Health Insurance Companies in India
Udgirkar Rajkumar Annarao
Department of Commerce CMJ University, Shillong, Meghalaya
Download PDFAbstract
Insurance is a device for indemnifying or guaranteeing an individual against loss.
Reimbursement is made from a fund to which many individuals exposed to the same risk have
contributed certain specified amounts, called premiums. Payment for an individual loss, divided
among many, does not fall heavily upon the actual loser. The essence of the contract of
insurance, called a policy, is mutuality. The major operations of an insurance company are
underwriting, the determination of risks the insurer can take on; and rate making, the decisions
regarding necessary prices for such risks. The underwriter is responsible for guarding against
adverse selection, wherein there is excessive coverage of high risk candidates in proportion to
the coverage of low risk candidates. In preventing adverse selection, the underwriter must
consider physical, psychological, and moral hazards in relation to the applicants. Physical
hazards include those dangers which surround the individual or property, jeopardizing the wellbeing of the insured. The amount of the premium is determined by the operation of the law of
averages as calculated by actuaries. By investing premium payments in a wide range of
revenue- producing projects, insurance companies have become major suppliers of capital, and
they rank among the nation‟s largest institutional investors.
Keywords: Health Insurance Companies; Reimbursement; premiums
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