Don’t Expect All Life Insurers To Launch Indemnity Health Insurance Plans: Former LIC Chief
Existing health insurers will oppose entry of larger life insurers as their businesses are already underpenetrated, SB Mathur says
Not all life insurance companies will be keen on launching their own indemnity-based health insurance plans. That’s according to SB Mathur, former chairman of Life Insurance Corporation of India.
“We find the penetration levels very minimal despite the vast potential for the health insurance industry,” Mathur told BloombergQuint in an interview. “There are 24 players in the country and all of them will not jump [into offering indemnity services], especially the small players.”
Under indemnity-based health insurance plans, a customer gets medical expenses reimbursed up to an assured amount under the policy.
That comes as the industry regulator—the Insurance Regulatory and Development Authority of India—set up a committee last week to examine the feasibility to allow life insurers offer indemnity-based health policies. The nine-member committee will submit its recommendation within two months, it notified through a circular.
Mathur said the idea behind this move is to catch the customers young and leverage the synergies between life and health insurance businesses. “Both have the propensity that in the early stages of the human life cycle, the claims are lower and people are not willing to get insured. As the age advances, there is a greater willingness to sign up as propensity increases but it is disadvantageous to the service provider.”
The former secretary-general of Life Insurance Council said the existing health insurance providers will oppose the entry of larger life insurers as their businesses are already underpenetrated. Standalone health insurers have managed to garner just Rs 10,600 crore in terms of premium in 2018-19 despite the increased spending among the middle class, he said.
WATCH | Former LIC Chairman SB Mathur On Indemnity Health Insurance Plans