Concerned over the number of complaints regarding premium subsidisation in group insurance policies, the Insurance Regulatory and Development Authority (IRDA) is initiating steps to address the issue.
The insurance regulator said a number of complaints have been received by it on the unfair discounts given to group policies, and it wants to see that the practice is being done away by insurance companies. IRDA has asked the General Insurance Council (GI Council), the apex body of non-life insurance companies, to provide the relevant data to understand how companies treat their customers.
The regulator will study all aspects of the issue and come up with findings. The study will also look at the pattern of premium charges for individuals as well as groups, since it believes the distortions are widespread.
On the sidelines of the launch of a modified diabetes health insurance policy by Star Health and Allied Insurance Company, IRDA chairman TS Vijayan said the insurance watchdog was not keen on supporting this kind of approach.
We want to discourage the practice of giving discounted premiums to group insurance policy seekers as has been done by insurance companies. People who are going in for group covers are getting far low premiums at the cost of individuals who would end up paying higher premiums," he said.
The companies, who come with a block of employees, negotiate and get a better deal, are being unfair to individuals who are paying higher premiums, he said. IRDA believes insurance companies are nothing but a trustee for premiums collected from a number of individuals. Therefore, it is the responsibility of the insurance companies to give equitable treatment to all customers.
You see, insurance companies are not giving the claim money from their pockets. They are providing the funds from the trust money that has been given to them by everyone. If insurance companies are charging lower premium for groups and higher premiums for individuals, the less premium groups are getting subsidised by the insurance companies. This is one thing we want to stop and, accordingly, have asked insurance companies for data on their premium structure. We have to see, as regulator, whether this should continue or not, he said. He added: The regulator wants to see no unfair practices being adopted by insurance companies."
On third-party motor insurance premium hike, Vijayan said it had already published the draft and called for feedback from stakeholders.We will accordingly decide