New Delhi: Insurance behemoth Life Insurance Corporation (LIC) is eyeing to re-enter the mediclaim segment as and when the regulator provides clarity on the issue, the chairman has said.
Sharing its plan to enter the segment, LIC chairman M R Kumar told news agency PTI, "We are already doing a lot of long-term health protection and guaranteed health products. And we are evaluating the suggestion that the regulator Irdai made recently."
Kumar hinted at the development during its earnings call over the weekend. The chairman further added, "I don't think it will be difficult for us as we already offer some of the health products."
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What are mediclaim policies?
Mediclaim policies are indemnity-based health plans which are counted as the best-selling health insurance products. However, in 2016, the Insurance Regulatory and Development Authority of India (Irdai) had asked life insurers to withdraw indemnity-based health plans from the market. Since then, life insurers are allowed to offer only fixed benefit health plans.
Under indemnity-based health insurance plans, the insurer provides reimbursement for the money spent on medical treatment up to the sum insured. While fixed benefit health insurance plans offer you a fixed amount out of the sum insured for pre-determined illnesses or medical conditions.
What does IRDA say?
Irdai Chairman Debasish Panda had recently hinted that it was time life insurers re-entered the health vertical as he had given a mandate to the industry to ensure that every citizen has a health insurance policy by 2030, reported PTI.
However, Panda went on to clarify that the regulator was only evaluating the pros and cons of allowing life insurers to sell health insurance policies and that no decision has been taken yet.
Life insurers in most markets globally sell health policies.
Currently, there are 24.50 lakh life insurance agents in the country, while the there are only 3.60 lakh agents in the general and health insurance category. If life insurers are allowed into the health insurance sector, the number of agents will jump by 600 percent, increasing health insurance penetration significantly in the country.
What are difficulties in the proposal?
Some industry experts point out at difficulties in the proposal saying for instance, the claims department in a life insurer is oriented towards payment of the claim on death or policy maturity but health insurance claims are logged by around 7 per cent of the insured during the year.
While others argue that life insurers already have the necessary infrastructure in terms of distribution and policy servicing to offer these plans. They believe that this is an opportunity to further enhance the experience from what it was before 2016 when these policies were being offered by life insurers.
Even as regulations differ in each country, the concept of composite insurance companies exists in some countries wherein life insurance companies are allowed to sell both life and general insurance products.