Life insurers can soon offer health insurance policy

Chennai: After banning life insurers from selling indemnity-based health policies a few years back, Insurance Regulatory and Development Authority of India is now examining the feasibility of allowing them again.

IRDAI (Health Insurance) Regulations 2016 allows Life Insurance Companies to offer benefit-based health insurance products only. Representations have been received from life insurance companies to allow them to offer indemnity products as well, the regulator said.

Indemnity-based health plans are insurance policies in which the insured is reimbursed the actual expense incurred during hospitalisation up to the total sum insured under the policy.

Historically Health insurance is recognised as one of the important elements of health care and health insurance premiums have been registering a significant CAGR of around 20 per cent in the preceding 10 years in India. It is in this context that IRDAI is making a feasibility study.

A few years back, life insurers had started offering such plans. However, in July 2016, IRDAI had banned them from offering them.

According to industry, IRDAI had found that indemnity cover was a service more than a product and did not want life insurers to sell them as their core competency is not providing health cover.  

Now IRDAI has formed a committee, which will look into feasibility and the business scope for life insurance companies to offer indemnity based health insurance products and extant statutory provisions that are applicable in this regard.  The Committee shall submit its recommendations within two months.

According to S. Prakash, MD of Star Health and Allied Insurance and a member of the committee, this is a good initiative for the regulator. “We will have to study the pros and cons of this suggestion before providing recommendation to the regulator,” he said.