Life Insurers – Can Life Insurers Offer Health Plans?

Can Life Insurers Offer Health Plans

Currently, life insurers are barred from selling indemnity health plans (mediclaim policies). However, Irdai is likely to issue draft guidelines allowing life insurers to sell indemnity health plans. This is expected to enhance penetration of health insurance in India.

Life insurers are well-positioned to offer health plans because of their wider distribution network and underwriting expertise. They also have the ability to leverage technology and agile processes to better target different customer segments. The move will also make health insurance premiums more competitive.

But life insurers are also facing a number of disadvantages. For instance, allowing life insurers to sell health plans may increase the number of complaints from general insurers. Life insurers will also have to create a complete infrastructure for short-term health insurance products. This will be a significant challenge for insurers. Insurers will also need to develop an effective pricing strategy for health products. They will also have to offer a comprehensive claim settlement process.

Life insurers will also face competition from stand-alone health insurers, which have a network of hospitals and innovative products. Life insurers will also have to deal with shorter claim settlement periods.

In the past, life insurers focused mainly on mortality protection. However, concern over mortality risk has diminished in many markets. This has impacted demand for core products. As a result, life insurers have started to focus on health products. They are also offering financial services to their customers. Insurers have also started using social media sites like Facebook and LinkedIn to identify potential customers. Life insurers also use companies like APPS and ExamOne to gather medical information. Insurers also send paramedical professionals to their customers’ homes.

Life insurers can also leverage their extensive network of brokers and agents. In India, life insurers have over 2.5 million individual agents and about 500 corporate agents. Life insurers also have a large bancassurance channel. They can leverage this to offer more affordable premiums.

As an insurance regulator, Irdai has formed an internal committee to look into the feasibility of health insurance. The committee is co-chaired by LIC chairman MR Kumar and former New India Assurance chairman G Srinivasan. The committee has submitted a report on the feasibility of health products to Irdai.

The committee has recommended that life insurers be allowed to manufacture and distribute health plans. However, life insurers have to offer health plans that have a longevity of at least three years. They must also not offer unit-linked platforms.

While the move is expected to help enhance the penetration of health insurance in India, it will also have its downsides. Life insurers will have to reduce their premiums in order to remain competitive. Also, stand-alone health insurers will suffer due to the influx of life insurers offering health plans. Life insurers will also have to create an extensive network of hospitals to service their health insurance customers. The life insurance industry will also need to use technology to reach out to different customer segments.

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