Health insurance business loss for government companies; A cumulative loss of Rs 26,364 crore in five years

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New Delhi :Health insurance business for all the four general insurance companies in the public sector has been unprofitable. The report of the Comptroller and Accountant General of the country, or ‘CAG’, has revealed that the combined loss of these four companies on this front has been close to Rs 26,364 crore in the last five years due to the high volume of claims filed especially in group insurance schemes.

Due to losses in the health insurance business of government insurance companies, their profits in other businesses have either decreased or their overall losses have increased, said a report submitted by the CAG in Parliament. New India Assurance Company Limited, United India Insurance Company Limited, Oriental Insurance Company Limited and National Insurance Company Limited are the four public sector general insurance companies reporting losses. These four state-owned companies collected a total of Rs 1,16,551 crore in insurance premiums during the five years from FY 2016-17 to 2020-21. After motor insurance business, health insurance is the second largest business segment of these insurance companies. However, the market share of government insurance companies in the health insurance business has also been steadily declining compared to private insurance companies and single health insurance companies, the report said.

Irregularities and Violations

The Union Finance Ministry has laid down the guidelines for underwriting of group insurance schemes in September 2012 and subsequently amended in May 2013, according to which the aggregate ratio of group insurance policies should not exceed 95 per cent and for group insurance policies which include cross-subsidy, the aggregate ratio should not exceed 100 per cent. Should not be more than percent.

However, the finance ministry’s guidelines were not followed by the government insurance companies and the combined ratio of the group health insurance segment reported by them has gone up to 125 to 165 per cent of the company’s health insurance business, observed the CAG report. This has also led to errors like settlement of claims more than once, compensation over and above the sum assured, disregard of waiting period clause for certain diseases, non-implementation of co-payment clause, violation of maximum (capag) limits for certain diseases. Irregularities like wrong assessment of admissible claim amount, non-payment of interest on delayed settlement have also been found.

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