The health insurance market in India is growing rapidly, led by non-life (general) insurers. Life insurers have struggled to compete in this space due to offering complex products when customers needed simple indemnity plans, and not participating in the large corporate and mass market segments. Both life and non-life insurers face challenges like increasing medical costs, lack of data, and ensuring customer understanding of products. However, the future is promising with rising incomes, awareness, and lifestyle diseases driving demand. Insurers are innovating with new product types and improving processes using technology to better serve customers.

1. 0
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.

2. 0
Flow
Health insurance market
Why did Life insurance companies struggle?
Challenges
Future of Health insurance industry

3. 0
HEALTH INSURANCE
MARKET

4. 0
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)

5. 0
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 RsCrore
CAGR 25%
Source: IRDA website

6. 0
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

7. 0
Top Insurers-GWP segment wise (Rs.Crore)
FY 2011-12
0
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

8. 0
Health Insurance by Life Insurance
Companies
363
302
460453
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

9. 0
WHY DID LIFE INSURANCE
COMPANIES STRUGGLE ?

10. 0
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

11. 0
CHALLENGES

12. 0
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

13. 0
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

14. 0
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

15. 0
FUTURE OF HEALTH
INSURANCE INDUSTRY

16. 0
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

17. 0
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

18. 0
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 ?