Healthcare Insurance Sector in India


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The Report is a brief overview of Healthcare Insurance Market in India. It covers Market Size and Forecasts, Competitive Structure, Growth Analysis, Impact Analysis and Recommendations.

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Healthcare Insurance Sector in India

  1. 1. Healthcare Insurance Sector in India Santhosh - Analyst
  2. 2. Contents Introduction Market Size & Forecasts Market Drivers Market Restraints Competitive Structure Value Chain Impact Analysis Recommendations
  3. 3. Introduction Healthcare Insurance Market in India in unique and has a strong growth potential than the other insurance markets. The study covers all the fundamental aspects of the healthcare insurance market in India. The Topics covered in this study are • Market size – future forecast (reasons for the fc) • Key drivers/resistors of the market • Split between public and private healthcare insurance markets in India • Competitive landscape – w.r.t private players • How does public healthcare insurance work in India • How does public healthcare insurance affect the healthcare scenario in India • The healthcare insurance value chain – private compared with public • Impact of healthcare insurance sector’s growth on the pharmaceutical market in India • Strategic recommendations
  4. 4. Market Size & Forecasts India Health Insurance Market (2002-2008) Source:IRDA The Indian healthcare insurance industry was worth INR 5,125crores with a compounded annual growth rate of approximately 37 percent between 2002 and 2008. The market penetration is only around 2 percent of the total population in India. The Health Insurance Industry is one of the fastest growing segments among other non-life insurance segments.
  5. 5. Market Size & Forecasts Total Revenue Forecast for Indian Healthcare Insurance Market - 2008-2015 70000 50 45 60000 40 Premium in INR (Crores) 50000 35 Growth Rate 30 40000 25 30000 20 20000 15 10 10000 5 0 0 2008 2009 2010 2011 2012 2013 2014 2015 Year Revenues Growth Rate The Indian healthcare insurance industry is worth INR 60,497 crores with a compounded annual growth rate of approximately 42.3 percent between 2008 and 2015. The market penetration is will be 3 folds higher in 2015. The main factors of growth are increased awareness. According to World Bank Report, 99% of Indians will face financial crunch in case of any critical illness. Hence the need for Health Insurance.
  6. 6. Market Drivers Current Impact (2008-2011) Future Impact (2011-2014) Increasing awareness of Health Insurance Rising healthcare costs have increased need for health insurance Supporting Demographic Profiles (Prospering Middle Class, increasing disease state, population) Detariffing of the general insurance industry (which has increased emphasis and efforts by insurance companies towards health insurance and other personal lines of business) Rationalization of premium rates (e.g. trend of upward revision in respect of Group Health policies) 0 5 10 0 5 10 In order to encourage foreign health insurers to enter the Indian market the government has recently proposed to raise the foreign direct investment (FDI) limit in insurance from 26% to 49% , Government initiatives are always supportive to Healthcare Insurance Environment.
  7. 7. Market Drivers (Cont…) The spending on Healthcare is increasing YOY from 2005 to 2025. The prospering middle class in India supports this spending environment. The average annual household consumption in healthcare (discretionary spending ) is expected to double between 2005 and 2025. Source:Mckinsey There is a clear indication that seekers ( annual income between INR 2,00,000 and 04,99,999) and strivers ( annual income between INR 5,00,000 and 10,00,000) population is significantly increasing in the next future. There will be a direct proportionality of this increase to healthcare spending parity. Source:Mckinsey
  8. 8. Market Drivers (Cont…) Salient Demographic Features that support the growth of Health Insurance in India:  Adult literacy rate in India is 61.3% and the youth literacy rate in India is 73.3% and is expected to increase in the future.  The Disease rates in India is increasing. India has one of the highest heart disease and diabetes rates in the world.  It is home to one-sixth of the world’s population occupying less than 3 % of the world’s area. Population of India (in Millions) Year Under 15 15-64 65+ Total 2000 361 604 45 1010 2005 368 673 51 1080 2010 (P) 370 747 58 1175 2015 (P) 372 819 65 1256 2020 (P) 373 882 76 1331 Source: Institute of Economic Growth The Indian population will have an increase in population by 2010. Specifically, the age group between 15-64 will experience high growth levels. This will support the health care insurance market to grow in tandem.
  9. 9. Market Restraints Current Impact (2008-2011) Future Impact (2011-2014) Inadequate healthcare infrastructure Limited reach Significant underwriting losses for Health Insurance business in India Lack of standardization and Accreditation norms in healthcare industry in India Insufficient data on Indian consumers & disease patterns resulting in difficulty in product development and pricing 0 5 10 0 5 10
  10. 10. Competitive Structure Health Insurance Companies’ Landscape Public Sector: New India, Oriental, National, United India Non-life insurance Private Sector: ICICI Lombard, Reliance, Bajaj Allianz companies and others Specialized Health Health Insurance  Star Health and Allied Insurance insurance Companies  Apollo DKV insurance companies Life Insurance broadly addresses four needs: saving, protection, retirement and investment. Life Insurance Main players: Companies  LIC  Private players etc
  11. 11. Competitive Structure (Cont…) Market Share of Key Players in Health Insurance Companies (2008) Market Leader : New India Insurance Market Structure : Oligopolistic Competition Top players : New India ICIC Lombard United India National Oriental Market Size : Increasing Source:IRDA Health insurance forms a low proportion of the total business for life insurance companies in India (0.2 percent of the individual regular premium for FY2008), it forms a significant proportion of the business for non-life Insurance companies (approx.18 percent of the total Gross Written Premium for FY2008)
  12. 12. Competitive Structure (Cont…) Healthcare Insurance Premium – Company wise analysis Public Vs Private Health Insurance Companies Market – India (2008) By Analysis Private Healthcare Companies have doubled their market share since 2004. The public sector companies are increasingly losing their market share.. The public health insurance companies accounts for 62% while the private sector accounts to 38% of the Indian Health Insurance market in 2008. Inference:  The total premium income of Private health insurance portfolio in 2008 grew by 57.03% to INR 1941.50 crores from 2007.  The total premium income of Public health insurance portfolio in 2008 grew by 61.3 % to INR 3183.50 crores from 2007.  In 2008, there wasn’t a significant change in the market share for public and private sector.
  13. 13. Competitive Structure (Cont…) Market Share of Key Players in Private Health Insurance Sector (2008) Market Leader : ICICI Lombard Market Structure : Oligopolistic Competition Top players : ICIC Lombard Reliance Bajaj Alliance Market Size : Increasing By Analysis Present Scenario Futuristic Scenario : Perfect Competition Niche Market Leaders Niche Market Leaders Star Health ICICI Lombard ICICI Lombard Star Health Reliance Apollo DKV Apollo DKV Bajaj Allianz Royal Sundaram Reliance IFFCO Tokio New Players Royal Sundaram TATA AIG Bajaj Allianz Others IFFCO Tokio TATA AIG Market Boomers Market Followers Market Boomers Market Followers By Analysis The market in the current scenario is oligopolisitc in nature and there is a fair possibility in future that the market will have large number of firms with homogenous product offering ending with Perfect Competition.
  14. 14. Value Chain Insurers Private Companies IRDA - regulator Public Companies Payers Intermediaries Providers TPAs Employers Hospitals Distribution Channel Government Diagnostic Centers Partners Mediclaim Policy Holders Doctors HMO NGO/SHG/MFI Nursing Homes PPO Customers (Individuals, Patients) Private: Private Companies, TPAs, Distribution Channel, TPA’s, PPO, HMO, Healthcare Providers, Private Employers Public : Public Companies, Healthcare Providers, Government Employers
  15. 15. Impact Analysis – Public Sector Health Insurance Health Insurance Landscape Plans Insurance and other organized forms of  Private payment for health services, including  Social/Government ESIS, CGHS and other such employer (CGHS, EHIS, RSBY schemes, presently cover <15% of all etc) people in the country. (Membership: 47  Community Based/ million under ESIS, 4 million under Micro insurance CGHS, and upwards of 100 million under government-sponsored, group Some of the leading health insurance plans in India with and individual commercial health good coverage options and insurance, plus coverage under tax saving schemes are schemes of Defence, Railways, PSUs- Health Guard, Star package, esp. steel and coal etc) Silver Health Policy, Insta Insure, Star package, Health Advantage Plus and Family Floater Plan.
  16. 16. Impact Analysis – Public Sector (Cont…) The social/community insurance is has the highest coverage till date. Even in case of entry of private players in the market, this segment will have tremendous potential due to diversified coverage (Rural India). There has been strong evidence of growth on adoption of insurance plans in the rural India. If similar plans introduced, there would be a raise in the penetration of the Indian market. For the healthcare sector, this is significant in terms of more number of patients. Hence there would be requirements from the healthcare sector to adjust to infrastructure mandates Healthcare Impact:  Impact: on Quality of Healthcare services (service quality would increase)  Impact on healthcare infrastructure (Quality would definitely increase)  Increase healthcare insurance penetration
  17. 17. Impact Analysis – Pharmaceutical Industry Healthcare Insurance Growth’s Impact on Pharmaceutical Industry Reimbursement Reimbursement is the sales price that a payer for a drug ultimately pays, net of any rebates or discounts it receives. Reimbursement is important to pharmaceutical companies because any rebates or discounts that impact the price of a drug to a payer also impact pharmaceutical company revenue and profits (along with quantity). Generally speaking, as a payer’s negotiating power increases, either through government legislation or concentration of buyers, reimbursement levels go down. Payer Mix Payer mix represents the percentage of prescriptions that are reimbursed by a private health insurance plan, government funded health plan or paid for in cash by an individual. Payer mix is relevant because on average pharmaceutical companies receive very different revenues for the same drug depending on whether it is ultimately reimbursed by a private health plan, government funded plan or paid for in cash. Utilization Utilization is defined as the quantity of pharmaceuticals consumed. It is necessary to evaluate potential impact on overall utilization of pharmaceuticals (both brand and generic drugs) as well as any potential bias towards utilization of generics over branded pharmaceuticals.
  18. 18. Impact Analysis- Pharmaceutical Industry (Cont…) Net Effect on Factors Pharmaceutical Companies As the health insurance penetration increases, reimbursement will also increase. As the volume of drug sale or utilization of Reimbursement drugs grows, reimbursement increase with a positive impact. A partnership environment strategically would be in advantage for pharmaceutical companies to Payer Mix offer discounts and increase their volume sales. Branded Generic Utilization The growth of healthcare insurance market By Analysis in India will have a positive impact on Pharmaceutical Industry. India’s With the growing Health Insurance market in India, the overall utilization of drugs Pharmaceutical market is a pharma would subsequently increase. However, generic drug utilization would be higher than emerging market with growth potential more that of the branded drugs due to the factor that India is still in nascent stages health than 10%. Alongside with the growth of insurance penetration. Assuming that the penetration is more in middle class, the insurance market, the pharmaceutical premium they opt will be lesser and hence generic drugs would have an definite market may grow at a faster phase more advantage. than 15% within the next few years.
  19. 19. Recommendations Create the Awareness Increase exposure through media (TV, Radio and Internet). In this case, the traditional model is more generic and there is a need to reinvent the messages based on target groups to achieve the business objectives. Product Mix & Quality There is a demand for new products in the market with optimal pricing. Preventive care, out patients coverage and long term care needs to be addressed with utmost flexibility in options such as continuity/renew-ability and portability. Comprehend the nuances of the market Companies should understand the nitty-gritty of the market to increase their market share.  Fraud Control  Cost & Inflation Factors  Localization Trends  Quality Standards – Region wise.  Managing the divergent expectations of the insurer, the insured and the provider
  20. 20. Research Methodology The Research Methodology Followed (Secondary Research – Internet) • Define Marketing Problem and Opportunities • Obtain background information on industry, markets, customers and competition • Locate appropriate resources/collect data • Organize and analyze data • Present Finding