The popular health insurance cover the Mediclaim Policy offered by the four public sector non-life insurance companies is set for a major overhaul.

Stung by the massive losses on the health portfolio that exceed premium collected, the Government-owned insurers are working out major changes in the cover including fixing minimum and maximum amount of sum insured that would be available and stringent health checks for people above a certain age who are seeking a cover for the first time.

The companies are also working out ways to detect pre-existing illness of the insured for which claims would not be entertained. Oriental Insurance Co is working on major changes in its existing Mediclaim policy.

There has been a lot of concern on the rising losses on the health portfolio. While the company is thinking of capping the maximum sum insured (the amount that an insured can claim for an illness) to between Rs 2 lakh and Rs 3 lakh from the existing Rs 5 lakh, it was also planning to set a floor level for sum insured at Rs 50,000. There would also be compulsory health-check for people above the age of 45 seeking a cover for the first time.

The cap on the higher end would ensure that the company's losses are restricted while the higher floor level would enable it to get a decent amount of premium at the lower end.

The current minimum sum insured of Rs 15,000 was too low to provide any meaningful cover for different kind of illness. The three other Government-owned non-life insurance companies are also working on similar plans to curb losses on the health portfolio.

Besides Oriental Insurance, the other PSU insurers are National Insurance Co, United India Insurance Co and New India Assurance Co.

While losses on the health portfolio have been rising, insurers feel that matters have turned worse ever since Third Party Administrators (TPAs) were introduced into the health market in 2003 to work as intermediaries for processing medical claims.

Insurers argue that since TPAs facilitate cashless transactions, the insured have been seeking medical treatment in more expensive facilities than when they would have to pay from their pockets and then seek claims from the insurance company.

(http://sify.com)