Insurance law treats health as separate niche

Allows portability; IRDA norms soon

Insurance law treats health as separate niche

The new insurance law passed by Parliament this week discourages non-serious players by retaining capital requirements for health insurers at the level of Rs 100 crore. It also paves the way for promotion of health insurance as a separate segment.

Earlier, health insurance was considered a part of the non-life insurance sector, which is largely into insuring assets, whereas health insurance is for humans. The Insurance Laws (Amendment) Bill, 2015, defines ‘health insurance business’ inclusive of travel and personal accident cover.

Consequently, the new law makes it imperative for the Insurance Regulatory and Development Authority (Irda) to come up with revised regulations governing non-life and health insurance sectors. Irda has said that it will come up with revised regulations in the next three months. It has also said that the earlier regulations on the health sector will be given a re-look and changes will be made wherever required.

The healthcare insurance market is still very nascent in India. Some estimates foresee a 15 per cent growth in private healthcare insurance market in the country boosted by  emerging middle class with an increasing disposable income.

Premium exemption up

The Narendra Modi-led government has, however, said that universal health is one of its primary motives. The Union Budget 2015-16 presented in Parliament last fortnight has announced a substantial increase in health insurance premium exemption under section 80D.

It has been raised to 25,000 annually from Rs 15,000, a jump of 67 per cent. The limit for medical cover too has been raised substantially. An individual can now buy medical covers of up to Rs 50 lakh.

The step will partly protect an individual who buys health cover from rising inflation. A recent survey by Towers and Watson said that India has the highest rate of medical inflation in the world. Medical inflation runs higher than salary increases and general inflation.

On the regulatory side, the policy change is that an individual has the freedom to change insurance provider. The portability of insurance provider has been introduced in the country. With changes in the way India looked at the health insurance sector, a whole host of insurers, including Max Bupa, Apollo Munich, Cigna TTK, and Star Health, have said they are hopeful of increasing their presence in the Indian market soon.

Health is Wealth

Capital requirements for health insurers retained at Rs 100 crore
The law defines ‘health insurance business’ inclusive of travel and personal accident cover
Health insurance was considered a part of the non-life insurance
Estimates foresee a 15 per cent growth in private healthcare insurance market



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