The government has told state-run general insurance companies not to offer discounts on loss-making group health insurance policies, in an attempt to stem losses of close to Rs 1,500 crore these firms face in FY12. The move could lead to a higher premium on such policies.
The finance ministry has told general insurance companies to revise the premium upwards or stop renewing group health insurance policies to prune their losses, said a finance ministry official who did not want to be named.
The combined ratio – claims paid plus other expenses as a percentage of premium earned – is close to 150% now. The combined loss of state-run firms, mainly on account of such discounts on policies, is estimated to be close to Rs 1,500 crore for FY12. This has prompted the government, the owner of these companies, to issue the directive to cut losses.
“Public sector companies are giving huge discounts to grab market share. So our efforts will be to bring discipline to the group health insurance segment. There should be an audit of individual portfolios so as to ensure that segment-wise, there is no loss,” said the official.
See on timesofindia.indiatimes.com