HDFC ERGO General Insurance Company, which aims to better the average sectoral growth this financial year, says retail health premium revision should be automatic. Ritesh Kumar, managing director and chief executive officer, discusses his priorities with M Saraswathy. Edited excerpts:
There have been some representations made to the regulator for an increase in health premiums. Do you also feel the need for a rise in prices?
Health insurance premiums are growing 30 per cent year-on-year. Given the kind of low penetration, a 30 per cent increase should continue in the near future.
The representations made to the regulator are on the retail side, since it is regulated. The increase in premiums should be commensurate with the rise in health (care) inflation. Periodically, companies have to go and ask for a correction in prices. We have suggested there be an inflation-linked increase, allowed on an automatic basis.
With the health insurance sector seeing a transformation in terms of the service provided, has the concept of health insurance portability become popular?
It is a flexibility the regulator wanted to give consumers; if they were dissatisfied with the existing insurer, they could change. The fact that portability has not gained momentum means a large number of customers were not dissatisfied with their insurance companies.
All our (non-life companies’) products are yearly products. Also, the general insurance industry is claim-intensive. The annual nature of the policy ensures insurers are adequately taking care of the service aspect.
How is your weather-based crop insurance scheme performing?
We have implemented the pilot in 11 states. This is a product based on data and is transparent. The payouts could be quicker. Given the criticality of what a crop failure means to a farmer, the products need to be made scientific and actuarially placed.
Isn’t it a very risky product, given the poor performance of monsoons this year?
This product is actuarially determined. If insurance would mean you never take a hit, then that wouldn’t be insurance. In some districts, yes, we would have to pay more than the premium; in some, you would have to pay less. While the monsoon was slow to come, it gradually settled in. So these will vary from state to state.
HDFC ERGO has already begun to have its in-house third party administrators. Would you be looking to move to wholly in-house based TPAs?
Our move to have our own third party administrators is guided by the fact that we should be able to have more control over the claim settlement process. When a health claim happens and the person is in distress, the servicing capability needs to be of a very high order. Now, we are able to respond on a 24/7 basis. Public sector insurers have been talking of it for some time. A few companies have their in-house TPA. If the PSUs set up their in-house system, there would be a significant volume catered by captive TPAs.
There are group policies, where clients do not want cashless cover. You should be able to service them.
What kind of premium growth do you see this financial year? Would there be more capital infusion?
For the entire year, our growth will be higher than the industry. We might not be able to sustain a 40 per cent growth but we would see upwards of 30 per cent on an overall basis.
On capital infusion, we have infused adequate capital over the past three years. We infused about Rs 212 crore in 2010-11 and Rs 142 crore in 2011-12. As of now, we haven’t infused any in the current year. We do not foresee any significant infusion. Even if there is one, it would be marginal.