Reliance General’s ‘gross premium underwritten’ is down by over 21%, partly as a result of increase in premium by almost 500% in Reliance HealthWise, which has put off customers. This is at a time when the general insurance sector is expanding and no other company is exhibiting negative growth
After being labelled as the cheapest policy for three years, Reliance General Insurance hiked premiums for its HealthWise mediclaim policy by as much as 500% citing rise in illnesses and inflationary trend in medical costs.
(Read more: http://www.moneylife.in/article/8/7498.html). However, it seems that the move has backfired and the company's revenues have fallen sharply by 20% (Please see table). This is when all other general insurers are witnessing a healthy rise of 12% to 1,067% in premiums.
According to a broking house, more than 70% of customers have switched to another insurer due to Reliance's premium hike. Moreover, they are assisting policyholders who have claims rejection from Reliance TPA Medi Assist under the pretext of pre-existing conditions.
The gross premium underwritten is an important parameter to judge business growth for an insurance company. The general insurance sector has shown healthy growth by 12% to 1,067% for different companies except for Reliance General that has unhealthy decline of over 20%.
please click see the table
Source: IRDA
"Post de-tariffing, there was a major price war and some insurers chose to have short sight whereas some maintained long sight. Reliance General targeted for short-term growth and tried to build a decent top-line within a span of two-three years but that turned out to be a loss-making proposition for Reliance - the aftermath of which is now very apparent in the market.
"Due to the losses made in the past three years, Reliance had to cover up the same and revise the premium that resulted in this hike. Market reaction to this hike has resulted in a major revamp in the portfolio of health policies in Reliance. And as a result, Reliance Health insurance is not being perceived (as being) competitive in the market," said another broking house.
There have been comments on our 23 June 2010 article about policyholders writing complaint letters to different authorities without success and more importantly without hearing back from the insurance regulator. It is a surprise considering that the Insurance Regulatory and Development Authority (IRDA) has been putting out a lot of advertisements in newspapers urging policyholders to contact it if their grievance is not solved by any insurer. On the other hand it is not surprising considering that IRDA was looking the other way on other consumer issues like abrupt removal of cashless facility by PSU insurers at corporate hospitals.
The official reply from Yegnapriya Bharath, joint director, consumer affairs department, IRDA, on 31st July was: "Reliance filed revised rates with IRDA in an effort to make the product sustainable and also make it on par with market rates, which had gone up due to increased claim outgo as a result of spiraling medical costs. The revision filed by Reliance was considered by IRDA only in March 2010 (after three years of the initial filing of the product) and the rates as already mailed to you were cleared."
When Moneylife asked IRDA chairman J Hari Narayan about 500% increase in Reliance general insurance during the Associated Chambers of Commerce and Industry of India (ASSOCHAM) global insurance summit on 1st September, he said, "We (IRDA) don't regulate pricing. There used to be (a) tariff regulatory system where pricing was regulated, but we now believe that pricing is best left to competitive forces in the market."
He added that policyholders can switch to another insurance company. When we emphasised that policyholders cannot easily switch due to restriction of pre-existing conditions not being covered for four years, Mr Narayan added that he would check if there had been any regulatory breach.
But will IRDA act on this issue? Healthcare is second largest in general insurance with over 20% share after motor insurance.
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I expected a disount from the last premium as there was no claims made, but they hiked it 3 times..
Share on you mr Anil Ambani and reliance. You people just spoiled the trust from common people
IN CASE PSU CO. IRDA SHOULD ORDER FOR CASH LESS FACILITY OR ASK CO. TO REFUND 6% EXTRA PREMIUM WHICH POLICY HOLDER PAYS. ALL TPA'S HAVE FAILED IN THEIR WORKING.
HOW RATING AGENCIES GIVE THEIR RATING WHEN TPA TTK HEALTHCARE DOES NOT PROCESS CLAIMS FOR 2 TO 3 MONTHS.