Bank mergers to see premium jump scores from mediclaim holders 50-300%

BENGALURU: Thousands of Mediclaim customers are expected to be the first victim of the merger proposed by the government of 10 banks, as premiums for most of the clients of the merging banks will increase between 50% and 300% Starting next year. It is expected that senior citizens, who depend on the pensions or interests of the FD to obtain monthly income, are the most affected, since they probably cannot afford such a high increase in premiums. The increase in premiums will be much smaller for younger customers.

Currently, most PSBs offer their customers credit cards and credit cards that cover health through group medical policies that come from their bancassurance partners. According to current IRDA regulations, the insurance regulator, a bank can only have one bancassurance partner for each type of insurance, whether life, health or motor. Therefore, as the PSBs merge, their existing bancassurance bonds will also dissolve. In addition, since IRDA regulations do not allow the portability of group health plans, merged bank customers will have to buy individual drug policies or be treated as new clients under their new bank's group health coverage.

The first victim will be 64,500 credit card customers of Vijaya Bank, as of January 1, 2020. As of that day they will no longer be covered by the health insurance plan they have had during the last two decades.

TOI consultations showed that PSB customers who for years enjoyed group medications at rates of between 7,500 and 12,000 rupees, will see that their premiums will rise to between 22,000 and 75,000 rupees, if these policies become individual policies with annual renewal .

Consider this: Vijaya bank 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. Therefore, all Vijaya bank customers will now have to move to Max Bupa as new customers. A spokesman for BoB said that, since IRDA did not allow group health portability, so even if he wanted to migrate the existing policies of Vijaya bank clients with the Max Bupa mediclaim program, it is not possible.

B S Behl, 79, and his wife Shantha Behl, 78, had medical coverage for Rs 5 lakh for the past 20 years, whose annual premium was Rs 12,910. When they approached United Insurance for renewal, they were given a price of Rs 49,000 if they wanted to continue with the benefits of their existing policy. For Behl's son, Sanjay, 51, who paid 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 persons is lower when it is covered through a large group as volumes compensate for claims incurred. But for an individual, we have to analyze their age group and then set the price of the policy accordingly, which are approved by the regulator.

IRDAI did not respond to requests for comments.

Vijaya Bank customers feel that since the banks and insurers involved are public sector companies, the government should intervene to reach a solution for bank customers. “When BoB took over Vijaya Bank, it took over its assets and liabilities. So today, how can they not meet our genuine demands? ”Asked lawyer Ganesh Prasad, who was summoned with Rs 75,000 if he wanted to renew his coverage of Rs 5 lakh for his family of five.

Senior officials of other PSBs, classified for the merger in the next year, are also worried. “Our staff will face the anger of customers, whom we have had for decades, when they realize what happened. It is quite unfair since the bank did not have a role to play in landing in this disaster, said the CEO of one of the ten banks for the merger.

However, there is hope for PSB customers. According to Atul Sahai, CMD, New India Assurance, as a public sector company, the main focus of the insurer is to analyze the interests of the insured. “This is a peculiar situation that has arisen. But I am sure that we (PSU) can find a solution, ”said Sahai. But to find a solution, it would take a while, IRDA, insurance and banking sources said.

In addition to time, there could be other obstacles as well. According to a National Insurance official, there will be a regulatory obstacle. “Beyond that, to cover the merged entities, we will first have to see the previous claims experience. And the fact that there are more people covered does not mean that premiums will automatically decrease. If this group of people are mostly middle-aged or older, our risk/premium will also increase, ”said the official.