LIC to file its first health insurance plan this month

MUMBAI: Life Insurance Corporation of India (LIC) will lodge its first long-term health insurance plan with the insurance regulator, IRDA, this month, said the insurance major’s executive director-health insurance DD Singh. The product will have elements of a unit-linked insurance plan and a hospital cash policy.

The corporation has already put in place the support systems for the health insurance plan. It has tied up with eight third-party administrators (TPAs) to manage claims under the policy. The policy will have a health savings element, which will in all likelihood be on a unit-linked platform. The policy will also have a ‘floater’ option — a facility whereby a single sum insured can be shared by an entire family.

Unlike the general insurance companies, LIC would not use the TPAs to settle claims. For claims settlement, the corporation has tied up with Syndicate Bank, Axis Bank and Bank of America. The corporation is also in talks with Munich Re to provide reinsurance support for its first health product.

For distribution of the health insurance plans, the corporation is looking to tap the ten lakh odd agents who are presently selling its life insurance plans.

The government is considering carving out LIC’s health insurance division into a separate company, given the health insurance industry’s growth potential. There are already two standalone health insurance companies — Star Health and Allied Insurance and Apollo DKV Health Insurance.

“Our objective is to keep costs as low as possible. We will be issuing a single policy for the long-term. We will also be having a small team of around 30 people,” said Mr Singh.

A key difference in the structuring of the health insurance policy will be the fact that premium rates would be progressive, with the cost of insurance going up as the insured ages. In almost all life insurance policies, premiums remain constant throughout the term.

The other difference is that the utilisation of the claim benefits will be decided by the insured. LIC will release the funds to the policyholder through its banking partners.

Life insurance companies were allowed to sell standalone health insurance products a year ago to increase the penetration of health insurance in the country. In the private sector, ICICI Prudential and Bajaj
Allianz Life Insurance have launched their health insurance products.