Healthcare Insurance Sector in India
Santhosh
- Analyst

Contents
Introduction
Market Size & Forecasts
Market Drivers
Market Restraints
Competitive Structure
Value Chain
Impact Analysis
Recommendations

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

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.

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.

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.

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

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.

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

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

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)

Competitive Structure (Cont…)
Healthcare Insurance Premium – Company wise analysis
Public Vs Private Health
Insurance Companies Market –
India (2008)
By Analysis
www.healthinsuranceindia.org
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.

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.

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

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.

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

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.

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.

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

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