In a bid to cut down their health insurance bill, buyers are increasingly turning to family floater policies – covers where a single sum insured is available for all members of a family. These policies allow the customer to buy a cover with a single ‘floating’ sum insured for, say, Rs 9 lakh rather than buying individual covers of Rs 3 lakh for each person of a four-member family.
In the case of ICICI Lombard General Insurance, the largest private health insurer, sales of family floater policies have risen 6.3% in FY14 on the back of 6.4% growth in FY13. This was even as sales of individual policies dropped 15% after a sluggish 3% growth in the earlier year.
“We are seeing a trend of policyholders shifting from individual to floater policies in health insurance. Our analysis is that in 99% of the cases, this is the right call as it is very unlikely that the entire sum insured will be utilized,” said Sanjay Datta, head (underwriting and claims), ICICI Lombard General Insurance.
According to Datta, family floaters work well from an insurance company’s perspective as well because they diversify risk. “There have been instances when individuals have bought a larger sum insured for themselves and a lower sum insured for children to cut costs. In floater policies, they do not have to make such a call,” he said.
New India Assurance, the largest health insurer, introduced a new floater policy in mid-March. The company has already sold over 5,000 family plans in less than a fortnight. “I would definitely say that the market is moving towards floater plans. There is a growing awareness of the need for a high sum insured and this is possible through a floater plan,” said Segar Sampathkumar, general manager, New India Assurance.
He added that buyers are consciously making a choice when faced with the possibility that more than one person might undergo major medical expenses, but that probability is extremely low. Even for such remote situations, there might be solutions in future. “Insurance companies might come out with solutions like a double insurance cover in case of accidents,” said Sampathkumar.
Manasije Mishra, CEO, Max Bupa Health Insurance, said, “Our research shows that consumers prioritize families’ health over their own and they seek products that can meet the needs of all members. In our experience, as people get more health-aware, more and more are opting for family health insurance policies and with rising cost of healthcare, more customers will choose to obtain comprehensive protection for their families.”
Max Bupa has a policy that covers the health needs of extended families and can cover up to 13 family relationships under a single policy. “The family floater policies are more economical than the individual ones. For instance, in case of a family of three covered under Max Bupa’s policy, all the family members can claim multiple times up to the individual sum assured limits and collectively also to utilize the floater amount, if needed. This will be cost-effective compared to buying three individual health policies for a similar coverage,” said Mishra.