Health insurance premium may vary from one metropolitan city to another

Can the health insurance premium paid by a Mumbai resident be more than that paid by a Chennai resident, on the strength of the geographical location, other things being equal? A report on `Innovations in health insurance policies’ by the Insurance Regulatory and Development Authority (IRDA), recently submitted to the Finance Ministry as well as insurance companies, says it can.

Geography, will certainly be a key instrument for pricing products in the near future says IRDA. According to the report, geography would be one of the key differentiator for prices of products since healthcare costs vary in different parts of the country. “The healthcare costs in Chennai, for example, are lesser than the costs incurred in Mumbai. This should be used as a differentiator for prices for products being offered in various parts of the country,” said the report. Thus, there could be restrictions in terms of where the treatment can be availed.

Key suggestions

The other key recommendations made by the regulator include the system of a `pool’ for insuring pre-existing ailments and introduction of the system of co-insurance, co-payments and deductibles in pricing.

A senior official at IRDA said the report was meant to serve as a guideline for insurance companies currently designing new health insurance products. “The aim is make health insurance more viable for the customer as well as the company,” he said.

The report has also suggested the introduction of health insurance policies which allow co-insurance (customer has to pay a percentage of claimed amount), co-payment (customer has to pay a fixed amount), deductibles and medical savings products especially for customers who think they might not fall ill but still wish to be covered.

`Pool’ concept The IRDA constituted committee has also strongly recommended the concept of a `pool’, which will be maintained by the regulator for covering pre-existing illnesses like congenital ailments and conditions like AIDS.

The funding of the pool would be from the contributions of insurance companies, voluntary contributions from corporates, grants from Central and State governments and aid from international bodies such as World Bank and WHO.