Public sector insurers are on course to increase medical insurance premium with Oriental Insurance saying that it will end the six–year freeze and raise annual costs by around 15% in the wake of higher costs.

Other state–run companies, which sell health insurance under the Mediclaim brand, too, are expected to follow suit, especially after the government prodded them to ensure that they run profitable businesses.

The four companies–New India Assurance, National and United India apart from Oriental Insurance––have 60% market share. New India had launched a new policy a few years ago.

"There has been no revision (in premium) for five to six years and we will soon file the new products (with the rates) with the regulator," Oriental Insurance chairman and MD A K Saxena said. He indicated that the average increase for individuals would be to the tune of 15%, while for group insurance the hike could be steeper.

Executives with public sector companies said the premium was fixed over five years ago based on the costs prevailing then. “Medical costs have just shot up, we need to adjust to the new reality since we are losing money," said a company executive. Sources said on an average public sector companies were paying over Rs 100 as claims and other charges for every Rs 100 they collected as premium. In case of senior citizens, the outgo was as high as Rs 150, while for the younger population it was around Rs 125, another executive said. The government wants companies to ensure that the outgo is Rs 95 at the most.

The younger population subsidizes the seniors, whose claims are higher, and that trend is expected to continue. As a result, the increase in premium may be higher for individuals, who are below 55 to 60 years.

While the premiums are being raised for a standard Mediclaim, Saxena said, Oriental is also working on a no–frills health cover. The policy may be like the one designed for Rashtriya Swastha Bima Yojana, which has capped the maximum spending on ailments. An Oriental executive said the company was examining the possibility of having differential premium. “The cost of surgery in Bhubaneswar is much less than in Delhi, which should reflect in the premiums and the cap," he said.

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