August 07, 2008

IRDA may ensure affordable health cover to all, even after 65 years

Senior citizens have good chances of getting a health cover even after they turn 65.

Insurance regulator IRDA is vetting a proposal to make health cover affordable to all senior citizens. A final view will be taken on providing guaranteed access to health insurance for this segment by the end of this year, said a top official of the regulatory body. The proposal is based on the recommendations of an expert panel on health insurance last year. The panel recommended allowing senior citizens to enter the health insurance system up to 65 years of age — or higher — at the discretion of the insurer.

If they do so, they should be given guaranteed renewal of their insurance without any upper age limit. As a transitional measure — since guaranteed access is being provided to senior citizens for the first time — there should be no upper age limit for entry or renewal for a period of three years from the date the IRDA issues the regulations”, the panel had said. It had made out a case for insurers to fix a “base” price of Rs 3,000 every year for a sum insured of Rs 1,00,000 (at 50 years).

“We are examining these recommendations of the panel we reckon that health insurance should be made affordable, given the mounting health care-costs,” said DVS Sastry, director general, IRDA at a seminar on effective cross selling of insurance and mutual fund products organised by Watson Wyatt and the Indian Institute of Banking and Finance here.

Several senior citizens have registered complaints with the regulator about insurance companies denying renewals.

Industry experts, however, reckon that people should enter health insurance schemes at an early age to enable insurance companies distribute their risks better. Currently, health insurance penetration is minuscule in India. The total premium from health insurance stood at Rs 4,970 crore in FY 08, marking a 55% growth over FY07. Currently, there are only two standalone health insurance companies — Star Health and Allied Insurance and Apollo DKV — offering pure health products.

The government is looking at raising the cap on foreign direct investment (FDI) in insurance from 26% to 49%. It is also considering a minimum capital requirement of Rs 50 crore for health insurance companies to make it attractive for new-entrants. Consumers are expected to get a better deal in terms of pricing when competition intensifies among these players.

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