HEALTH INSURANCEVOLUTRY HEALTH INSURANCE

( SCENARIO IN INDIA)

PRESENTED BY:GROUP A ( MBA-HA)SMSR, SHARDA UNIVERSITY

Table of contents

Introduction – health Insurance scenario Market share VHI ( Voluntary health insurance) Types of plans VHI providers How health insurance works Increased need of VHI Concerns and challenges

INSURANCE SECTOR DIVISION IN INDIA

HEALTH INSURANCE

Health insurance in a narrow sense would be an individual or group purchasing health care coverage in advance by paying a fee called premium.

In its broader sense, it would be any arrangement that helps to defer, delay, reduce or altogether avoid payment for health care incurred by individuals and households

Health Scenario In India

Total Expenditure on health in India is nearly 6% of the entire GDP Government spending is less than 25% against the average

spending of 30-40 % in other developing countries. Indian health insurance industry stands at INR 5,125 crores with

only a small Section of the total population (around 2%) being covered so far.

CAGR of around 35 % (FY2002-08) Health Insurance industry in India is one of the fastest growing

segments.

India Health Insurance Market Size & Growth Rate

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 20080

1000

2000

3000

4000

5000

6000

761 10041354

17322222

3209

5125

Market Size: (INR) - Crores

Market Size: (INR) - Crores

CAGR – 35%

MARKET SHARE

VARIOUS HEALTH INSURANCE PRODUCTS AVAILABLE IN INDIA

The existing health insurance schemes available in India can be broadly categorized as: 1. Voluntary health insurance schemes or private-for-profit schemes 2. Mandatory health insurance schemes or government run

schemes (namely ESIS, CGHS) 3. Insurance offered by NGOs/Community based health insurance 4. Employer based schemes

Voluntary health insurance schemes or private-for-profit schemes

In private insurance, buyers are willing to pay premium to an insurance company that pools similar risks and insures them for health related expenses.

The main distinction is that the premiums are set at a level, which are based on assessment of risk status of the consumer (or of the group of employees) and the level of benefits provided, rather than as a proportion of consumer’s income.

Types of plans Group Insurance Plan Group insurance offers medical insurance to the groups like

employees of a company, members of an association or a co-operative society and so on.

Individual Insurance Plan Individual insurance caters to the special needs of the

individuals. Premium is comparatively high for this kind of insurance.

Floater Insurance Plan Floater plan can be availed individually or by all the members

of the family. It provides single premium for the entire family

Types of plans cont…..

Health insurance plans can be further categorized as: Med claim Policy Personal Accident - Individual Personal Accident - Family Insurance for Group Accident Jan Arogya Bima Policy Bhavishya Arogya Policy (Insurance for senior citizens) Traffic Accident Policy Overseas Med claim Policy

Nowadays, few more health plans are readily available in the market as:

Health Plan for Tax Saver- This is at premium policy of fixed rate under which the customers can save up to the amount of Rs. 3,366 as per Indian Income Tax Act, Section 80 D.

Family Floater Health Plan - This policy takes the responsibility of the expenses on hospitalization of the whole family.

Critical Care Plan - In case of serious illness like stroke, heart attack, cancer, kidney failure or paralysis this plan offers a lump-sum benefit on diagnosed disease. This policy can also be used for the benefit of Personal Accident and Permanent Total Disablement (PTD).

Personal Accident Plan - It is a cover against permanent partial disablement (PPD), accidental death and permanent total disablement (PTD).

Health Guard - It offers access to the cashless facility at various hospitals all over India and also medical reimbursement for entire hospitalization expenses.

Hospital Cash -It provides extended financial support at the most required time.

Personal Guard - It is cover against accidents and accidental injuries.

Silver Health - This insurance plan is a special scheme that takes care of expensive medical treatments for people aged between 46 to 75 years.

VHI providers In the public sector, General Insurance Corporation (GIC) and its four subsidiary companies 1. National Insurance Corporation, 2. New India Assurance Company, 3. Oriental Insurance Company and4. United Insurance Company) Life Insurance Corporation (LIC) of India provide voluntary insurance schemes Private sector: Bajaj Alliance, ICICI, Royal Sundaram, and Cholamandalam and many others are offering health insurance schemes.

Change in market share

MEDICAL INSURANCE SCHEME OR MEDICLAIM

Of the various schemes offered, Mediclaim is the main product of the GIC.

Mediclaim was introduced in November 1986 and it covers individuals and groups with persons aged 5 – 80 yrs. Children (3 months – 5 yrs) are covered with their parents.

This scheme provides for reimbursement of medical expenses (now offers cashless scheme) by an individual towards hospitalization and domiciliary hospitalization as per the sum insured.

There are exclusions and pre-existing disease clauses. Premiums are calculated based on age and the sum Insured, which

in turn varies from Rs 15 000 to Rs 5 00 000. Another scheme, namely the Jan Arogya Bima policy specifically

targets the poor population groups.

IRDA With the passing of the Insurance Regulatory Development

Authority Bill (IRDA) in 1999 the insurance sector was opened to private and foreign participation, thereby paving the way for the entry of private health insurance companies.

The bill allows foreign promoters to hold paid up capital of up to 26 percent in an Indian company and requires them to have a capital of Rs 100 crore along with a business plan to begin its operations.

Currently, a few companies such as Bajaj Alliance, ICICI, Royal Sundaram, and Cholamandalam among others are offering health insurance schemes.

VHI schemes - examplesThe companies providing various kinds of health insurance schemes are:

Max NewYork Life Insurance Medicash Plan, Wellness plan, Safety Net

New India Assurance Company Ltd. Universal Health Insurance Scheme Medical reimbursement Personal Accident Cover Disability Cover

Apollo DKV Insurance Company Ltd Easy Health Insurance Plan Maxima Health Plan Individual Personal Accident Plan

How Health Insurance Works

Premium: As health coverage the policy-holder has to pay each month.

Deductible: It is must for a holder to pay out-of-pocket before the health plan actually pays its share.

Coinsurance: In this a percentage of the total cost of the health insurance is to be paid rather than paying a fixed amount up front.

Cont…

Exclusions: Under this the customer generally pays the full cost of non-covered or excluded services.

Coverage Limits: The insured person is expected to pay for specific services, in case if health plan's maximum payment limit exceeds. In other words the remaining costs of the opted health plan will be paid by the bearer.

Out-of-pocket maximums: In this case the health plan reimburses all further costs of the members when they have actually end up paying out of their pockets.

Premium calculation

Premiums are calculated based on the insurance product (or plan) purchased by the individual

To decide on the amount that one would need to shell out, the insurance company takes all costs into considerations. Like :

Mortality rate : Age and heredity Marketing and administration expenses Adjusted or Modified Community Rating Rating bands Adjusted and modified community rating

Increased need of VHI in last few years – why?

Indians at greater risk Lifestyles have changed Rare non-communicable diseases are now common

The Cost Factor Medical care is unbelievably expensive Incomplete financial planning Indirect costs add to the financial burden

Concerns and ChallengesReasons for poor penetration of voluntry health insurance Lack of regulations and control on provider behavior Unaffordable premiums and high claim ratios Reluctance of the health insurance companies to promote their

products and lack of innovation Too many exclusions and administrative procedures Inadequate supply of services Co-variate risks India is a low-income country with 26% population living below

the poverty line, and 35% illiterate population with skewed health risks.

Complicated VHI schemes

Common perception….

VHI…really serving the purpose?

You can get sick only once….

Just think….

IS THERE A MARKET FOR VOLUNTARY HEALTH INSURANCE IN

DEVELOPING COUNTRIES?

Thank You