Internal audits have forced insurance companies to ask for higher premium after issuing policies, leading to an increase in cancellation of mediclaim covers.
According to the industry estimates, cancellation of group mediclaim policy midway has gone up by 30 per cent.
Insurers, mostly private ones, are opting to cancel mediclaim, marine and cargo cover at a later stage due to adverse claims ratio. In order to grab market share, they have not been pricing the product correctly.
"Private insurers are cancelling group health policies with a 30-day notice. The trend has been continuing post-detariffication, but has gained momentum this year with the increase in internal audits of these companies," said Boda Insurance Broker Executive Director K Ramachandran.
Sources said that ICICI Lombard has asked L&T to pay additional premium for the group mediclaim policy in the middle of the year. When contacted, L&T said that ICICI Lombard has requested for extra premium but has not sent any notice.
An ICICI Lombard spokesperson said that they have a vigilant investigating team which ensured that genuine claims were paid.
"Cancellation of health policy midway is an inappropriate step and it only goes to show that the insurer has not priced the risk appropriately unless the decision to cancel is taken because of fraudulent or wrong declarations at the time of pricing," said Shreeraj Deshpande, head (health insurance), Bajaj Allianz General Insurance.
Insurers have sent notices to companies in the middle of the year after the audit. These contracts give room to the insurers to cancel a policy with a 30-day notice to the companies. The cancellation notice allows both sides to withdraw the contract after refunding the premium at a month's notice.
Earlier, insurers used to accept group health business despite heavy losses as an incentive for companies to grab their property insurance.
Insurers have been offering discounts to the tune of 80-90 per cent after the removal of price restrictions.
Moreover, claims ratio in group health has gone up to 120 per cent.
