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14 january 2013

Get ready to pay more for your health insurance. All four public sector insurers — United India Insurance, Oriental Insurance, New India Assurance and National Insurance Company — have got the green signal from the Insurance Regulatory and Development Authority (Irda) to hike premiums on retail health plans. The state-owned insurers are in the process of filing redesigned products in terms of price and features.

Industry expects a price correction in the range of 25-30%.

"Since the outgo is more than the inflow, it is inevitable for the industry to go for a price correction, which is reasonable. It has been five years since we have kept the rates intact," said a senior official from a public sector insurance company.

Similarly, private players have taken their case to the regulator for revising premium rates for retail health plans. "Standalone health insurers have sufficiently priced their products and we will be looking at strengthening our distribution channels in the next fiscal," said Antony Jacob, CEO, Apollo Munich.

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In a bid to bring down competition among PSU insurers, the finance ministry had rolled out a roadmap for them last June.

The refiled products will be priced after considering various factors such as medical inflation and claims experiences. According to insurers, there will be hardly any product differentiation except for factors like claims reporting time, serving claims and so on.

Coming up with products having add-on coverages and pricing them sufficiently are the two strategies planned for next fiscal by PSU insurers.

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According to insurers, revision in premium rates are crucial for them next fiscal as payments on pre-existing diseases (PED) are due. If the rates are not revised, payment on PED may push them into red zone.

Private and public sector insurers cut down discounts and other benefits on group health plans last year. To reduce the loss ratios in health portfolio, a rational pricing has been done for this segment.

Currently loss ratio for health insurers stands at 70%, which they attempt to bring down as management expenses and other expenses are spiralling. Last month, health insurers witnessed a growth of 25% in terms of gross premium underwritten.

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