Health insurance has emerged as a significant financing mechanism for healthcare. G Srinivasan, Chairman and MD, The New India Assurance, speaks about the evolution of this sector, upcoming trends, his company’s role in improving health insurance penetration, the way forward for the sector in India and more, in an exclusive interview with Lakshmipriya Nair
How has healthcare insurance evolved over the years and what are the trends in 2016?
Healthcare insurance has a history of almost 30 years in this country and it has evolved in a very big way. Especially in the last seven to eight years, there have been substantial improvements in the health insurance sector. Today, health insurance is very important to people. I think with increasing life spans, increasing medical advances and increasing cost of medical treatment, today, health insurance has become absolutely mandatory for every individual and every family, and people understand that. I would say that today the most popular and voluntarily sought after insurance is health insurance. Hence, this sector will continue to grow. In the last decade, it has grown by about 20 per cent on a year-to-year (y-o-y) basis. I expect the same trend to continue in the coming years.
What is the breakage of the health insurance sector in India?
If you look at the health insurance premium of this country, last year it was about Rs 21000 crores approximately. In terms of value, half of it is corporate or group health where the companies cover their employees through group policies, around 40 per cent comprise individuals taking polices and 10 per cent is the government health schemes. But, if you look at the number of people covered, I would say about that around 25 per cent of the people in this country have some form of health insurance or another and a large part of it comes through government health schemes such as the Rashtriya Swasthya Bima Yojana, and health schemes adopted by states like Tamil Nadu, Maharashtra, and now Rajasthan. So, in these cases, the government itself funds the premium and people are covered, especially those below the poverty line. So, out of the 25 per cent of the populace covered under health insurance, about 16-17 per cent of them are covered by the government health insurance schemes where people don’t really pay much, about four per cent would be corporate insurance where the employers pay, and only about five per cent of individuals buy health insurance policies.
Today, with people having higher purchasing power and as I said, health today is the most important requirement in term of insurance, it is more important than life insurance, so that will also grow. So, the sector will grow at 20 per cent going forward and it will be one of the largest segments in the general insurance space.
How important is health as a sector for New India Assurance?
It is a very important segment for us. We are the market leaders in health insurance. About 28 per cent of our business comes from health insurance. It is also growing at about 20 per cent each year. Thus, it is a key portfolio for us.
So, what are the plans for this segment in 2016?
We would like to keep up the growth in line with what is happening in the market. Basically, as I said, there are three segments, the government health insurance, corporate insurance and individual insurance. We are active in the government health segment, we have recently been selected by the Rajasthan government to provide health insurance cover for the whole state. We have also been an active player in the Rashtriya Swasthya Bima Yojana in various states such as Himachal Pradesh, Chhattisgarh, Karnataka, Meghalaya, Arunachal Pradesh etc. We will continue to be active in the government health insurance space.
In the case of corporate health, New India has a historical advantage because most of the major corporates in the country are our customers. So, many of the major group insurance policies are with us.
In the retail health space, we have a large segment but that is where we want to grow. It is where a large segment of people are not covered. 75 per cent of people do not have health insurance in this country. So, this segment offers the biggest potential for growth, so we will focus on it by using technology, product innovation and distribution. In terms of product innovation, we had come up with a floater health insurance policy last year. We also introduced Asha Kiran health insurance policy for people who have only girl children at reduced premium rates, and we also launched a top-up health insurance product. Currently, we are working on two-three new kind of health insurance products as well. So, product innovation is a major focus area for us. Distribution is done mainly through the agents, because we reach out to individuals through them. We have around 70,000 agents, we train and motivate them to sell insurance. Ultimately, the way health insurance should really happen is that every family should take a policy for themselves. That is the ideal form of health insurance.
How has technology helped revolutionise health insurance? What are the technologies that NIA has adopted?
I was speaking of technology adoption on the distribution side. We have several customer portals so somebody can take a policy through the Internet. They don’t have to come to our office, they can go to the site and take a policy. Then we have empowered our intermediaries, so agents can issue policies, brokers can issue policies, our own marketing people can also issue policies. Somebody can use a mobile app to take a policy. So, by using technology, people can take policies in a hassle-free manner.
Even in the case of settling claims, a lot of technology can be used to make it easier. So, has NIA used any technology to do so?
Basically, we use the third party administrators (TPAs) for settlement of claims. Currently, we use around 10 TPAs. Through the TPAs, we use a lot of technology. If someone goes to the hospital, he immediately contacts the TPA and within half an hour or an hour he gets a pre-authorisation and he gets admitted and we provide a cash-less facility to them. So, all this is now taken care of through technology. And it also helps in maintaining transparency in the whole process. So, today everything is technologically-driven and there is lot of information available. A lot of analytics can be done through the information derived such as you can understand which kind of diseases are driving the claims and are there any problems in certain areas and so on. So, all that can be done through analytics and that is the only way to control health insurance claims because health insurance is a tough sector when it comes to claims settlement which has two aspects. One is claims service, we have to give immediate service to the customers because nobody can go to a hospital and wait for an hour. They have to be given immediate authorisation to go ahead. The other area is managing claims, if you don’t manage claims, the claims cost can go up which will ultimately cause the premium costs to go up.
You are a partner in the government’s Rashtriya Swasthya Bima Yojana. How does it work and what is your role in it?
It is an interesting scheme that the government has been operating for the last eight years. Basically, people below the poverty line are enrolled for this scheme.There is a smart card which is given to the customers. So, if the person or his family members have and to go to the hospital, then this smart card is swiped at the hospital and then they are admitted and given treatment as per the packages they have been enrolled for. When the card is swiped, we are intimated about the person’s details, the reason he is being treated for and the package he has opted for etc. The government has already finalised the packages and made arrangements with various hospitals to give treatment as per these packages. As per the scheme, the patient is discharged after treatment without paying anything and the hospital is paid by us.
IRDA has allowed health insurers to tie-up with banks, how does this help in increasing health insurance coverage? Are you in any such tie-ups?
Yes, we have bank-insurance tie-ups with Union Bank of India, Corporation Bank and many co-operative banks. We have been in these tie-ups for many years. Now stand-alone health insurance companies have also been allowed to tie-up with these banks as per a new regulation which has come into effect from from April 1, 2015. The banks can tie-up with three general insurance companies. Thus, now IRDA has opened up the banking architecture. Today, banks can tie-up with multiple insurance companies and vice-versa. Then the products of the companies will be available for sale at these bank branches. When the customer goes to the bank, he can see which insurance company’s product is better and he can take that. Thus, it has a very positive impact for the customer.
Despite significant growth, only 25 per cent of India’s population is getting covered under health insurance. So, what are the major challenges that are hindering the growth of this sector? How can they be mitigated?
Spreading health insurance is an absolute necessity, 100 per cent of people should be covered under health insurance. But it is not happening because: one there is lack of awareness, people don’t know that there is a product available that take care of their health needs, secondly, some of them clearly cannot afford to take health insurance, thirdly, there is a question of accessibility too. People want someone to come to their home, explain the benefits of health insurance. So, these are some of the reasons why health insurance has not achieved higher penetration. But, compared to other forms of insurance, health insurance has made a much deeper penetration in India. However, this has to continue, so as insurers we have to make sure that there are more intermediaries available, more foot soldiers who can reach out to customers and make our products more simple and affordable. Then I think that the penetration levels will go up. On the other hand, there are a lot of challenges on the claims side. In fact, India is probably one of those countries where there is absolutely no regulation of hospitals. The providers’ field is completely unregulated and there are lot of variations in the charges that are levied by the hospitals in the country. There is also high medical inflation in the country, every year the rates go up by 12-15 per cent. Probably, health is also one area where technology increases the cost. Newer methods and technologies actually means higher costs, in most of the other fields, technology means lower costs. So, what is happening is that medical costs are going up and this is driving premium costs further, making health insurance even more unaffordable. These are some of the challenges that we face. If we successfully manage these challenges then we can definitely make health insurance more widespread in this country.
What are the steps that the policymakers can take to tackle these challenges?
First, they have to take some concrete steps to bring medical costs under control. In order to do this, there has to be some transparency, some kind of uniformity in the medical charges across the country. There must also be standardisation of the formats used by various hospitals and technology should be used in a very big way to implement it. If there is a standard format then it is very easy to settle claims and it also helps people to easily understand them. Treatment protocols should be put into place and strictly adhered to, accreditation must also be encouraged. These are some of the steps that the policymakers should focus on.
As per a recent newspaper article, NITI Aayog wants more insurance models to come up in the public health arena. What’s your take on it?
There has always been a debate in the country on how the government should spend money on health. One is the traditional model where the government bills hospitals and provides free or subsidised treatment to people. The other model, which we have been following for atleast a decade, is instead of spending all the money on building hospitals, you provide health insurance to people. In this way, when people take treatment, the insurance policies help pay the bills and the money goes to the private sector who, in turn, builds the infrastructure. The advantage in the second method, where the insurers are involved, is that we bring in efficiency. When the government spends directly, there is often no control and we do not know whether the funds are being deployed efficiently. When the insurance companies are involved, we make sure that the medical costs are controlled and falls within the premium that is being charged. Hence, there is a lot of scrutiny of the claims, it brings in transparency, efficiency and better documentation. I believe this is the reason why NITI Aayog feels that insurance models are the way to improve public health.
What are the three big changes that have occurred in the health insurance sector in the last three years?
One would be the way the claims are being settled. We didn’t have the cashless model before. In the last fifteen years, the cash-less model has been introduced. Today, people go to the hospital and show their insurance policies to take their treatment without paying any money upfront. Earlier people had to spend money and claim reimbursement from the insurance companies. This is a major change. The second thing is product innovation. Earlier, there were very limited products in the market. Today, around 200-250 products in health insurance are available. So, a lot of new products which are suitable for different segments of the society have evolved over the last fifteen years. Third is the increasing use of technology. Today, technology is used in a big way in every space of health insurance, be it procuring health insurance, managing it or claims settlement.
What are your expectations from the budget this year?
As insurers we expect reduction in taxes so that health costs can come down. We also recommend that service tax should not be not charged from health insurance policies, so that health insurance premium costs can come down, third is that the exemption limit in Section 80 D be reduced so that a large number of people can opt for health insurance.
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