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Medical costs: Customers seek higher cover

August 31, 2013

Medical costs are going through the roof, as is apparent with medical inflation hovering in double digit (18%). To insure themselves against the expenses in medical emergencies, more people are going for higher mediclaim covers when their policies are up for renewal. Also, many customers are utilizing their NCB (no claim bonus, a benefit for those who have not claimed insurance during the preceding year) to enhance health cover limits.

“We are seeing cases wherein customers are opting for higher sum insured at the time of renewal. This is especially more pronounced when the customer hits a certain age bracket (35, 45 or 50). The additional premium towards the enhanced coverage either comes out of the non claim bonus or from the insured’s own pocket,” CMD of New India Assurance, G Srinivasan, said. The medical insurance segment accounts for 27% of the company’s gross written premiums.

In the case of United India Insurance, the benefit for not claiming anything the previous year is passed on in the form of higher sum insured in the second year, the premium remaining the same. “Depending on the bonus, the sum insured can increase by 5% in the second year and 10% in the third year,” CMD of United India Insurance, Milind Kharatsaid. Around 27% of United India’s premiums come from the health segment.

Insurers also state that the need for enhanced coverage is more pronounced in those categories where customers have opted for the basic cover (Rs 1.5 to 2 lakh) and want to move into the next bracket. “There continues to be a rise in cost of medical procedures across the board. Customers who have a basic cover are on the lookout for an enhanced cover at the time of renewal,” Dr Renuka Kanvinde, assistant vice-president, health insurance, Bajaj Allianz General Insurance said.

“While longevity is on the rise, every passing year also bring in some additional health risks and increasingly, customers are very open towards higher coverage limits at the time of renewal,” CEO of insurance advisory firm Optima Insurance Brokers, Rahul Aggarwal said.

It’s not only nationalized insurers and private ones who are experiencing this trend. Even stand alone health insurance providers have seen cases wherein customers have utilized their non claim bonus towards a higher sum insured for the next year. “Customers can add the bonus to the sum insured and thereby enhance coverage provided they have no previous claim or illness,” CEO of Star Health and Allied Insurance said. He added that usage of such bonus can see the sum insured rise by 10% during the renewal year and 20% the following year, provided there is no previous claim or illnesses in each of the two years.

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