Page 284 - Ebook health insurance IC27

The Insurance Times

severity category, so they are reinsured using a portfolio approach. Critical illness
products tend to have lower claim incidence, lower frequency but much higher per
claim payouts. These are thus reinsured using Quota share structures.

In India, health insurance products are sold by non-life insurance companies, life
insurance companies and Stan Alone Health Insurance (SAHI) companies. Each
of these segments use reinsurance differently.
(i) Life Insurance Companies - These companies use Quota/Surplus structures

for the Critical Illness Insurance. While some of them use quota share
reinsurance for fixed benefit products, mostly at the inception stage to obtain
pricing assistance.
(ii) Non-Life Companies - They generally do not reinsure the indemnity medical
insurance, except with stop loss covers. The reason is that in context of
other businesses that they write, such as Fire, Marine etc, they would not
find value in basic quota share or surplus reinsurance.
(iii) SAHI Companies - These companies also use stop-loss reinsurance covers.
In addition, since these companies write only health insurance, they use stop
loss covers with low triggers than those usually used by non-life companies.

The final dimension to consider in the context of health reinsurance is that in India,
rural and social sectors are increasingly looking at commercial health insurance as
a delivery channel. For e.g most of the State Governments subsidize the premium
on rural schemes covering specific segments.

The central Government has also implemented the Rashtriya Swasthya Bima
Yojana to cover basic health insurance at district level. Rural and Social
insurance schemes though have higher claim incidence, (especially since these

288 Guide for Health Insurance