MUMBAI : India’s insurance regulator is planning to allow life insurance companies to offer full-fledged health insurance policies, two people with direct knowledge of the plans said, in a move that will likely reduce premiums and increase access to affordable health cover.
An internal committee of the Insurance Regulatory and Development Authority of India (Irdai) has been discussing the proposal over the past few weeks, and the regulator is likely to issue draft guidelines allowing life insurers to sell indemnity health insurance products (commonly known as mediclaim policies), said the two people, both of whom spoke on the condition of anonymity since the rules are yet to be formalized. “Life insurance companies inherently get more customers than health insurers in the retail space, which will help them get more people covered under medical insurance at more affordable premiums," one of the two people cited above said.
According to India’s Economic Survey 2021-22, life insurance penetration in the country stood at 3.2% in 2020, rising from 2.82% in 2019.
However, the penetration of overall non-life insurance (which includes health insurance, motor insurance, fire and industrial insurance) is abysmally low at 1%, way behind the global average of 4.1%. “With captive customers, larger distribution networks and higher disposable cash, life insurers are well-positioned to offer health insurance products to a larger population at better rates," said the second person.