Private Business houses owning own Insurance companies bought group health insurance policies from PSU’s

It is interesting to note from Government auditor CAG that public sector insurance companies have incurred huge losses on group mediclaim policies because of

Their lackluster attitude in adopting a standard rate for medical services.

According to the report during the three years (2006-09), the four PSUs suffered a loss of Rest 417 core from individual portfolio and Rest 622.49 core from group policies.

The CAG said that the premium earned by the four insurance companies nearly tripled to Rest 3,696 core in 2008-09, from Rest 1,321 core in 2004-05. It also said that some of the big corporate houses, despite having their own group company in this sector took policies with PSU insurers.

The report said that against Rest 11.74 core premium collected from IT firm TCS; claims paid only for domiciliary hospitalization were Rs 71.64 crore. "Despite its own group company being in the health insurance business, TCS, Tata Motors and Tata Power went for group policies with PSU insurers," it said.

The insures should have increased the premium of the policies when they come up for renewal every year, but "the four insurance companies did not do this in respect of group policies resulting in a loss of premium of Rs 329.68 crore for three years ended March 31, 2009," it said.

The report said the group policy holders were given additional benefits such as maternity, baby day one care, preexisting diseases among others, without charging additional premium. The CAG also pulled up the insurance companies for failing to monitor the quality of services offered by the TPAs to the insured, which in turn impacted customer satisfaction.

Let us see what will be the impact of this report.
Will it result in hardening of premium rates? Yes definitely this is going to happen.

All PSU's will be using common TPA

We had covered in the past that KPMG was appointed by 4 PSU's to advise them about a common TPA with a view to protect their interests.

Yes it is going to happen.It may be 1 TPA to be selected by all of them so that they can give good service to them ( 4 PSu's).As it will be a good business therefore naturally all the instructions of PSU's will be followed.

Let us wait for many things to happen.With big hospitals being deleted - Is it going to be market segmentation where HNI's will start moving to private companies like Max Bupa /Apollo Munich .