Health plans

Life insurance: Can life insurers offer health plans? Irdai ready to take a call

Mumbai: Six years after banning life insurance companies from offering health insurance products, the Insurance Regulatory and Development Authority of India (Irdai) plans to allow it again as new president reviews policies long overdue changes to improve insurance penetration in the country.

Allowing life insurance companies to offer health plans is one of the big moves ahead of Irdai chairman Debasish Panda, who has pledged to simplify regulations and capital requirements and to introduce new products to expand insurance penetration in the country.

“Allowing life insurance companies to manufacture and distribute health plans has been a bone of contention in the industry because general and stand-alone health insurance companies clearly oppose it. But a decision will have to be made. taken especially in committee to assess this feasibility more than two years ago submitted its report, ”said the CEO of a life insurance company.

The nine-member committee co-chaired by LIC President Mr. Kumar and former

Chairman G Srinivasan was formed in February 2020 to examine the feasibility and scope for life insurance companies to offer indemnity-based health plans.

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“The committee had sent out its recommendation over a year and a half ago. But since there were more life insurance members on the committee, all it could suggest was to allow companies to life insurance to be distributors of health plans, although the request has always been to allow life insurers to offer health because it’s a natural combination rather than bludgeoning it with insurance products general as the automobile,” said a member of the committee.

Industry captains say new head at Irdai with recent public listing of

could change the status quo in the industry.

“Irdai’s new chairman wants things to happen. But more importantly, since now LIC is listed, it’s in the government’s interest to make sure it’s profitable, and that’s one way to do that. Allowing LIC to offer healthcare will open up a whole new segment so the key is with the government It’s also important to see what LIC’s perspective is on this as previously they were reluctant to venture into new areas as they were always under pressure to fulfill the mandate of the government,” said the CEO quoted above.

Allowing life insurers to offer health plans will hurt the fortunes of stand-alone health insurers and general insurance companies. The regulator will also have to take their grievances into account, especially at a time when the notoriety of these products is post-Covid.

A National Insurance Academy research paper released earlier this month said health insurance premium collected rose to ₹73,330 crore in FY22 from ₹58,572 crore a year ago. year and growing at a compound annual growth rate of 24%.

“This is a proposal that is in the works but no decision has been made yet. There are other issues that are also under consideration, so it’s not as if this decision is the next in line,” a senior Irdai official said. . The regulator could not immediately be reached for comment.

Among the reforms proposed in life insurance are the standardization of products and the simplification of regulations, more specifically on the calculation of management fees for these companies.

“But this decision is probably more important because it has ramifications throughout the insurance industry,” the CEO said above.

It is unclear whether Irdai would like to take a fresh look at health insurance or will rely on already existing submissions from previous commissions in this regard.