The following are the loss ratios of Group Health for the four-year period from 2019-20 to 2022-23:

Public Sector: 106%, 104%, 130%, 107%
Private Sector: 87%, 90%, 106%, 89%
Standalone Health: 86%,80%, 88%,61%
Overall: 99%,98%, 119%,96%

When we see from a case-by-case basis, it may seem that Group Health business is being picked at a loss. Other than public sector, this is not a fact. I understand (I could be wrong), when private sector releases the payment to hospitals, they do get a decent discount. Which is not reflected when renewal quotation is given.

Private sector has squeezed brokerage and TPA charges. With TPA doing majority of administration work, management expenses are also limited. Add the investment income of around 4% of the premium; private sector is making money even in Group Health.

Why do corporates give group health business to insurers when they almost pay premium equivalent to the claims? Could they not be better off managing the employee health from a fund created which could also earn investment income?

The only answer is group health can become a HR nightmare if handled by the company. When an insurer rejects a claim or deducts from hospital bills and the employee has to foot that bill; blame can be transferred to insurer. If the company does that, HR will face serious employee dis-satisfaction issues.

Everyone seems to be a winner in this game called Group Health Insurance. Except for the public sector insurers. And consequently, the Indian taxpayer. Already talks of Budget 2025-26 pumping in additional capital for public sector insurers.

Blog by Atmaram Cheruvu