Health insurance as a mechanism to finance healthcare needs is slowly and steadily gaining acceptability throughout India. This, in turn, gives the insurance sector a greater scope to grow within the healthcare industry. Sanjay Datta, Chief-Underwriting & Claims, ICICI Lombard GIC talks about the current state of health insurance in India and its scope for growth, in an interaction with Raelene Kambli
Give us an overview of the current state of the health insurance sector in India?
Sanjay Datta |
The health insurance industry is growing at a fast pace with 16 per cent growth and underwriting a total premium of Rs 153.4 billion in FY 12-13. It alone contributes 22.2 per cent share to the total insurance premium, second largest after the motor insurance business. The sector is poised to grow at a higher rate in the coming years, as low penetration (less than one per cent of GDP) and growing demand opens up a vast potential, which is also evident from the fact that new players are entering the market.
How would you broadly characterise the health insurance industry in the last five years? Are there a lot of changes within the sector?
In the last five years, the industry has witnessed setting up of market infrastructure, healthcare tie-ups for better network, greater transparency in tariffs and pricing as well as regular focus on the policyholders’ rights. The sector has witnessed optimisation of the sum insured and coverage, along with specialised products as responses to the growing need of the consumers. The health insurance sector has been continuously evolving and is currently going through a phase where it is transforming its treatment-based approach to awareness and preventive care led roadmap. In the coming years, this dynamism is sure to continue.
What kind of operating models for health insurance are viable in India?
An operating model is viable only if it brings value to the customer. Therefore, it is necessary to design each and every system and process keeping the customer at the helm. The next step in the health insurance segment is to move from being simply a ‘claims settling and process following unit’ to simplifying claims and processes. Introduction of network tie-ups and fetching better discounts is such an example. To make an operating model viable for health insurance, technology-enabled solutions would play a pivotal role.
What is the impact of the financial crisis on the insurance industry?
With robust systems and regulations in place, the industry as a whole has been unaffected by the financial crisis, posting a growth of more than 20 per cent in FY 12-13. As companies are slowing down on hiring and restricting the budget for employee wellness, an indirect pressure on growth of few segments such as group health insurance can be felt.
Lack of insurance penetration is one of the biggest challenges that the industry faces. How should insurance companies tackle this industry situation?
The insurance penetration has increased significantly since the opening up of the sector for private players. This increase is due to the entry of new players, introduction of new products and channels of distribution along with increasing penetration of the private insurance companies in uncovered markets. The industry as a market is continuously working on reducing the cost, and enhancement of quality of healthcare delivery, by establishing linkages with different stakeholders involved.
To improve the overall health insurance penetration, an integrated roadmap by government and private players would speed up the pace further. Recently, Insurance Regulatory Development Authority (IRDA) has taken various steps to ensure increased penetration which includes bringing in more transparency in the industry through monitoring of consumer-related aspects, such as market conduct, consumer education and creation of an integrated platform for redressal of customer grievances.
What are the government’s initiatives in this sphere? Government blames the insurance sector for not doing their part. What is your opinion on the same?
The Central Government has given priority to healthcare and is making significant investments to improve infrastructure and delivery mechanism, jointly with state governments through various programmes, particularly in the health insurance domain. They have been contributing through the launch and funding of several central and state level schemes which include the Rashtriya Swasthya Bima Yojna (RSBY) covering around 34.41 million below poverty line (BPL) families and an estimated 170.8 million people through implementation in 445 districts across 28 States and Union Territories. Government, in order to further improve penetration, has also decided to include new groups like workers in the unorganised sectors as a part of the RSBY Scheme. Recently, the Delhi government has decided to provide cashless health insurance cover to domestic helps, street vendors, railways porters and hawkers in the city.
The insurance companies have been working in hand with the government on several new and old initiatives. Recently, ICICI Lombard General Insurance signed an agreement with the Meghalaya government to roll out a comprehensive health insurance scheme in the state aimed at covering close to three million citizens. ‘Megha Health Insurance Scheme,’ provides all households in the State with a financial cover of upto Rs 1.6 lakh per year to cover in-patient services, irrespective of all income groups.
What else needs to be done to address the lack of penetration? What are the pre-requisites to improve the health insurance scenario in India?
The industry needs to focus more on generating high level of awareness amongst consumers to avail insurance products. Even today, consumers typically buy insurance to save tax, as an investment or because it is mandatory. It is extremely critical that these issues are addressed and consumers become aware of the need and importance of health insurance. Though products like micro insurance may be mandated by the IRDA to serve customers, it is imperative to ensure the right mix in terms of prices and services of each product to encourage people to avail health insurance. Lack of an integrated health infrastructure poses the biggest challenge in India. With increasing awareness and changing lifestyle, market is currently looking for a more organised provider set-up to impact the complete health spectrum, moving up from insurance. A mechanism to reduce the cost of benefits and to enhance the quality of care is the need of the hour.