Presented ByDebadrita Chakraborty

Indranil MukherjeeMohit Damani

Neha ShivKumarNaveen Sharma

2

Why is Health Insurance important?– Rising medical costs– Sharing of health related risk– uncertain hospital bills– Expensive/quality health care services– Money value – Sick Vs Healthy– Family health insurance– Tax benefit– Productivity of workforce– Removes some of the burden from the state– Keeping pace with the customer needs while

achieving profitability

Health Insurance – Scope • Health Insurance - potential to

become a Rs.25000 crores industry by 2012.

• No. of Elderly People in the Developing World will TRIPLE in 25yrs. (WHO)

• In India, the no. of people above 60 yrs is about 8% today, with that no. expected to hit 21% by 2025. (Source:Asia Insurance Review)

Source: NIA Library

…..Health Insurance – Scope

• Medical tourism on the rise• Healthcare infrastructure expansion• Increasing burden of new diseases and

health risks and neglect of preventive and primary care and public health functions due to under funding of the government health care.

Objective of The Study• To find out the necessity of health

insurance • To find out the position of different types of

health insurance schemes available in India

• To discuss the past & present scenario and future prospects

• To launch a new health insurance scheme based on the analysis of the current schemes

6

Progression of Health Insurance business in India

40,078

5,166,968

169703 153,097

8,637,251

356419332,541

10,662,361

798588

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

2006-07 2007-08 2008-09

Health Insurance Policies Procured by lines of business

Standalone

Non-life

Life

Policy Growth Rate

2007-08 2008-09

Standalone 282% 117%

Non-life 67% 23%

Life 110% 124%

Total 70% 29%

% share of Health insurance policies sold

2006-072007-

082008-

09

Standalone 0.75% 1.67% 2.82%

Non-life

96.10%

94.43%

90.41%

Life 3.16% 3.90% 6.77%

Total100.00

%

100.00%

100.00%

7

Current Health Insurance Scenario: India

Source: Business World (India) – Oct 2007

Low penetration of Insurance and Low Govt. expenditure in India . . .

Has resulted in high Out-of-Pocket spend

Uninsured82.65%

Community Insurance4.19%

Pvt. sector Enterprise (Self

Funded)4.61%

Indian Railways0.59%

Pvt.Health Insurance1.42% CGHS

3.35%

ESIS3.19%

Health Insurance Penetration in India

Health Insurance Plans

Health Insurance Plans

Private SocialCommunity Based /

Micro Insurance

Risk Rated & offered by

Commercial Organization

Non- Risk Rated &

Government initiated

Community Rated & Normally

managed by Community /

Groups

Health Insurance : NeedIndian health financing CHALLENGES:

• Increase in health care costs

• High financial burden on the poor

• Need for long term and nursing care

for senior citizens

• Increasing burden of new diseases

and health risks

• Due to under funding, preventive and

primary care and public health

functions are yet to meet their

objectives.

Population covered under some form of Healthcare Prepayment

0.9

3.45 5

14.3

02468

10121416

PrivateHealth

Insurance

SocialInsurance

EmployerSpend

CommunityInsurance

Total

Healthcare Type

Perce

ntage

(%)

Source: Mckinsey

Some facts on Health Expenditure in India…

■ The magnitude of health expenditure in India for the year 2001-02 was about 4.8% of the GDP at current market prices

■ Over three-fourths of all health spending is private spending

■ Less than 15 percent of people in India have some form ofhealth insurance coverage

■ More than 40 percent of the people hospitalized had to borrowmoney / sell assets to cover expenses

■ A quarter of those hospitalized fall below the poverty linebecause of high costs #

■ Medical care is one of the 3 main causes of impoverishment inthe country.

■ Recent NSSO data (60th round) indicates a large share ofconsumption expenditure is on health (13% in rural, 10% inurban)

Trends in Product Variety:

• Health insurance in India was first marketed by non-life insurers as a standardized annual indemnity product, Mediclaim, in 1986, with an annual limit of indemnitychosen by the insured beforehand, and the premiums being largely based on the annual limit chosen and the age of the prospect.

• The product variety available has increased substantially now, though the indemnity-based annual contract continues to be the form which predominates • Requires increased emphasis on consumer understanding of product scope and options.

Products now available include:

– Individual and Group Floater Indemnity products

– Critical Illness Indemnity and Benefit products

– Hospitalization Benefit and Surgical Benefit products

– Hospitalization Daily Cash Benefit products

– High Deductible and Top-Up covers

– Micro health insurance products

– Overseas travel and International comprehensive coverageProducts

– Disease Management products

– Specific disease products- Cancer, HIV, Diabetes

– Products for different age groups- Senior Citizens, children Dental insurance

– Products with outpatient coverage in some form

Social / Government Schemes: Issues &Challenges

• Catering to Mass Population based on Income criteria Price Pre-fixed A challenge to administrator – TPA working with synergies in NGO’s to ensure

a successful model Subsidized schemes To be run on community based models

• Health Care for Government Employees & Workers Self Funded schemes Impressive network Covers small segment of population Cumbersome procedure

“No National Health Care Coverage catering different strata segments”

Present scenario1. Enormous mismatch in global healthcare financing2. Developing countries have 84% of population & 90% of disease

burden3. By 2020, estimated world population-7.5 billion By 2050, estimated world population-9 billion4. According to NHA of India 2001-02, sources of finance in health sector-

Household 68.8%

Central Govt . 7.2%

State Govt. 14.4%

Private Firms 3%

Public Firms 2%

External Funds 2%

Local Govt2.2%

Penetration of health insurance

Table 1. ACTUAL DATA - Source: Tariff Advisory Committee, Data Repository

Time YearNo. of

PoliciesNo. of

MembersNo. of Claims

Premium Paid in

Rs (crore)

Claims Payable

in Rs (crore) Claim Ratio

Underwriting Balance

Rs (crore)

1 2003 - 2004 2265451 8361629 360088 944 785 83% 159

2 2004-2005 2059449 8987239 555273 987 948 96% 39

3 2005-2006 3828495 16345575 1016785 1947 1777 91% 170

4 2006-2007 3110475 17907430 1060047 2,820 2,198 78% 622

5 2007 -2008 3790838 24121625 1436998 2,758 2,904 105% -146

Key Observations:

1.Table 1 encloses the data related to Paid Claims and not the Incurred Claims. Why are the Incurred claims data which is crucial and important not reported? How far are the Paid Claims data a good approximation to Incurred Claims data?

2. Table 1 contains data of 7 variables over a period of 5 years, which may not be large enough to be used for accurate future predictions. Are the data heads recorded for future analysis sufficient? Who recommended the current format of the data set, Table 1?

3. The data enclosed in Table 1, is gathered from TPAs and then consolidated .Do the data gathered from TPAs represent the whole health insurance business for the corresponding year?

Year No. of No. of No. of Premium Claims Claim Underwriting Policies Members Claims Paid in Payable in Ratio Balance

Rs (crore) Rs (crore) in Rs (crore)

2003-04 2265451 8361629 360088 944 785 83% 1592004-05 2059449 8987239 555273 987 948 96% 392005-06 3828495 16345575 1016785 1947 1777 91% 1702006-07 3110475 17907430 1060047 2,820 2,198 78% 6222007-08 3790838 24121625 1436998 2,758 2,904 105% -1462008-09 4493349 32422234 2203227 4426 4322 97% 1042009-10 5323360 44431783 2882139 6317 6206 98% 1122010-11 5501574 54877506 3675942 7777 8140 104% -3632011-12 6776295 75522610 5307482 10422 11720 112% -12982012-13 7647569 99460493 7198628 15101 16605 109% -15032013-14 8645012 130596430 9508732 19583 22866 116% -32832014-15 9836703 171462366 13052023 26140 31848 121% -57072015-16 11483470 229755216 17964586 36097 45182 124% -90852016-17 12914784 300806429 24061174 48745 62771 128% -140262017-18 14804382 397596699 32710371 64826 87558 134% -22732

GROWTH FUNCTION - EXPONENTIAL FIT - TABLE 3

The projected alarming situation !!!

Underwriting Balance - TABLE 2

-400

-200

0

200

400

600

800

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

TIME ( in years )

VA

LUE TIME (in years )

Gross Profit

Issues and Concerns

1. Low level of awareness among consumers about health insurance products and their benefits

2. Limited Influence over healthcare delivery mechanism - Limited healthcare delivery network with top few cities

3. Low health insurance penetration and lack of affordability of the consumers in the tier 2/3 cities and rural areas to support the investment in healthcare infrastructure in these areas

4. Insufficient data on consumers & disease patterns, absence of standardization of healthcare costs & significant levels of frauds leading to under-pricing of insurance products, difficulty in product development & pricing and higher value of claims

Addressing some way-outs for issues and challenges:

• Creating awareness on Rights & Responsibilities

• Data Pool – Regulator as a repository• Standardization of Cost

– Health Providers• Increased Tax benefit• Gradation of Health service providers• Pool for Senior Citizen• Compulsory Health Benefits for organized

sector• Government role on mass healthcare

initiatives

Recent initiatives of IRDA

Committee to formulate regulations

Pure health insurance products

Allowing the formation of an stand alone health insurance company

Standalone health insurance companies

Renewability

Senior citizens

Obstacles to providing Health Insurance….

Lack of Data

Moral Hazard/Adverse Selection

Complex nature of the product

Medical Inflation

New treatments

Unnecessary treatments

Difficulty in pricing

Government provision of health care

Long term nature

Changing life style & fraud companies’ presence……

How to mitigate/address these impediments contd…

InsurerDesigning a less complex product

Transparency in the product features

Clarity in policy terms, conditions & exclusions

Efficient back-office support for underwriting and claims processing higher Reinsurance

Need for quicker services. Eg: Toll free no.s, cashless, quick response

Expense analysis on a regular basis

Product innovation

Efficient training of sales force

How to mitigate/address these impediment contd……

Policyholder:

• Pay attention to policy conditions

• Read the exclusions and limitations very carefully

• Compare premium costs, deductibles, co-payments

• Take an informed decision

How to mitigate/address these impediments contd…

Regulator/Government

• Come out with health insurance regulations• Centralized data base for health insurance

experience statistics• Provider rating• Cap on renewal premiums• Ensure that a decent portfolio of health

coverage represent the rural sector• Guard against ill effects of privatization• Further tax incentives• Compulsory savings towards health care• Should emphasize the need to employ

actuarial methods in various aspects of life and non-life businesses

Challenges and Road Ahead:

• Health System Issues:

– Healthcare costs– Regulation of providers– Accreditation/ Grading/ Quality issues

• Consumer Awareness and Empowerment– Decrypting the jargon– Product innovation to match consumer needs– Simplification and standardization of key terms– Process efficiencies– Performance benchmarks for operations and service– Transparency and best practices– Leveraging technology

• Minimizing moral hazard in the system• Increasing reach, access and affordability

QUESTIONNAIRE

Name of Respondent: - ____________________________

Date: -

Gender

(a) Male (b) Female

Age (in Years)

(a) 18 – 25 (b) 26 – 35 (c) 36 – 45 (d) above 45

Qualification

(a) 12th (c) Graduate (d) Postgraduate (e) Professional

Monthly Income (in Rs.)

(a) Below 10,000 (b) 10,001-20,000 (c) 20,001-30,000 (d) above 30,000

Occupation

(a) Student (b) Private Employee (c) Govt. Employee (d) Business Man

Q.1 Do you have any Insurance Policy? (a) Yes (b) No

Q.2 Are you aware about Health Insurance? (a)Yes ( b) No

Q.3 If yes, do you know benefits of health insurance? (a) Yes ( b ) No

Q.4 Do you have any Health Insurance Policy? (a) Yes (b) No

Q.5 If yes, which companies plan do you avail? (a)LIC (b) Bajaj Alliance (c) ICICI Lombard (d) HDFC (e) Others

Q.6 How did you get this health Policy? (a)Employer Provides (b) Own purchase (c) Family Provides

Q.7 How much premium do you pay annually? (a) 1000- 5000 (b) 5001- 10000 (c) 10001 – 15000 (e) Above

15000

Q.8 Why did you purchase this health insurance plan? (a) Health Expenses recover (b) Tax benefits (c) Recover Future uncertainty

Q.9 Please Rank all these companies as per services provided by them from 1-5

“Ideal Health Insurance”-Our Invention….

Benefits of the policy:

• It takes care of the medical treatment costs incurred during hospitalization due to serious accident or illness

• The policy can be taken as add on cover to your existing hospitalization – medical expenses policy

• In case of higher expenses due to illness or accidents the Ideal policy takes care of the additional expenses.

Special Features of The Policy

• Floater Policy (sum insured floats over members covered)• Competitive premium rates• No Medical tests up to 55 years subject to clean proposal

form.• For all cases where medical tests have been conducted in our

empanelled diagnostic centre, and the proposal has been accepted / and premium received the Company would reimburse50% of the medical test charges

• Pre-existing diseases covered after 4 years• Continuity for waiting periods would be given for any

indemnity cover irrespective of Sum Insured in the earlier policy and discounts on child health insurence

 

Age Flexibility

• Age of entry for proposer 18years – 70 Years. Renewable up to 80yrs

• Children from 3 Months - 5 years can be covered if both the parents are insured with us

• Children from 6 years to 18 years can be covered if either of the parents are covered with us

• Children from 18yrs to 25yrs can be covered as self proposer or as dependents

Dependants Under Our Policy

• The primary member or the proposer can cover Self, Spouse, and 3 Children under this policy

• The premium would be calculated as per the highest age of the family member

 

Eligibility Criteria For The policy

• Members covered under Medical expenses (Hospitalization) policy. This policy covers the medical expenses in excess of the specified deductible amount

• Members who do not have any Health policy can also opt for this policy; the expenses up to the deductible limit (per hospitalization) have to be borne by the member

WHAT WOULD BE THE PREMIUM COST

Sum insured/ No of members 1 Lakh 2 Lakh 3 Lakh

Deductible

1 2500 3750 5900

2 3500 5250 8100

PLAN 3 4025 6038 9255

90 days-40 years 4 4430 6645 10145

5 4870 7305 11115

1 4500 5500 7900

PLAN B 2 5850 7150 10150

41-60 years 3 6435 7865 11125

4 7080 8655 12200

5 7645 9345 13145

1 4750 5750 8150

PLAN C 2 6175 7475 10475

61-80 years 3 6795 8225 11485

4 7475 9045 12595

5 8070 9770 13570

Details of Coverage of The Policy

• Single Sum Insured and single premium for the whole family

• the member has access to cashless facility in more than 2400 empanelled hospitals across the country subject to terms and exclusions

• In case the member opts for hospitals other than the empanelled ones the expenses incurred would be reimbursed within 14 days from the date of submission of all documents

Details of Coverage of The Policy Contd……

• The policy covers ambulance charges in case of emergency subject to a maximum of Rs. 3000

• The limit of indemnity /Sum Insured is the maximum liability above the deductible

• Discounts provided on child insurence

Crystal Ball Gazing………. Trends for the

near future

• Growth trajectory likely to continue- health insurance will be an increasingly important mode of payment for hospital services

• Product and delivery innovations, distribution innovations .Increasing and professionalization in the system

• Quality, Standards, Cost optimization

• Providers contributing to sharing risk-– Provider payment mechanisms– New dimensions of Provider ‘Networks’

• More comprehensive products- overcoming limitationsdue to health system issues

• Savings linked, Differentiated and Multi-tiered products

Thank You