June 19, 2021

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Life insurers Approached IRDAI to Sell Indemnity-Based Health Insurance

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LIC companies approached the IRDAI – Insurance Regulatory and Development Authority of India for permission to start selling indemnity-based health insurance products.

There is the low penetration of health insurance in the country, and there is enough scope and requirement for sale of more of these products.
Life insurance companies sell protection for critical diseases like cancer cover. They have a huge distribution network across the country, which can be benficial to sell health insurance.

In 2016, the IRDAI had issued new health insurance regulations, in which it had barred life insurers from selling indemnity-based health insurance products, either as an individual or a group policy. It also barred from offering single premium health insurance products under the unit-linked platform.

IRDAI had allowed only general insurers and health insurers to provide the individual health products with a minimum tenure of one year and maximum tenure of three years, and the premium remains unchanged for the tenure.

Life insurance companies cannot offer comprehensive protection to a customer who are looking for both term insurance and health insurance and they have to go for another company.

Life insurers has to tie up with a general or health insurance company to provide health plus life products.

According to some sources, life insurance companies have proposed reviewing the current bar to IRDAI Chairman Subhash Chandra Khuntia, although the regulator is yet to take a view on it.

The general insurance companies are not happy with the recommendation as they are of the view that they have better wherewithal to not only sell insurance but also process and settle claims.

The IRDAI data says, that the penetration of non-life insurance sector in the country stood at 0.93 per cent in 2017, against 2.76 per cent for life insurance.

The government and the insurers are hoping that Ayushman Bharat will increase awareness and penetration of health insurance.