An 80 per cent jump in the health insurance premium of Karthik Shekhar’s aged parents came as a shocker to him. This is because no claim had been made, and also because he has to pick up the tab to cover his parents under the group health policy offered by his company.
To cope with the rising premium costs in group health, many companies are asking their employees to pay from their own pockets for parental cover.
V Jagannathan, Chairman and Managing Director of Star Health and Allied Insurance, said that corporates have been keeping parents out of the group health offered to their employees and their families over the last few years as claims on account of parents are inflating the premium costs.
He said that corporates have been asking employees to opt for a separate policy for parents. The main advantage for policyholders under group medi-claim is that pre-existing diseases are covered from day one, unlike individual health insurance policies, which have a waiting period of up to four years. However, for insurers, the selective coverage of parents has made group health insurance a loss-making proposition, with extremely high claim ratios.
Sanjay Datta, Chief - Underwriting and Claims, ICICI Lombard, said that the company insists on a minimum group size to provide a selective parental cover to employees of corporates.
However, according to a recent study by Marsh Insurance Brokers, 19 per cent of the organisations that had not covered employees’ parents last year have introduced it this year.
The study also reveals that 41 per cent of the organisations provided 100 per cent employer-sponsored cover in 2014-15, up from 35 per cent in 2012-13. Also, 76 per cent the organisations facilitate parental cover with employee contribution this year up from 54 per cent in 2012-13.
A senior official from a public sector general insurer said that given the lack of social security in India, the demand for a group health parental coverage will continue.
However, because of the cost impact, insurers and corporates will need to strike a balance to ensure that the premium costs do not pinch the employers, and insurers do not make huge losses.