Group health insurance premiums are likely to see an 15-18 percent increase in 2019 on account of a rise in health inflation. Sources told Moneycontrol that several corporate accounts have seen an increase in premiums from January 1 while a few others will see a rise from April 1 onwards.
"We had no other option but to raise premium for the products. Corporates can get the employees to opt for a co-pay element so that the burden of the increased prices can be reduced," said a senior official at a large private sector insurance firm.
Co-pay is a standard practice in several corporate houses wherein an individual employee pays a part of the insurance premium to ensure continued coverage for themselves and their families. Usually, parents or spouse and child are covered by the corporate health insurance space.
Medical inflation is said to be in the range of 18-24 percent in the country due to a rise in costs, including those of medicines, medical equipment and hospitalisation. This has led to a direct impact on the insurance costs for companies.
The premiums under group health plans are significantly lower than those of individual health insurance products. This is because of the number of people getting covered under the master plan and also because the incidence of claims would be lower. Top-ups are also available on the base policy to individual employees at an additional cost.
The chief executive of a standalone health insurer said that many insurers are still offering discounts to corporate clients, which makes it unviable for them to participate in such businesses.
"To keep costs sustainable and keep claims expenses under check, a price rise is inevitable," he said.
Group health insurance, which involves insuring a group of individuals, usually part of the same organisation, has been a bleeding portfolio since certain insurers were involved in heavy discounting to retain clients. Here, the loss ratios were almost 140 percent, which meant for every Rs 100 collected as premium, Rs 140 were paid out as claims.
A report by Mercer Marsh Benefits said that increased non-communicable diseases will increase employer-sponsored healthcare costs over the next three years. These diseases include heart disease, cancers, stroke, chronic respiratory diseases, diabetes, Alzheimer's disease, mental illness and kidney diseases.