Even as signs of the health insurance industry opening up for foreign players have become evident, public sector general insurance companies are not keen on setting up stand-alone health insurance subsidiaries in the near future.C.S. Rao, chairman, Insurance Regulatory Development Authority of India (Irda), had recently announced that the regulator has accepted the recommendation made by the Health Insurance Working Group to raise the FDI limit to 51 per cent from 26 per cent. In addition, the minimum capital requirement is likely to be brought down to Rs 50 crore for stand-alone health insurance companies wanting to set up base in India.The recommendations, if accepted by the Finance Ministry, will encourage foreign firms to set up health insurance companies in India, resulting in a myriad of changes in the health insurance industry.In the changing scenario, the strategy of government-owned general insurance companies is crucial to the market as the public players have a major hold. For instance, four PSU players collected a premium of Rs 1,427.9 crore while eight private players collected Rs 304.27 crore health insurance premium in 2004-2005.When contacted, M. Ramadoss, CMD of Oriental Insurance Co, said, ‘‘We are better suited individually. We have a wide reach with around 900 offices for each company. I don’t think PSUs have to set up health insurance subsidiaries. We are not talking on this line. Our focus is to have bigger business volumes, refine our portfolios, work on our losses and make health insurance loss proof. The creation of a new health insurance subsidiary is not relevant to us.’’‘‘We have not decided so far. A separate health insurance subsidiary may be considered when things take shape,’’ said M. Parshad, CEO, General Insurance Public Sector Association (GIPSA).When asked about the competition that is likely to come as the market is being opened up for foreign players, B. Chakraborti, CMD, National Insurance Co Ltd said, ‘‘The four PSUs will decide on creating a health insurance subsidiary as and when the competition comes.’’‘‘These PSUs continue to believe in its strong network of 900 offices. The fact is that 62 per cent of their business is concentrated only in five to six cities and does not come from the 900 branches. They are complacent and underestimating the competition they are likely to face when private players enter the scene,’’ said an industry expert.According to experts, 40 per cent of the mediclaim business comes from corporates, who use health insurance as a bargaining tool while offering more lucrative and profitable portfolios of fire and engineering to the insurance companies. Since only group health is where they can offer discounts, it ends up being a loss-making business.Sums up Deepak Mendiratta, chief, Health Plans and Health Insurance, Max Healthcare, ‘‘PSUs are not going to face immediate competition, not at least for two-three years because new firms will take time to establish their products, distribution channels etc. I don’t see an immediate threat.’’
