Bank mergers to see scores of mediclaim holders’ premium jump 50-300%
Times of India 01/01/2020
BENGALURU: Lakhs of mediclaim customers are expected to be the first casualty of the government-proposed merger of 10 banks as premiums for most of the customers of the banks which are being merged are set to increase between 50% and 300% from next year. Senior citizens, who depend on pensions or interest from FDs for monthly income, are expected to be hit the hardest as they would most probably be not able to afford such a steep increase in premiums. The hike in premiums will be much lower for younger customers.
Currently, most PSBs offer their savings bank and credit card customers health covers through group mediclaim policies which are sourced from their bancasssurance partners. Under current rules by IRDA, the insurance regulator, a bank can have only one bancasssurance partner for each type of insurance, be it life, health or motor. So as the PSBs get merged, their existing bancasssurance tie-ups will also get dissolved. Also since IRDA regulations do not allow for portability of group health plans, customers of the merged banks will either have to buy individual mediclaim policies or will be treated as new customers under the group health cover of their new bank.
The first casualty will be 64,500 credit card customers of Vijaya Bank, effective January 1, 2020. From that day they will no longer be covered under the health insurance scheme they have had for the last two decades.
Queries by TOI showed that PSB customers who for years enjoyed group mediclaim at rates of Rs 7,500-12,000, will see their premiums jump to between Rs 22,000 and Rs 75,000, if these policies get converted into individual policies with annual renewal.
Consider this: Vijaya bank has been merged with Bank of Baroda (BoB) on April 1, 2019. BoB’s bancassurance partner is Max Bupa while for Vijaya Bank it is United India Insurance. So all the Vijaya bank customers will now have to move to Max Bupa as new customers. A BoB spokesperson said that since group health portability was not allowed under IRDA, so even if it wanted to migrate the existing policies of Vijaya bank customers with Max Bupa’s mediclaim programme, the same is not possible.
B S Behl, 79, and his wife Shantha Behl, 78, had a mediclaim cover for Rs 5 lakh for the last 20 years for which the annual premium was Rs 12,910. When they approached United Insurance for renewal, they were given a quote of Rs 49,000 if they wanted to continue their existing policy benefits. For Behl's son Sanjay, 51, who was paying the same premium of Rs 12,910 for a policy that included his wife and son, the new rate is Rs 22,000. According to a United India Insurance official, the risk of insured people is lower when one is covering through a large group as the volumes make up for claims incurred. “But for an individual, we have to look at their age group and then price the policy accordingly, which are approved by the regulator.”
IRDAI did not respond to requests for comments.