100% FDI in Insurance intermediaries:

The government has proposed a 100% foreign direct investment (FDI) in the insurance intermediaries, i.e. broking firms from the present level of 49% in the Budget. Meanwhile, the government has also decided to separate the National Pension System (NPS) from pension regulator- Pension Fund Regulatory and Development Authority (PFRDS) to resolve the issues over conflict of interest.

While declaring the FDI hike in the Budget, Finance Minister said that the government was also looking into possibilities of increasing the FDI limit in the insurance companies from the current level of 49%. On the other hand, insurance sources said the FDI cap is likely to be increased to 74% soon.

Sumit Rai, MD & CEO, Edelweiss Tokio Life Insurance, said, the proposed 100% FDI in insurance intermediaries will have a positive impact on customer, intermediaries and the sector. He added, “Insurance distribution is an upfront capital intensive business with a long gestation period, and given low insurance penetration in India, there is a significant need to strengthen existent distribution networks. The proposed 100 per cent FDI, coupled with a strong India growth story, will enable intermediaries to expand faster in non-urban markets, deepening insurance penetration in the country.

Adopting cautious approach, Tapan Singhel, MD & CEO, Bajaj Allianz General Insurance said, “When it comes to opening up on 100 per cent FDI in intermediation insurance, we will have to wait and watch on how this develops further.

Digit insurance to offer health insurance soon:

Digit insurance is likely to enter into the health insurance segment soon. The company is currently dealing in international travel insurance, motor insurance, home insurance and mobile insurance, will sell medical policies as well. Vivek Chaturvedi, head of marketing and direct (online) sales, Digit Insurance stated that they will launch their health insurance product in the next few days.


High value claims form a third of total national health insurance payouts

The government funded national health insurance scheme for the poor, Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (PMJAY), is expected to see a payout of INR23bn ($323m) this year for high value claims of over INR30,000 each.

These high value claims are likely to account in aggregate for 32% or almost one third of total payouts under PMJAY, says the National Health Authority (NHA) which administers the scheme.

The PMJAY was launched on 23 September 2018, and to date, about 36,000 households have lodged very high value claims exceeding INR100,000 each, reported Times of India. Among these households, 354 have already exhausted the INR500,000 annual coverage limit by May 2019, data analysis by the NHA shows.

The PMJAY is entirely funded by the government, with funding shared between the central and state governments. The aim is to reduce the financial burden on poor and vulnerable groups arising out of catastrophic hospitalisation expenses and ensure their access to quality health services. The scheme, which covers 107.4m households provides coverage of up to INR500,000 per family per year.

So far, over 93m beneficiary e-cards have been issued and over 3.77m hospital admissions recorded under PMJAY.

The mean claim size is around INR13,000, and half of all the pre-authorised claims are below INR7,000. 7% of claims are in the high value category (that is, over INR30,000 each) and just 1% in the very high category (over INR100,000 each) since the scheme was launched last year.

High-value claims are more prevalent among children under five years of age and adults aged above 50. Trends so far reflect that high value claims are tilted towards male beneficiaries, cardiology services and cardiac surgery packages, private hospitals and brownfield states where similar schemes were running but with a lower coverage limit ranging between INR50,000 to INR300,000.

The NHA is working to tighten scrutiny and checking fraud, but statistics suggest most claims are in low and medium categories, in keeping with the more usual needs of beneficiaries.

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