Oriental Insurance has no room for the aged

Public sector general insurer, Oriental Insurance Company Limited, has resorted to premium loading apart from reduced brokerage to discourage the sale of mediclaim policies to older people.

Traditionally, premium loading has been taking place only for group policies based on past experience. So, if the claims ratio is high for a certain group, the premium is loaded by a certain percentage at the time of renewal.

Oriental Insurance has informed the broking community that the premium loading for individual policies sold to people aged between 50 and 60 years will be 50 per cent and for persons above 60 years, it will be 100 per cent. Simply put, older people now have to churn out 1.5 to 2 times more for mediclaim policies from Oriental Insurance.

The reason for discouraging sale of mediclaim to older people is the high claims ratio of around 180 per cent. However, what is interesting is that Oriental Insurance is the only company, which has resorted to such measures.

Confirming this, C V Ramana Reddy, principal officer, Helios Insurance Services Private Limited, said Oriental Insurance is looking at reducing its exposure to the higher age-group bracket and hence these measures. On whether any similar intimation has been received from other insurance companies, Reddy answered in the negative.

Oriental Insurance has also reduced the brokerage from 17.5 per cent to 12.5 per cent for policies issued to individuals between 45 and 55 years. It is not paying any brokerage for issue of policies to people above 55 years.

The brokerage for group policies has also been reduced to 12.5 per cent. The claims ratio tends to be high in this segment as well because parents, who are dependents of employees, also tend to be covered by the policy.

According to a broker, these measures may turn disadvantageous for Oriental Insurance, as individuals may turn to other insurance companies for their needs.

Incidentally, Oriental Insurance has also applied for a health insurance product to the Insurance Regulatory and Development Authority of India where a higher premium can be charged for older people.