The Insurance Regulatory and Development Authority of India (IRDAI) has proposed to rationalize and standardize the administration of group health insurance. These types of policies cater to both formal and informal sectors. You will get coverage at a moderate cost if operated prudently. As per the IRDAI draft, the premium computation may include risk and other factors. Continue reading this page to find more about the IRDAI draft on group health insurance regulations.
Pricing of Group Health Insurance
As per the IRDAI draft, the premium must be computed on the following factors –
Morbidity Experience by Gender
A chronic or long-lasting disease is termed a morbid condition. So, the proposal must disclose the total number of group members suffering from any morbid diseases. Because if it is not, the insured members can’t file a claim against the same. The company needs to provide the details of such members who are experiencing morbid diseases. Based on that, the premium will be decided for your group policy.
Age Group Helps Determine Group Health Insurance Premiums
The age of the insured member plays an important role in determining the premium amount. The older the insured member, the higher the health risks the individual will have. Old people are more prone to diseases compared to younger people. So, if the ratio of old people is high in your company, the premium may increase.
The job your employees perform daily helps evaluate the premium amount. An employee who is a labourer is likely to face injuries more than the ones working in an office.
How Does the Headcount Affect Group Health Insurance Premiums?
More people in a group, more the premium amount. Why? Because in such a case, the offered sum insured is high as well. And a high sum insured leads to more premium. But unlike other health plans, the insured doesn’t need to pay the premium as the employer will take care of it.
The total expenses the employer does in a financial year. Because the higher the expenses, the more difficult it will be for him/her to pay the health insurance premium.
High Termination Could Lead to Group Health Insurance Application Rejections
It is the ratio of the employees who quit or get fired from the company. If the ratio is high, it could be troublesome for the company in getting a group health insurance policy. A high termination rate means instability in the workplace leading to operational losses, which could further hurt regular premium payments to the insurer by companies.
The yearly profit of the company shows its status in the market. If the margins are impressive, the premium could be low.
New Norms Proposed in Group Health Insurance Plan
The following norms should apply if the IRDAI draft is approved –
- Insurers need to explain the rates and terms if called upon by the group/company
- Named beneficiaries will get ID cards for cashless services, wherever applicable
- The master policyholder is the person to whom the insurer will issue the policy
- The insurer will issue unnamed policies, provided the group contains non-tamperable registers, records or procedures for the insured members’ identification.
Note – The regulator is open to suggestions and comments on the draft from stakeholders by May 13, 2022.