There are three types of insurance-general, life, and health. In India, no company offers health insurance as a stand-alone product. Even after the opening up of the insurance sector there were no applications of companies to set up an exclusive health insurance business. The major impediment is the requirement of a minimum working capital of Rs 100 crore, which is considered to be too large for a stand-alone health insurance business.
Health Insurance, or Health cover, is defined in the Registration of Indian Insurance Companies Regulations, 2000, as the effecting of contracts which provide sickness benefits or medical, surgical, or hospital expense benefits, whether in-patient or out-patient, on an indemnity, reimbursement, service, prepaid, hospital or other plans basis, including assured benefits and long-term care.
IRDA has encouraged both life and general insurance companies, old and new, to go in for rider policies offering health covers. Many new companies have gone in for riders offering a variety of health products. Riders are add-on benefits attached to the main life policy. To attract players to health insurance, life insurance companies will have no cap on health riders. While the relaxation has been given on the health riders, the 30 per cent cap on the premium of the base policy continues for other riders.
Third Party administrators (TPAs) are distributors of insurance products in the health insurance sector. They facilitate the smooth operation of a health cover by acting as a link between the insurance companies and their clients and hospitals. IRDAhas set up the minimum cap of Rs 1 crore for TPAs. The Rs 300 crore health insurance sector is expected to jump to Rs 1,500 crore by 2005.