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You better look for alternate health insurance policies to cover family members

If you had been banking on the mediclaim policy offered by your employer to cover the medical expenses of your parents as well as your immediate family, you may be in for a surprise. Several companies have added clauses to the corporate health insurance policy to exclude some benefits and set limits for others.

Amarnath Ananthanarayanan, chief executive officer at Bharti AXA General Insurance, said companies have shifted the premium burden or the claims burden to the employees. "In quite a few cases, parents have been removed from the purview of the insurance cover," he added.

This helps the employer reduce the premium burden and trim expenses. For example, consider a company that allocates Rs 10 lakh for an annual insurance cover for employees, their spouses and parents. If claims made during the year shoot beyond Rs 10 lakh, the insurer will seek an increase in premium at the time of renewal. The company can either pay the higher premium and continue with the policy or negotiate new terms. It will offer to exclude parents from the cover so that premium stays at Rs 10 lakh. If the insurer agrees, the company will offer its employees mediclaim, but with parents excluded.

The trend is more common in policies with a higher loss ratio, said Gaurav Garg, CEO and MD at Tata AIG General Insurance. "In policies where the loss ratios are not adverse, the cover continues for parents. The whole thing is driven by the claims' experience," he said. Sanjay Datta, head, customer services, health and motor, ICICI Lombard, said, companies' human resources policies decide the terms of the policy being opted for. "It also depends on the employee mix (age group of employees) of the company," he added.

A head of the underwriting department at an insurance company said the increase in claims has pushed up health insurance premiums. "Earlier the premium collected for property insurance used to help insurers manage the mediclaim business even with a low premium. But claims in the group insurance business have gone up to 200-300% (The insurer has to pay twice or thrice the amount collected as premium back to customers as claims)." "If parents are covered, they are of higher age group and the overall claim under the insurance policy can go up. So companies have started to reduce the insurance cover," the executive added. Pankaj Arora, senior VP & business head (retail) at SMC Insurance Brokers, said, "The premium in some cases has shot up to Rs 50-80 lakh and even Rs 1 crore in some cases. Companies are either reducing sum assured or alienating parents from the insurance cover."

"Many IT companies are examples of this as they had been offering the maximum benefits to their employees on insurance in their package," Arora said. Since two years, companies have started increasing mediclaim premium to cover up losses. Ananthanarayanan said premiums are likely to go up further. This increases chances your employer's mediclaim will offer even less cover than now. So better look for alternate health policies to cover family members.

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