The insurance regulator IRDAI on Tuesday has formed a panel under G. Srinivasan, director, National Insurance Academy(NIA), to examine whether life insurers should be allowed sell indemnity based health insurance products. MR Kumar, chairman,Life Insurance Corporation(LIC), will be the co-chair of the panel.


Representations have been received from life insurance companies to allow them to offer indemnity products as well, said SureshMathur, executive director, IRDAI.


However, General Insurance Council, the official representative body of the general insurer, had been vehemently opposing the proposal.Even Kumar was not supportive of the idea of life insurers selling indemnity products.


“We have a lot of other products which we have to focus,’’ he had said while addressing a press conference recently.

The panel will examine feasibility and the business scope for life insurance companies to offer indemnity based health insurance products,extant statutory provisions that are applicable in this regard, and any other relevant matters relating to the issue.

According MN Sarma, secretary general, GI Council, it is not correct to say that all the life Insurance companies in India are demanding opportunity to sell indemnity based health insurance policies.


It is only a couple of pocket sized life insurance companies, sensing a big business opportunity in health insurance sector are clamouring for opening the indemnity based and short term health insurance business to them.They are basing their arguments mainly on a few points and unfortunately all of them are absolutely incorrect, said Sarma.


“The benefit oriented Critical illness covers are already within the business purview of life companies and they hardly marketed those covers. Many of us are not even aware about the availability of such covers, leave alone buying them,’’ he said.


Before they clamour for indemnity based health business let the life insurance industry better market what ever is already within their purview. Rampant misselling in life insurance industry.One major problem life insurance industry is besieged with is rampant misselling. It is time they first put their house in order before thinking of unchartered areas, cautioned Sarma..


“ Indemnity based health insurance business needs enormous claims handling capacity and that too under very tight time lines. Where is the experience and capability for these very small life companies that are clamouring for new avenues? The real big ones are fully conscious of their role, responsibility and limitations and are not keen on this,’’ he explained.


However, Vibha Padalkar, MD & CEO, HDFC Life Insurance Company is very vociferous in her demand to allow life insurance companies to sell indemnity based health products.


“Life insurers were earlier allowed to sell these products and were not allowed recently and should be allowed again,’’ she said.


Tarun Chugh, MD & CEO at Bajaj Allianz Life Insurance said,“ Allowing life insurers to sell indemnity products will help provide a host of benefits to customers. Given the low penetration of health insurance in the country, selling the value-packed products through life insurer’s strong distribution network – agents/partners/online – will help take the benefits of health insurance to many more customers across the country, enabling them to take care of the expenses arising from critical illness/hospitalization"


Some of the other members of the panel are- M N Sarma, secretary general Insurance Council, SN Bhattacharya, secretary general, Life Insurance Council, A V Girija Kumar, CMD, Oriental Insurance Company, Pdilkar,Ritesh Kumar, MD & CEO,HDFC Ergo General Insurance


Insurance Act, 1938 vide Insurance Laws (Amendment) Act 2015 recognised health insurance as a separate class of business. Historically health insurance is recognized as one of the important elements of health care and health insurance premiums have been registering a significant CAGR of around 20% in the preceding 10 years in India.


IRDAI (Health Insurance) Regulations 2016 allows Life Insurance Companies to offer Benefit based health insurance products only.