August 26, 2010

INDIA: Health insurance firms hit seniors

NEW DELHI / The Hindustan Times / Banking & Insurance / August 26, 2010

By Mahua Venkatesh, Hindustan Times

Till July this year, S K Batra, 67  (name changed) used to pay Rs 1,596 a year as premium for medical insurance cover of Rs 100,000. The firm he's insured with has now asked him to pay a premium of Rs 9,985-an increase of 526 per cent - to continue with the same policy even though he hasn't made any claims in the last three years.

Batra is not alone.

A number of insurance firms have begun demanding much-enhanced premiums to renew existing medical insurance policies. In some cases, such as Batra's, there's been more than a five-fold increase in premium sought.

Senior citizens, with their limited incomes, are affected the most.

Batra has charged his insurance company with breach of contract. But Insurance Regulatory and Development Authority (IRDA) chairman J Hari Narayan is unimpressed.

"The issue of pricing is being looked into and is expected to be resolved soon. A policy is valid for one year (until renewed), so there is no breach of contract if after a period of one year, it is re-priced," Hari Narayan told HT.

The Confederation of Association of Senior Citizens of Delhi (CASD) said their attempts to convince both Hari Narayan and Delhi Chief Minister Sheila Dikshit have proved futile.

"Raising premiums arbitrarily is effectively a breach of contract and must be addressed," said J R Gupta, CASD chairperson.

An IRDA official said the increased premium would be applicable for all policyholders, which includes elders too.

Insurance companies have already drawn flak for suspending cashless hospitalization facilities at certain super specialty hospitals, on the grounds that the hospitals overcharged. But the company spokesmen said it was wrong to link the two.

Insurance companies said it was wrong to link the rise in premia with the controversy over cashless hospitalisation.

"We have decided to reprice healthcare products for the first time in last four years to ensure continuity, sustainability and viability of these products," a spokesman of Reliance General Insurance said.

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