This document provides an analysis of the Indian health insurance market and ICICI Lombard General Insurance Company. It discusses the growing market size and factors driving future growth. It also outlines ICICI Lombard's range of health insurance products and services, competitors in the market, collaborators, and recommendations to further grow their market share in health insurance.

1. Marketing of Services
ICICI Lombard General Insurance
Company Limited : Health Insurance
EPGP 2009-10 - Term V- Group Submission
26-Apr-2009

2. Instructor: Prof. Nimit Chowdhary
Submitted by:
Gourav Suri
Pankaj Kumar
Rajendra Inani - #27
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3. Table of Contents
1 Analysis of Industry Context........................................................................................................4
1.1 Market size and forecast..............................................................................................................4
1.1.1 Market Drivers for Future predicted growth ........................................................................4
1.1.2 Inferences.............................................................................................................................4
2 Role of marketing ........................................................................................................................4
2.1 Key Points....................................................................................................................................5
3 Company Analysis........................................................................................................................5
3.1 Range of products and services...................................................................................................5
3.2 NRI Services ................................................................................................................................6
3.3 Retail Health Insurance ...............................................................................................................6
3.4 Corporate Health Insurance.........................................................................................................6
3.5 Mass and Health Insurance .........................................................................................................6
3.6 Inferences....................................................................................................................................6
4 Competitors - Health Insurance Company’s landscape................................................................7
4.1 Specialized Health Insurance Companies ....................................................................................7
4.2 Non Life Insurance companies.....................................................................................................7
4.2.1 Public Sector.........................................................................................................................7
4.2.2 Private Sector........................................................................................................................7
4.3 Life Insurance companies.............................................................................................................7
4.4 Market share ...............................................................................................................................7
4.5 Inferences....................................................................................................................................8
5 Collaborators ..............................................................................................................................9
5.1 Channel partners .........................................................................................................................9
5.2 Third party administrators...........................................................................................................9
5.3 Reinsurers....................................................................................................................................9
5.4 Healthcare providers...................................................................................................................9
5.5 Inference .....................................................................................................................................9
6 Marketing Drivers........................................................................................................................9
7 Product and Services..................................................................................................................10
8 Pricing and Segment.................................................................................................................10
9 Market Segments and Product/Brand Positioning/product pricing Strategy............................11
10 Recommendations for ICICI Lombard......................................................................................11
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4. 1 Analysis of Industry Context
Health insurance market in India is unique and has a strong growth potential than other insurance
markets and as well as other general insurance business line. The Indian healthcare insurance
industry was worth Rs 5125 crores with a compounded annual growth rate of approximately 37%
between 2002 and 2008. The same industry was worth Rs 761 crores in 2002. The market
penetration is only around 2 percent of the total population in India. The health Insurance is the fastest
growing business line in General Insurance sector.
1.1 Market size and forecast
The Indian health insurance industry will be worth Rs 60497 crores with CAGR of 42.3 percent
between 2008 and 2015. The market penetration will be three fold higher in 2015. The main factors of
growth will be increased awareness. According to the World Bank report, 99% percent of Indians will
face financial crunch in case of any critical illness.
1.1.1 Market Drivers for Future predicted growth
1. Increasing awareness of Health insurance
2. Rising healthcare costs have increased need for Health Insurance
3. Supporting demographic profiles ( prospering Middle class, increasing lifestyle diseases and
population)
4. De-tariff of general insurance sector
5. Rationalizing of premium rates because of increasing industry experience in retail day by day as
well as trend of upward revision in respect of Group Health Policies).
1.1.2 Inferences
1. ICICI Lombard’s one third premiums are from health insurance this year 2009.
2. De-tariff has resulted in upward revision of group covers- rationalization.
2 Role of marketing
The management and organization of public sector companies remained less developed and they
neglect new product development and marketing. Thus one of the hopes in opening of the insurance
sector was that the private and foreign companies would rapidly develop the sector and improve
coverage of the population with insurance using new products and better management. It is estimated
that the Indian health care industry is now worth of Rs. 96,000 crore and expected to surge by 10,000
crore annually. The share of insurance market in above figure is insignificant. Out of one billion
population of India 315 million people are estimated to be insurable and have capacity to spend Rs.
1000 as premium per annum. Many global insurance companies have plans to get into insurance
business in India. Market research, detailed planning and effective insurance marketing is likely to
assume significant importance. Given the health financing and demand scenario, health insurance
has a wider scope in present day situations in India. However, it requires careful and significant effort
to tap Indian health insurance market with proper understanding and training.
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5. 2.1 Key Points
1. Increase awareness levels
2. Greater market share
3. Falling in right eyes of the government
4. Leverage for other businesses as well
5. Funding dilemma for common man resolved
6. Reach to bottom of pyramid at government expense
3 Company Analysis
ICICI Lombard is a leading insurance company that is a joint undertaking between two major
organizations - ICICI Bank Limited and Fairfax Financial Holdings Limited, a Canada based company.
They have a share amount of 74:26. ICICI Lombard has received approvals from various pioneer
organizations of finance world.
This ISO 9001: 2000 certified company is the first general insurance company in India. ICICI Lombard
General Insurance Company Limited offers the best insurance coverage and provides extensive
customer care services. With its registered office at Mumbai, ICICI Lombard is spread all over the
country. ICICI Lombard is the leading private general insurance company in India. It is known for its
simple and quick documentation. Its claim to fame is its extremely fast mode of settlement. Online
policies are offered almost instantly. The product line of ICICI Lombard General Insurance Company
Limited is extensive and covers almost all the fields.
The security system of the data transfer is made tight by 128-bit encryption. It is the first company to
have online interface for providing digitally signed documents.
This Insurance Company has been honored with numerous prestigious awards. It received the
following awards:
• Economic Times Avaya Global Connect Customer Responsiveness Award 2006
• Best Housing Insurance in the Smart Living Awards by 360 degrees, a Times of India Group
subsidiary, in Nov 2006
• Gold Shield for "Excellence in Financial Reporting" by the ICAI (Institute of Chartered
Accountants of India), 2006
• General Insurance Company of the Year at the 10th Asia Insurance Industry Awards
3.1 Range of products and services
• Health Insurance • Marine Insurance
• Home Insurance • Industrial Insurance
• Motor Insurance • Corporate Insurance
• Overseas Travel insurance • Liability Insurance
• Student Medical Insurance • Credit Insurance
• Domestic Travel Insurance • Shop Insurance
• Fire Insurance
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6. 3.2 NRI Services
• Health Insurance
• Parent’s Overseas Travel
• Student Medical
• Home Insurance
• Car Insurance
• Two wheeler insurance
There are several insurance schemes for customer support and agents provided by ICICI Lombard.
The Health insurance business has been strategically divided into three verticals based on source of
premium, customer segment served and number of lives to be covered:
3.3 Retail Health Insurance
Individual customers are served. Core service (claim settlement within timelines is the key). Usually in
India TPA( third party administrators) used to do this job but now the companies have started realising
that this core activity has to be taken by them because to customer service issues and loss in market
share. Bajaj started with it very early but ICICI Lombard realized slightly late and has its own internal
TPA known as IHEALTHCARE.
3.4 Corporate Health Insurance
Individual Corporate is served. Usually relationship based and a loss making portfolio individually
because it is served as cross subsidized product. Most of companies including ICICI Lombard has
realized and stop offering it as cross subsidized product.
3.5 Mass and Health Insurance
Govt pays the premium. It is relationship based. ICICI Lombard is the leading player in this. Huge risk
is involved since change in relationship manager/ product Head would lead to loss of business. In this
segment huge competition is being faced from Star, Apollo etc.
3.6 Inferences
• Aggressive product designing/ underwriting team
• Aggressive sales team- Lead in various new and innovative channels. It was first to start
telesales selling on credit card data of ICICI bank.
• Have experienced the whole product life cycle of Retail Health products and has got the data
and experience to rightly price the products. The retail is the most profitable segment and only
segment which is not relationship based but process capability and innovation based.
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7. 4 Competitors - Health Insurance Company’s landscape
4.1 Specialized Health Insurance Companies
These are standalone health Insurance companies
1. Star Health and Allied Insurance
2. Apollo DKV insurance
4.2 Non Life Insurance companies
4.2.1 Public Sector
1. New India
2. Oriental
3. National
4. United India
4.2.2 Private Sector
1. ICICI Lombard
2. Bajaj Allianz
3. Reliance and others
4.3 Life Insurance companies
These are allowed by the regulator to sell health but still today they serve broadly four needs-saving,
protection, retirement and investment.
1. LIC
2. Private players like ICICI Prudential, HDFC Standard Life
4.4 Market share
Market Leader - New India Insurance
Market Structure - Oligopolistic competition
Top Players -
1. New India Insurance
2. ICICI Lombard
3. United India
4. National
5. Oriental
The point to be noted is that in Health Insurance sector only close private competitor to ICICI Lombard
is Bajaj Allianz.
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 FY 2008). It forms a significant proportion of the
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8. business for non-life Insurance companies (approx. 18 percent of the total gross written premium for
FY 2008).
Private health Insurance companies have doubled their market share since 2004. The public health
insurance companies account for 62% while rest 38% is with private players in 2008.
4.5 Inferences
1. Though nothing much has changed in respect of shares in 2008 but public health insurance
companies are increasingly losing their share.
2. Highest percentage growth has been seen in case of Reliance (Premiums of 2007 / Premiums of
2006) but ICICI Lombard made huge leap compared to all public and private players since the
volumes and share is already high whereas for Reliance is low.
3. As noted above the only biggest threat to ICIC I Lombard today is Bajaj Allianz since it is already
eating into its existing customer base in tier one cities. The growth of ICICI Lombard is mainly
attributed to newer markets in second tier cities and mass and rural segment (relationship based
portfolio) and moreover well know is the fact that health insurance market in India is highly
underpenetrated.
Following product level comparison done at corporate level by ICICI Lombard. The major product
level attributes significant to selling Retail Health or mediclaim policies ( in specific to indemnity based
hospitalization products) has been shown below.
Co v e r IL Ba ja j Ch o la OIC N t n 'l S tar
Hosp √ √ √ √ √ √
Pre 30 60 60 30 30 30
7% of hosp bill
Post 60 90 90 60 60 max 7k
PED 5th 5th No NA 4th No
30 day √ √ √ √ √ √
Named ailments 2 yrs 2 yrs 1 yr 2 yr 2 yr 1yr/ 2yr
10% co-
pay in non- 10% for
We pay n/w Diab/Hyp &
Co-pay full claims hospitals 25% if both.
Hernia/pile Room
Only in s/cataratc Rent 1% Room Rent
case of etc 10% of of SI, ICU 2% of SI max
Sub-limits cataract SI 2% of SI 4k
Two Year √
SI 2L-4L 1L-10L 1L-10L 1L-5L 1L-5L
Entry Age 60 55 55/69 (for dependant parents)
60 60 1L-5L
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9. 5 Collaborators
5.1 Channel partners
ICICI bank, SKS microfinance, Fullerton group, Barclays etc. Various other collaborators like in the
mass and rural segment are Indian Government.
5.2 Third party administrators
Initially TTK Healthcare services Pvt ltd in Retail segment but now ICICI Lombard has its own internal
TPA. In corporate and mass and rural segment internal TPA as well as External TPA’s serve the
policy based on specific demand from client , volumes or number of lives involved, quality of service
required and region to served.
5.3 Reinsurers
In the past, most of the top 50 global reinsurers operated indirectly from their overseas offices by
sharing the re-insurance risks assumed by the general insurance corporation of India. One reason for
this was that they felt rates are inadequate and not at all reflective of existing global market
conditions. However this is changing and largest re-insurer Swiss Re has already entered into the
Indian market.
5.4 Healthcare providers
Various hospital chains like Apollo etc
5.5 Inference
1. ICICI bank is the largest private bank in India. ICICI Lombard has leveraged its position through
banc-assurance channels which constitute 70 to 80% of Retail Health segment.
2. Similarly other channel partners like Fullerton has helped to sell low ticket size retail thru clubbing
with other financial products and loans in second tier cities. Similarly SKS microfinance has
increased ICICI Lombard volumes thru health micro financing in rural segment.
3. ICICI Lombard is working on developing closed loop of network hospitals to give specialised
services to its customers and also to pass on the benefits of volumes as well as co-payment
structures to them.
4. ICICI Lombard is collaborating with Indian govt in servicing of RSBY ( for below poverty line
population ) and artisans and weavers policy and gets bulk of the premium from these. Facing
threat from Star since it shares good relationship with state governments in south.
6 Marketing Drivers
1. The only thing that is sold in health insurance is paper based on trust and this trust is built on
services that are provided later. Here fast claim servicing is key to trust and hence overall future
growth of company. ICICI Lombard is facing huge challenge in this aspect from Bajaj and
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10. Reliance. ICICI Lombard needs to have its own internal TPA (already Started in July 2008 named
I-health care).
2. Easy to understand policies and educated agent service
3. Health care providers- ICICI Lombard is developing its preferred network depending on the
bargaining power. Compared to a stage that exists in US today it is still in its nascent stage but
definitely better that Indian Companies. It has the largest network.
4. RSBY, Janashree Bima Yojna are government policies. ICICI is leader in mass and rural segment
as most of the servicing of these policies have been given to ICICI Lombard and the contract for
same gets renewed yearly. Here BPL ( Below poverty line) is the customer and here awareness
about insurance is the key.
5. Pricing and product innovation with widened services like outpatient services, dental services and
coverage for dreaded diseases. Today ICICI Lombard is basket full of products and services that
are customer need specific, channel specific and are priced accordingly with relation to past claim
experiences in same customer profile or related one and same adjusted for inflation. Example
Health advantage plus- High premium product for tax saving, gift for parents etc, Comprehensive
health insurance or family floater is pure indemnity based product for hospitalization and covers
family at large.
7 Product and Services
1. New Product Development: Extensive planning and research is done. New bunch of products are
being files with IRDA with more flexibility in feature selection. Revision of few existing products
and addition and deletion of service features is being done. ICICI Lombard is looking for long
term; intercompany portable and high sum insured products.
2. Product range: Health Advantage plus for high profile customers, CHI/ family Floater for
economy /family, critical illness cover- low premium with selective coverage benefit based
product. Rishtey- indemnity based health insurance for NRIs.
3. Cannibalization effect: Since most of the products have features that are more or less are addition
and deletion of main comprehensive product, so the cannibalization effect has to be carefully
studied.
4. Product Phasing out:- Many products have been phased out like family first, family first plus etc.
Most of them are made for one relationship like Centurion bank but over a period of time when
relationship comes to an end product also phases out. Declining sales are also responsible for the
same. For example the whole industry is moving towards products with 2 year pre-existing
disease products and four year pre-existing disease products are being phased out.
8 Pricing and Segment
ICICI Lombard has rightly entered into all segments. Since ICICI Lombard has effectively experienced
the whole retail product cycle which is usually based on pre-existing disease cycle of 4 years the ICICI
Lombard ideally should play on correct pricing. The prices of retail/ medi claim policies should come
down or should come with more additional innovative services and features for same existing price.
Similarly in rural retail segment because of its prior experience as loss making segment, it should
again enter into the same with Public private partnership with government and then leverage it
resources and same technology to cater to rural retail.
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11. 9 Market Segments and Product/Brand Positioning/product pricing
Strategy
In view of the segments and product that have already been explained above ICICI Lombard needs to
bridge the gap between rural and retail segment (tier 1 cities) and innovate few effectively priced
products for second tier cities or geo locations. In these locations word of mouth is key in selling
health insurance.
Retail Tier 1 (Mumbai, Delhi etc)
1. HAP- tax saving, high premium, OPD cover
2. CHI- Family based hospitalization cover
3. Rishtey- NRIS, High premium hospitalization cover
Rural
1. RUR
2. RU
Both rural products are more and less same and some are being replaced by FHI (Family Health
Insurance)based on past experiences in order to do more risk control.
10 Recommendations for ICICI Lombard
1. Focus on speedy and transparent claim processing
2. Create network which is accredited
3. Negotiate with hospitals for quality at affordable rates
4. Increase network with PHCs and Government hospitals to increase reach.
5. Help regulator in building database
6. Develop new products with OPD and Dental services
7. Introduce differential pricing techniques which at present is not there like co-payment etc
8. Invest in anti Fraud mechanisms in big way
9. Create more customer friendly portals
10. Focus to innovative channels of distribution and at the same time avoid ante-selection
11. Open rural kiosks
12. More extensive training of channel partners
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