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C. Shivkumar

BANGALORE, Dec. 30

MEDICLAIM policy premiums are to be hiked effective January 1 by about six per cent by the four public sector insurance companies — New India Assurance Company Ltd, National Insurance Company Ltd, United India Insurance Company Ltd and the Oriental Insurance Company Ltd.

Exactly one year ago, the insurance companies had hiked premiums on this account by 15 per cent. Currently, mediclaim premium ranges between Rs 1,236 for insurees under 35 years of age, Rs 1,344, up to 45 years and Rs 1,924 up to 55 years for an amount of Rs one lakh. Sources said that the current hike was being affected to factor in cost escalation as a result of appointment of third party administrators (TPAs) as mandated by the Insurance Regulatory and Development Authority (IRDA).

As per the guidelines of the IRDA, health insurance would be administered by the TPAs. Under these guidelines, insurance companies would expect to meet the cost of the TPA to the extent of 6 per cent of the premium collected.

In line with IRDA's directions, insurance companies have begun empanelment of TPAs. So far IRDA has licensed

about 20 TPAs. These TPAs are expected to tie-up with the hospitals.

For meeting claims of policyholders' payments to the hospitals by TPAs, insurance companies are to open a `claim float account' against a bank guarantee. Drawals from this account, in turn, are to be periodically replenished by the insurers.

However, sources said that some grey areas would still remain to be ironed out. These include areas where claims are rejected by the insurance companies, but have already been paid out by the TPAs out of the claim float account. Insurers have taken the stand that in the event of claims being rejected, the costs would have to be incurred by the TPAs themselves.

Each of these TPAs, are capitalised at Rs 1 crore each. They would be expected to operate call centres for 24 hours a day, throughout the year and attendant services both to the insurance company as well to customers. Appointment of TPAs is part of the programme of business process outsourcing spearheaded by the regulator to improve customer services and also help insurers to cut back on losses. Loss ratios in mediclaim are currently about 150 per cent. Against a premium collection of Rs 1,200 crore per annum, insurers are currently incurring claims to the extent of Rs 1,200 crore.

Accordingly, TPAs are expected to help in bringing down these losses to more acceptable levels, for which there are incentives packaged into the contractual arrangements. These incentives range between 10 and 20 per cent, for claims between 60 and 30 per cent of the premium collection.

High loss ratios have prompted the PSU insurers to bring down these ratios to more acceptable levels.

For curtailing these losses, TPAs have been offered incentive of 10 per cent for bringing down the claims ratios anywhere between 60 per cent and 90 per cent.

The incentive doubles if the ratios are brought down anywhere between 30 per cent and 60 per cent.

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