The Insurance Regulatory and Development Authority of India (IRDAI) has told the Karnataka High Court that it has been monitoring the pricing of health insurance policies offered by the public and private sector insurance companies to ensure that no policy results in any “super profit” to the companies.
The authority also said it had clarified on April 1, 2020, that indemnity-based health insurance products, which cover the treatment costs of hospitalisation offered by all general and health insurance companies, also cover the costs of hospitalisation treatment for COVID-19.
The IRDAI’s statement was filed before the court in response to a PIL petition, filed by city-based Letzkit Foundation, which has sought measures for health insurance coverage for senior citizens either free of cost or at affordable rates, including for COVID-19 treatment, among other pleas on health insurance for citizens at affordable cost.
‘Free policy not viable’
Stating that providing free policy for senior citizens is “not viable” as it would result in increase of premium for other categories of policyholders, the authority stated that the “entire business of health insurance is pool based...In case of reduction in premium of senior citizens, as sought by petitioner, another group of persons, like younger in age, have to cross subsidise premium.”
Pointing out that persons below 40 years taking health insurance is very low, the IRDAI said that if premium is increased for this category to cross subsidise the senior citizens then it will act as dissuading factor in younger individuals from subscribing to health insurance policies.
On the petitioner’s plea for insurance policy on the lines of Central Government Health Scheme (CGHS), the IRDAI said insurance policies and the CGHS cannot be compared as object, purpose, methodology of implementation, funding, and benefits were totally different. The IRDAI also said that it ensured that 30 general and health insurance companies provide health insurance policy exclusively for COVID-19.
As the counsel for Central government sought time to file response, a Division Bench comprising Justice B.V. Nagarathna and Justice Ravi V. Hosmani adjourned further hearing on the plea till October 5.
