Chennai, June 10 (IANS) The AIADMK government's decision to scrap the Kalaignar Health Insurance Scheme in Tamil Nadu has come as a blessing in disguise for the participating insurance companies as they were facing huge losses.

 
 "It is a bleeding business. The premium is low and the claims have started rising," a senior official of a participating company told IANS on the condition of anonymity.
 
 Named after the honorific title of DMK president and former chief minister M. Karunanidhi, the scheme was launched in 2009.
 
 Families with an annual income of less than Rs.72,000 were covered under health insurance scheme for a total sum of Rs.100,000. The premium per family was Rs.469.
 
 Around 1.4 crore families have been provided insurance cover till date.
 
 The city-based Star Health and Allied Insurance Company Ltd is the lead insurer with 47.5 percent share in the business and the rest is shared among private and government insurance companies under co-insurance contracts.
 
 An official of a co-insurer said that the business was profitable during the first year as claims were less than the premium income. "However, during the second year our share of claims outgo went up over Rs.90 crore while our premium was around Rs.75 crore."
 
 Non-life insurance companies feel the scheme could be profitable if it is run for a long time and the premium also goes up a little. They also say the government should cap the charges levied by the hospitals.
 
 According to a state government official, the total premium under the scheme for the second year was around Rs.600 crore.
 
 He said Star Health has been asked to wind up the scheme by July 5. "As per the contract, 30 days' notice has to be given to the insurer for cancellation of the scheme," he said.
 
 Officials of Star Health declined to comment when contacted by IANS.