The Insurance Regulatory and Development Authority of India (IRDAI) is examining a proposal that seeks to allow customers to buy health insurance for a period of two-to-three years at one stroke in view of the demand for long-term health insurance and health savings policies.
According to IRDAI chairman TS Vijayan, while health insurance policies are currently being sold for a one-year term, the insurance regulator had earlier formed a panel to study health insurance, including long-term policies and also health savings accounts. The report is now being finalised and the authority will take a call based on this and take into consideration aspects like capital, solvency and claim settlement procedures, Vijayan said.
Meanwhile, following the hike in foreign direct investment limit to 49 per cent earlier this year to attract capital and help improve insurance penetration, six to seven insurance companies in both life and non-life segments have evinced interest in raising the stake of their foreign partners from the present 26 per cent, Vijayan said.
However, their interest is yet to translate into actual applications to the authority for permission, he said while declining to identify the companies. He said that there would be various stages of approval and the increase sought by the companies ranged from 36 per cent to 49 per cent from their current level of 26 per cent.
Speaking at a general insurance company ICICI Lombard event here, Vijayan stressed the need for increasing insurance penetration in India. In the US and other markets, about 80 per cent of the assets are covered by insurance while it is hardly about 7 per cent in India. Many have no option but to dip into their savings if something happens when there is no insurance to cover those risks, he said.
There are 54 life and general insurance companies in the country and there is scope for increasing insurance penetration further. On the other hand, non-life segment is growing with health insurance chipping in.
The insurance penetration is less than four per cent of country's GDP now. Digitisation of policies was a key to reduce distribution costs of insurance products and also aid in speedy settlement of claims, he said.
Meanwhile, Bhargav Dasgupta, managing director and chief executive officer, ICICI Lombard, said the initial results for long-term insurance launched for two-wheelers in April were encouraging and it had so far issued one lakh policies.
ICICI Lombard was the first to have launched the long-term insurance product for two or three years. For it, the long-term polices accounted for 40 per cent of the online two-wheeler insurance sales. India has 160 million two-wheelers but 60-70 per cent of those were not insured, he said.
