Universal Sompo cuts back on group insurance mediclaim, that has been a drain on the firm

After an adverse loss ratio from group insurance offered to Indian Overseas Bank customers, Universal Sompo is now focusing on individual mediclaim policies for Allahabad Bank customers

Medical insurers laboring under big losses, mainly on account of the group insurance schemes they rushed into over the past few years, are on the retreat, with at least one company deciding to cut back on those schemes and focus to individual policies.

Universal Sompo General Insurance Company (USGICL) on Tuesday announced a new health insurance scheme for customers of Allahabad Bank, its joint venture partner, to push individual schemes, after two consecutive years of losses.

"We had a bad loss ratio, with group insurance offered through Indian Overseas Bank. It had to undergo upward revision," said ON Singh, executive chairman, USGICL. "Now, we are offering an individual health policy to customers of Allahabad Bank that can also insure dependent parents along with spouse and children. No medical checkups are required up to 45 years. Pre-underwriting health checkups will be at the cost of the company."

Universal Sompo, now in its third year of operation, piled up a loss of Rs53 crore last year. It has managed to reduce its losses to Rs30 crore, so far this year and hopes to breakeven next year. The company has an initial capital of Rs235 crore.

Universal Sompo said that it has sold 5,50,000 policies this year with a premium collection of Rs220 crore till now, and it is likely to exceed the target of Rs300 crore this year. Today, it has managed to restrict the group insurance component of its health insurance business to just 10%, while focusing on individual policies.

The company's latest offering, called 'Sampoorna Swasthya Kavach' will be available to savings bank, current account, recurring deposit account and term deposit account holders of Allahabad Bank, as well as NRIs on a payment of an annual premium. The policy could be for an individual or a family, on a floater basis. It has an optional critical illness rider.

This health insurance facility will be available to the customers through over 2,400 branches of Allahabad Bank across the country. The premium payments will have an auto debit option through the bank account. E Meditek Health Care Sevices is the third party administrator (TPA) for the 'Sampoorna' scheme.

Universal Sompo has set a target of one lakh policies under the 'Sampoorna' scheme in a year, to mop up between Rs60 crore and Rs70 crore. The cashless benefit is available across the country at over 3,000 hospitals. The minimum policy amount is Rs1 lakh and the maximum is Rs5 lakh. The premium for an individual policy of Rs3 lakh sum assured at the age of 36-45 is Rs3,827, whereas the premium for a family policy (self and spouse) for a similar sum assured and age group is Rs5,740.

Universal Sompo has also tied up with Indian Overseas Bank and Karnataka Bank for other schemes. The bancassurance model has more than 5,000 branches to sell insurance.

It has had a claims settlement ratio of 70%. On 1,08,000 claims received so far, about 80,000 have been paid.

The company is also targeting semi-urban and rural markets which have a low general insurance penetration. The focus of the company has been motor and health insurance and it sees potential in micro-insurance.

The company has 48 branches and 70 sales centers. They are planning for additional 22 branches.

In a rush to collect business over the past few years, several insurers offered specially-designed medical policies for group employees, covering major to very minor ailments, at cut rates. But with the claims running high, most of the insurers quickly began to run up losses.  

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