IRDA is considering a proposal to allow five year policies with the hope to improve the health portfolio of insurance companies as well as to ease the process of renewal of the policies.
General and standalone health insurance companies have been asking IRDA for permission to offer longer-term products as the existing policies are small ticket items where premium ranges from Rs 5000 to Rs 20000 a policy. Under the present health insurance regulations, general insurance companies can offer renewals only up to three years. Most policies, however, are for a year.
A senior official of the Insurance Regulatory and Development Authority said, “We are working on the underwriting and pricing parameters for it. A sub group has already been formed to work on the proposal.”
According to V. Jagannathan, Chairman and Managing Director, Star Health Insurance, “The advantage in having a longer term policy is that the commitment of the insurer is locked in for five years. However, for health insurance companies most claims come in the third or fourth year, so we will have to study the pricing mechanism before coming out with such policies.”
