MUMBAI, MARCH 18: When the insurance sector was allowed to freely price its products, one thing that consumers had surely expected was a fall in premiums. And it indeed happened in segments like life and motor insurance, but one segment that could not keep up to the promise is health insurance. The four PSU general insurance companies — National Insurance, Oriental Insurance, New India Assurance and United India Insurance — are facing the wrath of senior citizens with health insurance policies after they nearly doubled their premiums last year.

The companies hold losses responsible for the unprecedented hike in premiums. “The incidence of claims is higher in the higher age brackets; so premium rates have also been revised accordingly,” said Oriental Insurance general manager Niraj Kumar.

K S Venkateshwaran (79), a mediclaim policy holder with New India Insurance, paid Rs 4,825 as premium in 2002. Last year, he paid Rs 5,994 which has now gone up to Rs 11,422 this year. “I bought this policy in 1980 and over the last 28 years have made just one claim. The company has made good money from me but it did not think twice before raising the premium by nearly 100 per cent,” he said.

There are many similar stories as the health insurance premium was raised by about 100 per cent over the last year. This year Union finance minister P Chidambaram made some concessions for a tax payer contributing to the health policies of his parents. But the step does not seem to have calmed senior citizens who now have to shell out heavily on their health insurance. “it is not enough, as not every body has a corpus or an earning child to foot his premium,” says Venkateshwaran.

However, public sector general insurance companies say they are tied up in view of the mounting losses. “The premium to claim ratio has gone up by 150 per cent. We are losing money in this segment and can’t continue in the business without raising the premiums. We are also being taken for a ride as hospitals charge more to a patient who has a health policy, thereby making profits at the cost of insurance companies. If senior citizens want concessions, why are they not asking the government to pay for it? Why does the government charge 12.5 per cent service tax on policies for senior citizens?” asks New India Assurance chief manager (UNTB) R K Kaushik.

In the April-September period of 2007, the total premium accrued by general insurance companies was Rs 1,454 crore, of which the four PSU insurers contributed just Rs 354 crore. The bulk of the remainder (Rs 1,046 crore) was collected by three private players —- ICICI Lombard, Reliance General and Bajaj Allianz General.

Private sector general insurance companies have only recently started providing health insurance to senior citizens. Despite repeated attempts, United India officials were not available for comments. Insurance Regulatory and Development Authority (IRDA) chairman C S Rao too could not be contacted for his comments.