August 19, 2010

IRDA sketching new health insurance norms

THE Insurance Regulatory Authority of India (IRDA), on Monday, said revenues of insurance companies are likely to be impacted once the proposed guidelines for unit-linked plans fall in place. The regulator also advised the insurance providers to maintain costs by reducing expenses.

“I do hope there will be an impact on revenues. Ultimately, the idea of guidelines is to have an impact. My concern for the insurance industry is not what is going to happen in 2010-11, but to see that the industry remains healthy and be sustainable,” said J Harinarayan, Chairman, IRDA.
Speaking to the media after launching the 106th testing and assessment centre of NSE.IT, a subsidiary of National Stock Exchange, he said, insurance companies should redesign their products suiting the interest of policy hodlers. He added that companies should adopt cost-cutting measures to maintain profitability.

On the other hand, insurance companies feel that capping of surrender charges and distribution of charges over the lock-in period of five years will affect profitability. Similarly, ULIP sales will also be affected as agents may be unwilling to sell them at lower commissions.
Meanwhile, in a bid to resolve the issue on varying charges by hospitals and insurance companies, IRDA will soon introduce norms pertaining to the administration of insurance policies.

“The mechanisms are being put in place to improve efficiency in health insurance and administration. Expert committees of industy bodies like CII and FICCI have recommended measures including uniform claim forms,re-authorisatoin. We are also looking into aspects related to billing,” he said . As of July 1 328 hospitals were in the network for cashless facility across four cities namely Mumbai, Delhi, Chennai and Bengaluru. However, they withdrew from the same citing steep charges.

“They (hospitals) have renegotiated rates and as per the last count, over 390 have signed up with the partnership network,” he said.

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