NEW DELHI, SEPT 20: The claim ratio of health insurance products is about 40% higher in the metros and other big cities compared to tier II cities, like Jaipur and Pune. This is primarily due to the fact that cost of medical facilities is significantly higher in bigger cities, though consumers across the country have to pay the same premium.

There is, therefore, pressure on insurance companies from third party administrators (TPAs) to fix premium rates on the basis of region and the average cost of medical facilities there.

Explaining the reasons behind this trend, Icra senior analyst Vineet Nigam said in addition to basic medical facilties, even the rate of normal consultation is higher, which pushes up the claim ratio in metros. “There is also a lot of movement of patients from the smaller to the bigger towns after detection of some disorder. This also increases the claim ratio in the metros,” he said.

E-Meditek Solutions director Gopal Verma added that the need of the hour was to have different slots of premium for different regions. “The general insurance companies which are currently selling health insurance products must have different rates of premia for different areas. Until that is done, there cannot be uniformity in the claim ratio,” he pointed out.

It may be noted that the KP Narsimhan committee report on the insurance sector has suggested that standalone health insurance companies should be allowed to operate. The committee also underlined the need to bring down the minimum capital base norm from the current Rs 100 crore.

There are currently about 25 registered TPAs in the country. The number is likely to increase significantly once the standalone health insurance companies start operations. Meanwhile, Insurance Regulatory and Development Authority’s working group is also preparing a concrete report on health insurance.