurance Corporation of India (LIC) or any other insurer for maintenance of the dependent.

Few specified diseases: An individual can claim a deduction up to Rs 40,000 per annum (Rs 60,000 in case of senior citizens) under Section 80DDB of the I-T Act for expenses incurred on treatment of certain prescribed diseases or ailments, such as malignant cancers and AIDS, among others, subject to fulfillment of conditions prescribed under the I-T Act.

Therefore, it can be said that while medical costs have increased substantially, the silver lining is that one may claim tax deductions available for these expenses.

Oriental Bank widens focus to include Mediclaim policy

Oriental Bank of Commerce today entered into a memorandum of Understanding with Oriental Insurance Co Ltd for selling Mediclaim policies to the bank's customers through its pan-India network.

Oriental Bank Mediclaim policy is cash-less family floater covering the members of the beneficiary's family. The policies are available for Rs 1 lakh to Rs 5 lakh. For a policy of Rs 5 lakh, the premium is as low as Rs 6,705 a year.

The memorandum of understanding was signed by Mr. R.M. Sharma, General Manager, Oriental Bank of Commerce (OBC), and Mr. A.K.Saxena, General Manager, Oriental Insurance Co, in the presence of Mr. Nagesh Pydah, Chairman and Managing Director of the bank, and Mr. R.K. Kaul, Chairman and Managing Director of the insurance firm.

Mr. Kaul noted that this policy has some features that are unique for OBC's customers. “This product will be available for all OBC customers up to the age of 79 years. Also, no medical check up will be required.”

So far, Oriental Bank was not looking at general insurance products as a source of “revenue” for the bank. However, there is now a change in its revenue model and OBC has decided to also focus attention on general insurance products for increasing its fee-based income.

“This product was a long-felt need of our customers. Oriental Bank Mediclaim policy will fill the gap in our bouquet of products and services. This should help us in our fee-based income and also in bolstering CASA. This will be a great opportunity for us to build our Current Account Savings Account (CASA) deposits,” Mr. Pydah said.

All Metro and urban branches of the bank have been mandated to sell minimum 250 policies in the next six months, he said. The six-month target has been pegged at 175 policies for semi-urban branches and 75 policies for rural branches.