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A shot-in-the-arm for insurance players
Feb 02, 2018
The Centre’s flagship National Health Protection Scheme to cover over 10 crore poor families providing coverage up to ₹5 lakh, will benefit public insurers and certain private insurance players active in mass health programmes.
The Budget also proposes to merge three public sector general insurance companies — National Insurance Company Ltd, United India Assurance Company Limited and Oriental India Insurance Company — which will be listed sebsequently. This will bring down costs, improve scale and usher in greater competition in the space.
While clarity on the contours of the National Health Protection Scheme is awaited, industry players feel that it will be on the lines of the existing Rashtriya Swasthya Bima Yojana (RSBY).
Contours of health scheme
Under this, a beneficiary pays a premium of ₹30 for a ₹30,000 cover. The balance (about ₹370) is borne by the Centre and the State together. Insurance players will participate in the tender process for each state and the lowest bid is awarded the contract.
If the Centre’s new scheme is on similar lines, then a beneficiary may have to pay ₹500 for a ₹5 lakh cover.
The premium may work out cheaper as the probability of lower income households using up the full cover may be less. However, for players active in this space, this opens up big opportunity as the scheme gathers scale.
What for players
For public insurance players such as New India Assurance, United India, National and Oriental National and select private insurance players such as Reliance General, the Centre’s new health scheme offers immense opportunity. For Reliance General mass health forms about 44 per cent of total health GDPI (Gross Direct Premium Income).
That said, vagaries in the mass health business and unattractive pricing has seen other private players, turn cautious to this segment. Hence not all players may find it viable to bid for the Centre’s mega health protection scheme. For instance, in FY17 Reliance General was not appointed to provide policies under RSBY for the state of Kerala which impacted growth; overall health GDPI fell by a sharp 36 per cent in FY17.
Also sustainable benefits will flow in only when some of the existing issues are ironed out.
First, there must be smooth flow of subsidy without undue delay, both from the Centre and the State.
Next, claims settlement can be smoother only if more number of hospitals are empanelled which, given the segment these mass health programmes cater to, will be long-drawn. Of the ₹1,000 crore budgeted allocation to RSBY in FY-18, only ₹470 crore was used, according to revised estimates, clearly implying that scaling up such schemes will take time.
For FY-19, the Centre has allocated ₹2,000 crore for RSBY.
Sound move
New India Assurance was listed last year. But steep valuations and weak operating metrics have seen the stock trade way below its listing price of ₹800 (now at ₹667).
The Budget proposing to merge the remaining three public insurers is a sound move, as it will help them increase scale and cut costs.
In comparison to private players, public insurers have weak financials. Each of the three public insurers proposed to be merged have a steep combined ratio of 134-148 per cent (FY17). Combined ratio measures the incurred losses and expenses in relation to the total premiums. For top private general insurance players, such as ICICI Lombard, Bajaj Allianz and HDFC Ergo combined ratio is a much lower 97-104 per cent.
Source: The Hindu Business Line
Budget 2018: Budget 2018: Health insurance benefit for senior citizens raised to Rs 50,000
Feb 01, 2018
Providing relief to senior citizens, Finance Minister Arun Jaitley today raised the Section 80D limit of the Income-tax Act relating to deduction in respect of health insurance premium to Rs 50,000 from the earlier 30,000.
The section provides medical insurance or preventive health check-up of a senior citizen, deduction of Rs 30000.
It is proposed to amend the said section so as to provide that the deduction of fifty thousand rupees in aggregate shall be allowed to senior citizens in respect of medical insurance or preventive health check-up or medical expenditure.
It is further proposed to provide that where an amount is paid in lump sum in the previous year to effect or to keep in force an insurance on the health of a person specified therein for more than a year, then, subject to the provisions of this section, there shall be allowed for each of the relevant previous years, a deduction equal to the appropriate fraction of the amount.
It is also proposed to define the expressions "appropriate fraction" and"relevant previous years". These amendments will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-2020 and subsequent years.
The Bill seeks to amend section 80DDB of the Income-tax Act relating to deduction in respect of medical treatment, etc.
As per provisions under the said section a deduction is available to an individual and Hindu undivided family with regard to amount paid for medical treatment of specified diseases in respect of very senior citizen upto Rs 80000 and in case of senior citizens Rs 60000 subject to other conditions.
It is proposed to amend the said section so as to increase the existing limit of deduction available to an individual and Hindu undivided family with regard to amount paid for medical treatment of specified diseases in respect of senior citizen shall be Rs 1 lakh.
This amendment will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-2020 and subsequent years.
Budget 2018: Govt to merge 3 insurance companies and launch IPO
Feb 01, 2018
Mumbai: Three public sector insurance companies—The Oriental Insurance Co. Ltd, National Insurance Co. Ltd, and United India Insurance Co. Ltd— will be merged into a single insurance company and listed on the bourses, finance minister Arun Jaitley announced in the Union Budget on Thursday.
The merging of the three state-run insurers will lead to the creation of a mammoth organization, and will be a key part of the government’s divestment target of Rs80,000 crore set for fiscal year 2018-19.
“It is a very positive move. It is the government’s resolve that CPSEs achieve scale, heft and strengthen their balance sheets,” said Ajay Bodke, chief executive and chief portfolio manager at brokerage Prabhudas Lilladher Pvt. Ltd.
“We have seen consolidation happening in oil and gas, and the banking sector. It is just a continuation of that trend in the insurance sector,” Bodke added.
The government has initiated strategic disinvestment in 24 public sector undertakings (PSUs), including flag carrier Air India.
In 2017, the government listed two state-owned insurers—New India Assurance Company Ltd and General Insurance Corporation of India—on 13 November and 25 October, respectively. These stocks are down 17.50% and 16.67% respectively from their offer price.
To be sure, analysts had flagged the stretched valuations of these initial public offerings, and the shares slid post listing.
The Indian equity market’s largest institutional investor, Life Insurance Corporation of India (LIC), had bought 8.42% and 8.67% stake respectively in General Insurance Corp. and New India Assurance Co. during their IPOs.
Budget 2018: Jaitley announces world's largest health insurance program
Feb 01, 2018
New Delhi [India], Feb 1 (ANI): Finance Minister Arun Jaitley announced two new measures under the government's Ayushman Bharat scheme, which are expected to take healthcare to greater heights.
The two measures are as below:
1. Rs 1,200 crores will be allocated towards setting up health and wellness centers in India, which will provide comprehensive healthcare, maternal and child care, free drugs and diagnostics to the poor. The government has also invited private sector contribution towards the same.
2. In a bid to increase the insurance cover for the poor, the government, under the flagship National Health Protection Scheme announced that a sum of upto Rs 5,00,000 will be provided to 10 crore poor families in India per year, which is expected to reach around 50 crore beneficiaries, and will be used for secondary and tertiary care hospitalisation.
Apart from the above, Jaitley announced that a sum of Rs 600 crore will be provided for nutritional support to tuberculosis patients at a rate of Rs 500 per month. Additionally, 24 new government medical colleges and hospitals will be set up by upgrading existing district hospitals, thereby moving towards achieving universal health coverage.
These measures, Jaitley believes, will be crucial to building an efficient, productive New India, and would create additional jobs, especially for women.
He further claimed that schemes such as Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana will now expand to cover the lower strata of the society. (ANI)
Non-life insurers join hands to fight fraud
Jan 25, 2018
To curtail the rising number of fraudulent claims in health and motor business, non-life insurance companies have come together to identify the hotbeds of frauds. The association of non-life insurers called General Insurance Council has hired United States headquartered data analytics firm LexisNexis Risk Solutions to identify the pockets and patterns of frauds. The fraud study will encompass the premium and claims data of individuals as well as take into account other stakeholders such as hospitals, laboratories, diagnostics, pharmacies and motor garages.
Insurers are about to complete submitting their last two years data of health and motor insurance policies as well as of claims. The first set of data comprises of over 75 million motor insurance policies and 8 million motor insurance claims while the health insurance data consists of more than 10 million health insurance policies.
R Chandrasekaran, secretary general of the General Insurance Council told FC, “Around 10-15 per cent of the claims settled in value terms for motor and health insurance are frauds. We wanted to address the various fraud risks. It may be hard fraud, which is done deliberately, or soft frauds such as exaggerating an insurance claim amount. While most hard frauds get rejected by insurers, some may get pass through.”
“We are using a two pronged strategy to combat frauds. We have created a portal called fraudriskmitigation (frmp.com) for all insurers. Each member insurance company has to enter their respective cases identified as fraud and suspected fraud cases into the portal. There are various categories of fraudsters mentioned in the database such as insured individuals, surveyors, agents, hospitals, laboratories and diagnostics and garages. So far there has been 15,000 fraud cases reported in a year. Sharing information helped insurers identify some fraudsters,” added Chandrasekaran.
“We have also selected LexisNexis for a fraud analytics study. It is a pilot project and they will try to identify any susceptible frauds based on 100 data elements. If they find a fraud they will probe it further. So far 10 insurance companies have submitted two years data. If we find something useful in it then will go in for a full-fledged fraud analytics project with all companies submitting their data,” added Chandrasekaran.
Shivakumar Shankar, MD, LexisNexis Risk Solutions, India told FC, “We look into patterns of frauds that target policy holder as well as provider (garages and healthcare provider) frauds. This will be both frauds in claims as well as underwriting. The study is in progress and it is early to talk of results but we expect some interesting findings.
Source: mydigitalfc.com
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