September 25, 2007

Insurance Regulatory Development Authority collecting data on disease patterns

The Insurance Regulatory Development Authority (Irda) is collecting data on disease patterns of the country’s insured population to help health insurance providers to effectively price premiums for health policies based on indicators about the prevalence of diseases.

“We are collecting data about disease patterns from Third Party Administrators. The sample is fairly large. We want to put in this information in the public domain. It will help health insurance providers to understand the Indian population. It will also serve academic purposes,” said Irda chairman CS Rao.

Health insurance companies feel that such data will give them more clarity to price their product. Says an official from Max India’s health insurance division: "Once you have morbidity data, companies can price their products prudently and will know the level of risk they have taken. There will be more transparency in the policy, which will help avoid claim disputes."

The data is likely to be out in a few months. It will be helpful to make a correlation about the occurrence of diseases in a particular population and companies can estimate the risk they will have to take.

In life insurance, annuity products can be priced based on mortality rates which are unlikely to change. But building a database in the case of morbidity is difficult because health profiles of populations evolve over periods of time, subject to lifestyles, consumption habits and other parameters.

Health profiles of consumers can also improve or deteriorate for a variety of reasons, said an actuary. For instance, if smoking habits undergo a change in a population, fewer cases of lung related diseases will be registered over a period of time. Thus, prices of health insurance premiums will be determined by geography, costs of healthcare across regions, gender, etc.

Many players are expected to foray in the niche health insurance segment. Apollo Hospitals have formed a JV with German health insurance company DKV. Max Hospitals is scouting for a foreign partner to foray in the health insurance segment. Dr Reddy’s is also exploring the health insurance market.

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