Life insurers keen to have a 2nd go at pure-play health segment
Mumbai: With the regulator IRDAI hinting at allowing life insurers to enter the lucrative health segment, the industry led by the leader LIC and its large private sector peers are keen to have a second go in the indemnity-based health space.
The life sector players such as LIC, private players like ICICI Prudential Life, HDFC Life, and Bajaj Allianz Life, among others, are unanimous in saying that all of them were offering health insurance before the sectoral regulator Irdai in 2016 abruptly asked them to stop selling new pure-play mediclaim health insurance policies.
And so there is nothing that prevents them from re-entering the segment. Also, all of them continue to offer non-indemnity-based health policies even now.
When contacted, Life Insurance Corporation said, they are actively reviewing the proposal from the regulator as health is closely aligned to their core business of life insurance and that there is nothing new in it for them as they have been in it for decades and also continue to offer a host of non-indemnity products.
"We're already offering a lot of long-term health protection and guaranteed health products. We are evaluating the suggestion that the regulator has made," chairman MR Kumar said.
The chairman further said he does not think it will be difficult for them to offer pure-play health policies as they are already offering some of the health products in the fixed benefits segments.
Mediclaim policies, which are indemnity-based health plans and are annually renewed or sold with one-year validity are the best-selling health plans in the country. However, in 2016 the Irdai asked life insurers to stop hawking such plans. Life insurers since then have been allowed to offer only fixed benefit health plans.
Recently, Irdai chairman Debasish Panda said it was time life insurers re-enter the health vertical and mandated the industry to ensure that every citizen has a health policy by 2030. He also tasked life insurers to double their business by 2030 and one way to achieve the first objective is to allow more players into the segment.
However, later Panda clarified that no decision was made and that the regulator is evaluating the pros and cons of allowing life insurers to sell health insurance.
Currently, there are 24.50 lakh life insurance agents while general and health insurers collectively employ only around 3.60 lakh agents. If life insurers are allowed into health insurance, the number of agents will increase by 600 per cent, thereby increasing health insurance penetration significantly.
Industry watchers support the move saying globally life and health insurance are better aligned with life players and the move will help widen the reach of both. Moreover, life insurers already have the necessary infrastructure for distribution and policy servicing.
They also argue that though regulations vary from country to country, composite insurance companies exist in many countries wherein, life insurers sell both life and general insurance products along with
health covers.
