National Insurance Company Ltd plans to revise the prices of its health insurance products — subject to IRDA approval — to overcome the losses incurred in the segment.
The hike in price is likely to happen over the next couple of months, according to Mr N. S. R. Chandraprasad, Chairman and Managing Director, NIC.
Health insurance, which accounts for almost 27 per cent of the company's total business, has been making losses due to the high ‘combined ratio' and rise in medical costs, Mr Chandraprasad told
High ‘combined ratio'
Combined ratio is claims and operating expenses as a percentage of premium income. A ratio below 100 per cent indicate that the company is making underwriting profit while a ratio above 100 per cent would mean it is paying out more money in claims than what it is receiving from premiums.
“There is a case for price revision, and we are looking into it,” he said. NIC's premium for health insurance had not been revised since 2007.
“Medical costs have gone up and our ‘combined ratio' works out between 100-120 per cent, we are therefore making losses. So there is a need for price revision,” he pointed out.
NIC, the CMD said, was looking at the statistics and was conducting a study on the matter based on its prior experience. “We are conducting an in-house study based on the actuarial reports. We will then approach the IRDA. It might take five-to-six months for the price revision to come into force,” he said.