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Insurance cover gets the chop

Updated on: 18 May,2009 09:00 AM IST  | 
Lavanya Srinivasan |

With premiums skyrocketing and recession forcing firms to cut costs, employees suddenly have their security blanket stripped away. Corporate hospitals aren't too pleased either

Insurance cover gets the chop

With premiums skyrocketing and recession forcing firms to cut costs, employees suddenly have their security blanket stripped away. Corporate hospitals aren't too pleased either

Recession-hit employees are slowly beginning to realise that they can't even afford to fall ill.

With premiums skyrocketing, small businesses were the first to drop insurance cover but now even big firms are following suit nearly 32 per cent of employees without health benefits work for large companies, said a medicalu00a0 director of a renowned corporate hospital.

Root of the problem

The problem lies in the fact that retail business has been a far more viable option than group insurance. For instance, the claims payout in the retail business is around Rs 50-60 for every Rs 100 collected as premium. In group insurance, it's much higher. As a result, several general insurers have had to raiseu00a0 premium rates by 15-20 per cent this year. That, coupled with recession, has forced businesses to shift some of the increasing healthcare costs to employees.u00a0

'Parents need it more than us'

Techie Kishan Kumar says his company offered employees the best insurance cover with gym and other exclusive facilities. "But now that's available only for me and my spouse. My parents aren't covered. I think it's ridiculous because they need it more than us. Whatever it is, I wouldn't risk taking them to a government hospital," he says.

Apart from parents and dependents losing out, Deepak Mendiratta, managing director of Health and Insurance Integrated, a healthcare consultancy, says some companies have also reduced maternityu00a0 benefits. "As a result, revenues have gone down terribly for corporate hospitals," he adds.

Dr Nandakumar Jairam, chairman and group medical director, Columbia Asia Hospitals, expresses similar concerns: "Many people will not be insured in the following year," he says, "and that could adversely affect us."

Feeling the pinch

Corporate hospitals in Bangalore which get 25 per cent of their revenues from IT companies are already feeling the pinch.

"The money is just not there. Neither corporations nor private individuals can continue to afford the double-digit increases in health costs," says Arun Biswas, insurance agent, HSBC.u00a0

Solutions

Professionals in the health and insurance fields feel, however, that all is not lost.

"There are other methods of cutting costs like getting employees to pay part of the claim amount and a part of the premium if they want parents to be covered. This is apart from capping the amount according to diseases and reducing the sum insured," says Dr Naem Khan, medical director, Apollo Hospital.

"The companies could cut down on the kinds of health insurance provided like maternity cover, accident cover etc. The kind of covers now chosen could be limited," said Tarun Singh, head insurance, Prabhudas Liladhar.

(Inputs from Omi Gurung)




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