problems & prospects of insurers in health insurance space in india

PROBLEMS & PROSPECTS OF INSURERS IN HEALTH INSURANCE SPACE IN INDIA

• BY G SRINIVASAN• CMD CMD UNITED INDIA INSURANCE COMPANY LTD

• 24/01/2012

HEALTH INSURANCE IN INDIA – A SNAPSHOT

• OVER A DECADE OF FORMATION OF THIS DEDICATED SPACE

• 22 GENERAL INSURANCE COMPANIES WITH 3 HEALTH MONOLINE COMPANIES

• LIFE INSURANCE COMPANIES HAVE ALSO ENTERED THIS SPACE

• # OF POLICY HOLDERS INCREASED FROM 8.3MILLION IN 2004 TO OVER 200 MILLION IN 2011

G SRINIVASAN, CMD


• HEALTH INSURANCE PREMIUM Rs 11480 Crs IN 2010-11 WITH A GROWTH RATE OF OVER 36%

• IN THE CURRENT YEAR HEALTH INSURANCE PREMIUM UPTO DECEMBER 2011 WAS 0VER Rs 9661Crs, GROWING AT ABOUT 18%

• HEALTH INSURANCE EXCLUDED IN INDIA : OVER 950 MILLION (FICCI-McKINSEY SURVEY 2011)

G SRINIVASAN, CMD


• HEALTH INSURANCE BREADTH OF COVERAGE IN INDIA HAS INCREASED FROM 4% TO 20% OF THE POPULATION IN LESS THAN 5 YEARS (ISB – INSIGHT VOL 9 ISSUE 2)

G SRINIVASAN, CMD


• HEALTH INSURANCE PENETRATION IN INDIA IS LOW – ONLY AROUND 2.2% OF THE POPULATION IS COVERED UNDER PRIVATE HEALTH INSURANCE & RURAL HEALTH INSURANCE PENETRATION IS LESS THAN 10% (PwC HEALTH INSURANCE IN INDIA REPORT-MARCH 2011)

G SRINIVASAN, CMD

HEALTH INSURANCE IN INDIA - POISED FOR AN ACCELERATED

GROWTH CURVE!

• NEAR ABSENCE OF ANY SIGNIFICANT RISK PROTECTION AGAINST MAJOR HEALTH RELATED EXPENDITURE IN INDIA, AS INSURANCE & OTHER ORGANISED FORMS OF PAYMENT FOR HEALTH SERVICES (ESIS, CGHS) BARELY CONSTITUTES A TENTH OF ALL HEALTH EXPENDITURE

• NEARLY 80% OF HEALTHCARE EXPENSES FUNDED OUT OF POCKET BY PEOPLE IN INDIA AND IS A LEADING CAUSE OF IMPOVERISHMENT IN THE COUNTRY

G SRINIVASAN, CMD

HEALTH INSURANCE IN INDIA - POISED FOR AN ACCELERATED

GROWTH CURVE!• NEARLY 39 MILLION PEOPLE ARE PUSHED TO POVERTY

BECAUSE OF ILL HEALTH EVERY YEAR

• ABOUT 47% OF HOSPITAL ADMISSIONS IN RURAL INDIA & 31% IN URBAN INDIA WERE FINANCED BY LOANS & SALE OF ASSETS - 74% 0F MEDICAL EXPENDITURE WAS INCURRED ON OUT-PATIENT TREATMENT (THE LANCET – HEALTH REPORT 2010)

• INDIA SUFFERS 20% OF GLOBAL DISEASE BURDEN (THE LANCET REPORT 2010)

G SRINIVASAN, CMD

HEALTH INSURANCE IN INDIA - POISED FOR AN ACCELERATED GROWTH

CURVE…..• RISING DISPOSABLE INCOMES AND LIFESTYLE

CHANGES BRING IN NEW HEALTH RISKS – GROWING LONGEVITY OF THE POPULATION

• HEALTHCARE SPEND IN INDIA ESTIMATED TO DOUBLE TO Rs 2250 BILLION(US$ 42 BILLION) BY 2014

• COMPLEMENTING THE SAME , HEALTH INSURANCE IN INDIA IS PROJECTED TO GROW AT A CAGR OF OVER 15% TILL 2015 ( BCG REPORT- APRIL 2011)

G SRINIVASAN, CMD

HEALTH INSURANCE IN INDIA - POISED FOR AN ACCELERATED GROWTH CURVE…..• AT THIS RATE ONLY 50% OF THE COUNTRY’S POPULATION

WOULD HAVE SOME HEALTH INSURANCE COVER BY 2033 (PwC HEALTH INSURANCE IN INDIA REPORT-MARCH 2011)

• INCREASED GOVERNMENT FOCUS ON HEALTH INSURANCE FOR THE MARGINALISED POPULATION

• HEALTH INSURANCE TO EMERGE AS THE BLOCKBUSTER SEGMENT IN THE NON-LIFE INSURANCE SPACE, IT COULD ACCOUNT FOR 40% OF THE TOTAL NON-LIFE INSURANCE PREMIUM IN INDIA BY 2020 (BCG REPORT 2011)

G SRINIVASAN, CMD

HEALTH INSURANCE PREMIUM IN INDIA

YEAR HEALTH PREMIUM(Rs Crs)

GROWTH RATE(%)

HEALTH PREMIUM AS A % OF TOTAL PREMIUM

2004-05 1670.21

------ 9.55

2005-06 2222.09 33.06 10.922006-07 3208.73 44.40 12.882007-08 5124.95 59.72 18.422008-09 6625.46 29.28 21.832009-10 8305.18 25.35 23.992010-11 11480.12 36 26

G SRINIVASAN, CMD

CHALLENGES BEFORE THE INSURERS

• HIGH INCURRED LOSS RATIO OVER THE YEARS – 111% IN 2009-10 & 100% IN 2010-11

• TPA MANAGEMENT

• HEALTHCARE PROVIDER MANAGEMENT

• ISSUES OF ADVERSE SELECTION OF RISKS

G SRINIVASAN, CMD


• LACK OF DATA AVAILABILITY ON DISEASE & USAGE PATTERNS OF DIFFERENT SOCIO-ECONOMIC SEGMENTS IMPACTING PRODUCT INNOVATION

• LIMITED PRODUCT RANGE IN COVERAGE RESULTING IN MISMATCH BETWEEN THE DEMAND & SUPPLY OF INSURANCE – WHICH STEMS PENETRATION

G SRINIVASAN, CMD


• HIGH INCIDENCE OF DOUBTFUL /SUSPECT CLAIMS: ACCORDING TO A McKINSEY REPORT (2010), ATLEAST 20% OF HEALTH CALIMS IN INDIA ARE SUSPECT/DOUBTFUL

• RISE IN MORAL HAZARD AMONG ALL THE STAKE HOLDERS IN THE INSURANCE – TREATMENT VALUE CHAIN RESULTING IN LARGE VARIATIONS IN HEALTHCARE COSTS FOR THE SAME AILMENT/TREATMENT (PROF K SRINATH REDDY EXPERT COMMITTEE REPORT ON HEALTH INSURANCE IN INDIA -JANUARY 2011)

G SRINIVASAN, CMD


• LACK OF INNOVATION IN BUSINESS MODEL TO PENETRATE THE HUMONGOUS UNSERVED RURAL MARKET

• TRUST-DEFICIT IN THE CUSTOMERS/ CONSUMERS, WHICH NEEDS TO BE IMMEDIATELY CLOSED OUT

• LACK OF STANDARDISED POLICIES ACROSS THE INSURERS

G SRINIVASAN, CMD


• LOW AWARENESS AMONG THE POPULATION ABOUT THE BENEFITS OF HEALTH INSURANCE

• LACK OF CAPACITY TO BUY HEALTH INSURANCE

• FAILURE TO PROVIDE QUALITY HEALTHCARE IN THE COUNTRY, ESPECIALLY IN TIER 2 & 3 TOWNS & RURAL HINTERLAND TO MATCH THE GROWING HEALTH INSURANCE PENETRATION

G SRINIVASAN, CMD


• LACK OF STANDARDISATION & ACCREDITATION NORMS IN THE HEALTHCARE INDUSTRY

• ABSENCE OF REGULATOR FOR HEALTHCARE SECTOR

G SRINIVASAN, CMD

SOLUTIONS

• PROACTIVE REGULATOR & INSURERS ARE WORKING TOWARDS RAMPING UP HEALTH INSURANCE AWARENESS LEVELS THROUGH VARIOUS METHODS

• INNOVATIONS IN PRODUCT OFFERINGS & SERVICE DELIVERY IS BECOMING THE ORDER OF THE MARKET

G SRINIVASAN, CMD

SOLUTIONS

• TIGHTER CONTROL & MONITORING OF TPAs & HOSPITALS

• STANDARDISATION ACROSS THE INSURANCE VALUE CHAIN IS BEING SERIOUSLY LOOKED AT-

(1) CRITICAL ILLNESS DECISION & DETAILS (2) TREATMENT PROTOCOL, FOR ATLEAST MAJOR AILMENTS (3) BILLING PROCEDURES (4) LIST OF NON-MEDICAL EXPENSES

G SRINIVASAN, CMD

SOLUTIONS

• FRAUD IDENTIFICATION & CONTROL STRATEGIES BEING IMPLEMENTED

• INSURERS ARE BUILDING THEIR DATABASE & THUS A LARGER INDUSTRY DATA IS BECOMING AVAILABLE

G SRINIVASAN, CMD

SOLUTIONS• BIG DATA ANALYTICS & PREDICTIVE

MODELLING TOOLS WOULD BUILD A ROBUST FRAMEWORK FOR PRODUCT DESIGNING, PRICING & CLAIMS MANAGEMENT

• ENHANCED LEVEL OF CUSTOMER CARE SERVICES & STRONG GRIEVANCE REDRESSAL MECHANISMS PUT IN PLACE

G SRINIVASAN, CMD

SOLUTIONS

• MORE TRANSPARENCY BEING BROUGHT ABOUT IN POLICY COVERAGE & CLAIM PROCESS

• RISK-BASED PRICING, ESPECIALLY FOR GROUP COVERS

• IDEATION & INCUBATION OF NEW DISTRIBUTION MODELS TO PENETRATE THE UNTAPPED & UNDER-TAPPED RETAIL & MOFUSSIL MARKETS

G SRINIVASAN, CMD

INSURERS MAJOR INNOVATIONS TO DRIVE HEALTH INSURANCE PENETRATION

# MASS HEALTH INSURANCE SCHEMES - RSBY & OTHER GOVERNMENT SPONSORED HEALTH INSURANCE PROJECTS FOR DIFFERENT TARGET POPULATION- ESPECIALLY BPL FAMILIES

# OTHER DISTRIBUTION MODELS LIKE COMMUNITY - BASED HEALTH INSURANCE PROGRAMS & MICRO HEALTH INSURANCE PROGRAMS FOR VICTIMS OF NATURAL CALAMITIES

G SRINIVASAN, CMD

INSURERS MAJOR INNOVATIONS TO DRIVE HEALTH INSURANCE PENETRATION

# VILLAGE ADOPTION PROGRAM ( AS A VEHICLE TO PUSH HEALTH INSURANCE INCLUSION OF THE ENTIRE VILLAGE POPULATION)

G SRINIVASAN, CMD

MASS HEALTH INSURANCE SCHEME - RASHTRIYA SWASTHYA BIMA YOJANA (RSBY)

• A TRANSFORMATIVE GOVERNMENT SPONSORED HEALTH INSURANCE SCHEME FOR BPL POPULATION

• SCHEME STRUCTURED HEAVILY LEVERAGING IT BACKBONE(BIOMETRIC SMART CARDS,REALTIME DATA CAPTURE & MONITORING) AND ACTIVE COLLABORATION BETWEEN THE KEY STAKE HOLDERS (HOSPITALS, TPAs, STATE GOVERNMENTS,ETC.,)

• RAPIDLY ROLLED OUT ACROSS 26 STATES BY COVERING ABOUT 265 BPL FAMILIES COVERED & ABOUT 6.40 CRORE BPL POPULATION COVERED TILL DATE

G SRINIVASAN, CMD

CHALLENGES OF MASS HEALTH INSURANCE PROGRAMS

• FRAGMENTED HEALTH INSURANCE INCLUSION MEASURES OF THE GOVERNMENT

• PRICING INADEQUACIES

• FRADULENT & SUSPICIOUS CLAIMS

G SRINIVASAN, CMD

CHALLENGES OF MASS HEALTH INSURANCE PROGRAMS

• POOR QUALITY OF HEALTHCARE ESPECIALLY IN TIER II & III TOWNS & RURAL AREAS

• DIFFICULTY IN RAMPING UP ENROLMENTS UNDER THE SCHEMES

• HIGH INCURRED LOSS RATIO

G SRINIVASAN, CMD

THE LONG HAUL……

• LONG TERM VIABILITY OF HEALTH INSURANCE SEGMENT CRITICAL–KEY REQUIREMENTS– RIGHT PRICING, HIGH PRODUCT INNOVATION, PROACTIVE CLAIMS MANAGEMENT

• HEALTH INSURANCE IN INDIA HAS TOUCHED THE INFLECTION POINT & IS ON A HUGE GROWTH TRAJECTORY FOR THE NEXT FEW YEARS

G SRINIVASAN, CMD

THE LONG HAUL……

• THE INDUSTRY IS GOING THROUGH THE ADJUSTMENT & ALIGNMENT PHASE WHEREIN THE MULTIPLE STAKE HOLDERS ARE UNDERSTANDING ONE ANOTHER’S CONCERNS AND TRYING TO ADDRESS THE SAME FOR A WIN-WIN PROPOSITION TO ALL

• THE REGULATOR IS ACTIVELY ENGAGING WITH ALL THE STAKEHOLDERS TO PROTECT & PROMOTE THE CAUSE OF THE INSURANCE INDUSTRY AND MORE PARTICULARLY THE CAUSE OF THE CUSTOMERS/CONSUMERS

G SRINIVASAN, CMD

THE LONG HAUL……

• A FOCUSSED/DEDICATED REGULATORY OVERSIGHT ON HEALTH INSURANCE WOULD BRING MORE VALUE TO THE INDUSTRY, AS HEALTH INSURANCE IS FUNDAMENTALLY DIFFERENT FROM THE OTHER LoB

• A REGULATOR FOR THE HEALTHCARE PROVIDER SECTOR WOULD GO A LONG WAY FOR A CONCERTED ACTION TO GROW THE HEALTH INSURANCE SEGMENT

G SRINIVASAN, CMD

THE LONG HAUL……• TECHNOLOGY DEPLOYMENT (WEB APPS, HAND-HELD

DEVICES, CLOUD SERVICES,ETC,.) & DATA ANALYTICS WOULD BE THE ULTIMATE GAME CHANGERS-FOR FURTHERING PENETRATION, PRODUCT INNOVATIONS & DELIVERING SUPERIOR CUSTOMER SERVICE

• AWARENESS NEEDS TO BE ENHANCED ACROSS THE CUSTOMER/CONSUMER SEGMENTS ON THE BENEFITS OF HEALTH INSURANCE AS A PROACTIVE PURCHASE AND THE DOWNSIDE OF A REACTIVE BUY

G SRINIVASAN, CMD

THE LONG HAUL……• GOVERNMENTS SHALL CONTINUE TO BE THE KEY

DRIVER OF PENETRATION OF HEALTH INSURANCE IN THE COUNTRY

• INSURERS HAVE TO COLLABORATE WITH A MULTITUDE OF ENTITIES, WHO HAVE OUTREACH CAPABILITIES, TO DISTRIBUTE HEALTH INSURANCE PRODUCTS, IN A MASSIVE WAY, ACROSS THE RETAIL SEGMENT & RURAL HINTERLAND

G SRINIVASAN, CMD

THE LONG HAUL…… HEALTH INSURANCE IS A CRITICAL

REQUIREMENT FOR INDIAN GOVERNMENT’S ASPIRATION TO COVER THE ENTIRE 1.2 BILLION POPULATION UNDER THE UNIVERSAL HEALTH INSURANCE COVERAGE BY THE END OF THE 12TH PLAN (2012-17) AND,

INSURERS SHALL SEIZE THE OPPORTUNITY NOT JUST AS A BUSINESS PROPOSITION BUT ALSO AS A SOCIAL OBLIGATION TO OUR COMPATRIOTS

G SRINIVASAN, CMD

THANK YOU

G SRINIVASAN, CMD

problems & prospects of insurers in health insurance space in india

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