VIOLATION OF NORMS FAILED INSURANCE SCHEME

Thiruvananthapuram: A new health insurance scheme covering below poverty line (BPL) and above poverty line (APL) sections may not have materialised yet in the State, but a health and accident insurance scheme for BPL families proposed by the previous United Democratic Front government failed to take off since it was drawn up in violation of norms.

Before striking an agreement, the then government is learnt to have invested substantial sums with a private insurance company in the name of the scheme. The premium envisaged was Rs.399 for a family. It was largely based on a subsidy of Rs.300 for a family from the Universal Health Insurance Scheme (UHIS). The rest was to be shared equally by the beneficiaries, State government and local self-government institutions.
Official sources told The Hindu that the proposal to sign the agreement on January 3, 2006, did not work out, but a sum of Rs.7,098,0265 was invested with the company in February 2006.

The scheme turned out to be a non-starter since it was against the norms of the Insurance Regulatory Development Authority (IRDA) and the UHIS. The Centre is understood to have told the State government that the norms did not permit the government to associate with a private company. Still, the government proceeded with the proposal and deposited the funds, the sources said.

Moreover, during the initial negotiations, the company offered to get the subsidy from the Centre. Once the implementation schedule went awry, the then executive director of Kudumabsree wrote a letter to the company on February 22, 2006 saying that the agreement could be signed on March 2, 2006, to which there was no response.

The scheme could not be commenced owing to the delay in getting Rs.300 per family from the Centre. The company retracted from its commitment to securing the subsidy.
It was after a protracted correspondence that the government managed to secure the amount from the company. Now, refunding a sum of Rs.72,70,288 collected by the local bodies has become a difficult proposition for the government and it has been decided to use the funds for the new scheme proposed to be launched soon, the sources said.

Source: N.J. Nair
The Hindu