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Health Insurance business is doing reasonably well but it is largely coming from pure Health Insurance
companies or Non-Life companies and the Life companies seem to be struggling in this space.
Discuss the challenges and compare the future of health products under Life and Non-Life Insurers.
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Flow
Health insurance market
Why did Life insurance companies struggle?
Challenges
Future of Health insurance industry
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HEALTH INSURANCE
MARKET
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Health Insurance in India
The Health (Mediclaim/Indemnity) Insurance market :
- Retail Health products (Individual/Floater)
- Group Health products (Employer’s employee/Non Employer’s employee)
- Mass schemes for BPL families sponsored by Government
General Insurance (GI) companies offering Mediclaim products:
- 4 PSUs
- 13 Private players (RQBE, Shriram, Magma HDI & Liberty Videocon not offering
Health Insurance as of now)
- 4 Stand alone Health insurance companies(Cigna TTK recently got IRDA approval)
Life Insurance (LI) companies:
- Offering mainly Health insurance riders (Fixed benefit e.g. Critical illness Rider)
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Health Insurance by General Insurance Companies
GI companies dominate the health insurance market
This sector is the second largest contributor to the non-life industry’s premium
underwritten
The 5 years CAGR at 25% far exceeds the overall GI industry CAGR of 17%
As 2012-13 the market size is Rs 15,341 Crore
18% 18% 25% 23% 22%
44% 44%40% 42% 43%
11% 11% 10% 9% 10%7% 6% 6% 5% 4%
20% 21% 19% 21% 21%
0%
20%
40%
60%
80%
100%
2008-09 2009-10 2010-11 2011-12 2012-13
Segment-wise Premium Underwritten
Health Motor Fire Marine Others
6,259 7,869
11,020 13,313
15,341
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2008-09 2009-10 2010-11 2011-12 2012-13
Health GWP in Rs Crore
CAGR 25%
Source: IRDA website
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Market Share Breakup (GI Companies)
61%
27%
12%
GWP Breakup by Insurers
PSU PRIVATE STANDALONE HEALTH
17%
46%
11%
26%
GWP Breakup by Segment
GOVERNMENT GROUP FAMILY FLOATER INDIVIDUAL
PSUs dominate the health insurance
business
The significant market share of the
Stand Alone health insurers to be noted
Group Portfolio contributes the most
business
Source: IRDA website
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Top Insurers-GWP segment wise (Rs.Crore)
FY 2011-12
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472
232
40
175
344
30
583
200
627
1058
1114
753
1252
202
22
41
167
349
782
1071
565
636
222
77
431
0 200 400 600 800 1000 1200 1400
BAJAJ ALLIANZ
ICICI LOMBARD
NATIONAL
NEW INDIA
ORIENTAL
UNITED INDIA
APOLLO MUNICH
MAX BUPA
STAR HEALTH
Retail
Group
Government
Source: IRDA website
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Health Insurance by Life Insurance
Companies
363 302
460 453 506
576
-
100
200
300
400
500
600
700
2009-10 2010-11 2011-12
No of Policies in force in '000
Non Linked Health Business Linked Health Business
Source: IRDA website
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WHY DID LIFE INSURANCE
COMPANIES STRUGGLE ?
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Action Vs Need
What they did What was the need
Products offered complex in nature Simple products which can be easily understood
Long term Fixed benefit products Short term Indemnity product was the requirement of the market
Generally high premium for the linked health products
Affordable premium
Non participation in Corporate and Mass schemes
Participate in the segment which contributes more than 60% of Health Business
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CHALLENGES
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Challenges for the Industry
Indian population is yet to accept Health insurance as a financial
vehicle for medical treatment
Poor understanding of the products
Higher claim ratio specially in the corporate Health business
Lack of quality data
Life time renewal
Portability
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Challenges for the Industry
Fraud and abuse
Anti selection and Medical inflation
New disease patterns and advancement in Medical technology
Interpretation of policy wording and court decisions
No standardization of Medical treatment cost across service provider
network
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Challenges for Life Insurance Industry
More complex underwriting
Challenging claim management
- Multiple claims Vs single claim
- Hospital network management
- Supervising TPA activity / setting up in-house claim team
Lack of data for pricing and product design
Change in system
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FUTURE OF HEALTH
INSURANCE INDUSTRY
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Growth Drivers of the Health Insurance
Market
Economic factors :
- Meteoric rise in health expenditure
- Out of pocket expenses
- Rising disposable income
Awareness about availability & need for quality health care
Greater incidence of `lifestyle’ diseases (e.g. diabetes, heart disease)
Novel concepts like medical tourism and managed health care
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Evolution of Health Insurance in India
Mediclaim policy
introduced in 1986
2000s emergence of private non-life insurers providing variety of
health care products,
including OPD
Rashtriya Swasthya Bima Yojna launched in 2008, for BPL
segment
- 2012s Life insurers getting
into reimbursement product space
- GI and Stand alone Health
insurance companies
offering some value added
feature like Re-instatement of
sum insured
Going Ahead :
- Product for impaired lives(e.g.
Diabetes/Cancer) with a serious approach
- Long term managed care as prevalent in
USA
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Future
Lately several life insurance companies have plunged into the Indemnity Health
Product segment
Products:
- Minimum exclusions supported by stricter underwriting at
pre-acceptance stage
- Managed Care for life style diseases like diabetes
- Health Saving Account (HSA)
- Long term Care product
- For senior citizen
- Customized product
More IT enabled services leading to efficient processes
Strong coordination between Insurers and service providers
Gate keeping like USA
Direct to customer (D2C) channel emerging as an important distribution
channel
Universal Health insurance scheme for all citizens of the country ?
