HEALTH INSURANCE OUTPACES MOTOR INSURANCE IN INDIA

Propelling growth at a faster pace, the Health Insurance Line of Business, has created history by acquiring largest market share in Non-Life Insurance space in India. The Pandemic while marred the business growth in Motor LOB by over 19% till July in this fiscal year, the Health LOB maintained its growth at more than 10% to acquire the top position with 32.7% market share leaving Motor LOB behind at 30.3% of General Insurance market in India.

Health Insurance gains largest market share in India
Particulars	Health		Motor		Total Non-Life
	Jul-20	Mar-20	Jul-20	Mar-20	Jul-20	Mar-20
Premium: Rs in Crore	18415	51638	17049	69208	56542	189302
Growth	10.4%	13.4%	-19.2%	7.3%	1.6%	11.7%
Market Share	32.7%	27.3%	30.3%	36.6%	100.0%	100.0%

(Source: G.I. Council of India)

Automobile sector was witnessing a slowdown even before the COVID-19 outbreak and its market share dropped from 38% to 36.6% in March 2020. Its revenue in ‘Own Damage’ segment was virtually without any growth. Despite business continuity efforts by most of the players of the industry the decline of more than 19% impacted this LOB severely and it lost its position to Health Insurance LOB. Disruption will stay for some time at least and demand revival will not be easy for the general insurers. Domestic commercial vehicles may witness the continued slump this year. The private car segment may pickup post lockdown as people may avoid public transport and will follow social distancing norms.

On the other hand, India’s Commercial Health Insurance Segment is experiencing high growth owing to increased awareness in current pandemic situation and also because of standardized products with customized health coverage launched this year. Continued growth supported with awareness may help this LOB to consolidate its leading position beyond any threat by Motor LOB by the end of this fiscal.

HEALTH INSURANCE IN INDIA
	Retail	Group	Government	OMP	Total
July 2020 Premium       ( Rs in Cr)	7421	10057	883	55	18415
Growth	31%	11%	-43%	-85%	10%
Market Share	40%	55%	4.70%	0.30%	100%
March 2020 Premium ( Rs in Cr)	20514	25283	5027	814	51638
Growth	12%	23%	-14.80%	1.40%	13.40%
Market Share	39.5%	49.0%	10.0%	1.5%	100.0%

(Source: G.I. Council of India)

COVID-19 posed challenges before general insurers and standalone health insurers but at the same time it provided opportunities to them. The rising costs of medical treatments and health catastrophes are now well recognized and a value is seen in health insurance products. The Regulator has also responded to pandemic situation in time and when it was observed that insurers are settling health insurance claims within four corners of their contracts and observing the protection gap in available products the Regulator mandated Corona specific products to address these protection gaps. The corona product is mandatory for insurers, however it is for a shorter and limited period. The product is standardized and insurers are allowed only to discover price as per their actuarial prudence. When these products were launched the proposers were surprised with the wide gap in prices of standard ‘Corona Kavach’ policies. The time will test the assumptions of the actuarial wisdom of various insurers for such prices. Media reports suggest that protection of Rs one lac for insured in age bracket of 25-30 years is marketed at price range of Rs 215- 434 by Oriental Insurance whereas for same sum insured and for the same age band the Star Health is charging approximately 5 times higher premium in range of Rs 1000- Rs 1350/- For a five lac cover for same age band the price discovered by Oriental is in range of Rs 636- 1286 whereas the Star Health’s product is available in range of Rs 3831- Rs 5,172/-

Corona Kavach is a standard product which every insurer has to sell as per the mandate of the Regulator from July 10, 2020. Price is the only differential. The product has perceived great value in no time after its launch and it is believed that in a month up to 14^th of August 2020 more than 7.5 lac policies of Corona Kavach have been sold by stand alone health insurers and general insurers covering more than 12.86 lives and the industry generated extra premium of more than Rs 215 crore. The fear factor created value in the product and its sale will continue to grow despite the fact that the product is limited period single risk policy. However, this will propel exponent growth of this LOB. The Health Insurance has acquired the top position in Non-Life space and it is going to retain it for a longer period.

Vinay Verma

(The writer is Deputy General Manager in Oriental Insurance but the views expressed here are purely in his personal academic views)

Government to list Public Sector General Insurance Companies

General Insurance News Page: March 2016

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Government may list Public Sector General Insurance Companies
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Finance Minister Arun Jaitley announced in his Budget Speech ( 2016-17) a proposal for a public listing of the country's four government-owned general insurance companies.

He also proposed to significantly relax the foreign investment policy in insurance and pension, to attract more foreign investments. He also announced a new health insurance scheme aimed at families below the poverty line with the aim to cover tertiary care. The sum insured for this health plan will be Rs 1,00,000/- and for senior citizens another top up cover of Rs 30,000/- will be available. The present health plan popularly known as RSBY ( Rashtriya Swasthya Bima) mainly covers the primary care and to some extent it covers the secondary care as the limit of the health plan for an annual term is Rs 30,000/- for a family and for one illness episode it is restricted to Rs 15,000/-.

Mr Jaitley said that the General Insurance Companies owned by government will be listed on the stock exchange. These companies are:

1.     New India Assurance Company Limited,

2.     National Insurance Company Limited,

3.     The Oriental Insurance Company Limited and

4.     United India Insurance Company Limited.

However, he did not stipulate a timeline for the initial public offers of the insurers. The insurance trade unions have immediately reacted to this move.

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Railway Minister announced Rail Insurance proposal in Rail Budget 2016-17

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The Railway Minister Sh Suresh Prabhu has announced in his budget to provide rail travelers the option of buying travel insurance when they book train tickets. Ministry may work with insurance companies for this cover. The scope suggested for this cover includes indemnity against hospitalization due to train accidents, personal accident and baggage loss during travel.

According to estimates, there are 13 million rail passengers daily in India. Assuming that 30% of the passengers opt for insurance cover, the business potential could range between Rs 50-70 crores. At present travel insurance is not very popular in India. The travelers going overseas buy overseas mediclaim policies of public sector and private sector insurance companies. For domestic travel the major share of premium is underwritten by private sector insurers. Rail and road travelers rarely buy travel insurance. The insurance minded people have in place the personal accident cover that takes care of travel by rail and road. However, for air travel domestic travel insurance is commonly purchased in India. This business is again not substantial.

This travel insurance plan may provide safe and secure travel for railway passengers in case of unfortunate incidents if those occur. While insurance companies welcome the move as it will increase insurance penetration, they also have a point related to delivery of services. Like air travel business this segment may be targeted best by way of online transactions.

GENERAL INSURANCE IN INDIA

GENERAL INSURANCE IN INDIA


http://www.asiainsurancereview.com/Magazine/ReadMagazineArticle?aid=36078

Healthcare focus:                                         

Improving healthcare delivery in India

Source: Asia Insurance Review | Mar 2015Categories: Special Feature

   

Health insurance in India has emerged as the major growth driver and as a most prominent segment in the insurance space today. Mr Vinay Verma of The Oriental Insurance Co Ltd presents a quick introduction of the sector and says the growth of health portfolio is significant.

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PPN- Preferred Provider Network of Insurers

PPN- PREFERRED PROVIDER NETWORK

MOVING TO EPISODE BASED PAYMENT SYSTEM.

Episode-based payment, is a model that recognizes bundled cost to reimburse  health care providers (such as hospitals and physicians) on the basis of expected costs for clinically-defined episodes of care in which health care providers are paid a "lump sum" per patient regardless of how many services the patient receives. Evidence-informed bundled rates for various conditions that are adjusted for severity and complexity of a patient's illness are pre-negotiated amongst the insurance companies, health care providers and third party administrators. Unlike fee-for-service, bundled payment discourages unnecessary care & diagnostics, encourages coordination across providers, and potentially improves quality. It removes inefficiency and redundancy from patient-care protocols. Bundled payments improves footfalls and  provides economies of scale thus making reduced rates feasible for providers  for expected volumes of patients who intend to take care where cashless facility is available. Package pricing thus holds the promise of aligning payment with optimal care. 

Indian health care providers have relatively limited experience with episode-of-care payment that bundles multiple care services together i.e. the cost of the surgery, the hospital stay, the anesthesiologist and other related therapy or care into one price for selected medical conditions and surgical procedures. The experience that now exists mainly in major cities has its focused on surgery. This is presumably because both surgeons and hospitals are already paid case rates, so the transition to a single, bundled episode-of-care payment is simpler than for medical conditions, where the physicians are paid on a fee-for-service basis. Wherever this model has been practiced health care providers have identified ways to reduce length-of-stay and unnecessary hospital costs as they gain footfalls for such arrangements and in turn it has helped insurance companies to reduce their claim cost. Insured have also been benefited in getting quality care even with lesser sum insured and by saving premium cost for their health insurance plan. It is a win-win situation for patients, payers and providers.

As a strategy to reduce health care costs burden bundled payments for illness episodes, mainly the surgical procedures, began as early as 2010 when the Public Sector General Insurance Companies (PSGICs) recognized its need and pre-negotiated 40 odd surgical procedures with health care providers who joined the Preferred Provider Network of these insurance companies initially in 4 metros. Insurers over a period of time have now extended it to more than 100 pre-negotiated surgical procedures and the network has also been extended to 12 important cities where the health care is skewed.

Preferred Provider Network is a network of hospitals which have agreed to a cashless packaged pricing for certain procedures for the insured person. A tripartite agreement is inked normally amongst the Insurers, TPAs (Third Party Administrators) and Health Care Providers, often including pre-arranged packaged prices for pre-defined surgical procedures and for other surgical procedures and medical management cases some discount in total hospital bill is agreed upon. The claimant’s participation in the PPN doesnot necessarily result from an insurer’s referral but in most instances, the treatment provided by a PPN is pre-authorized by the insurer to enable a cashless treatment to insured patient.

Current healthcare pricing cannot be understood by a human being with average intelligence or limited patience. Further there is no Regulator to categorize the hospitals and to fix prices, nominal or otherwise, for providing health care. Insurers, who operate in regulated environment, have a challenge to find some clinical protocol & standardization in price of health care. The rates of two almost similar hospitals in same geographical area are also not similar. The rates may differ from one hospital to another based on facilities and the recognition treating surgeons have in the field of their specialty and also on the business objectives of the health care institution. The PSU insurers in absence of grading of hospitals try to categorize hospitals under four categories -- primary, secondary, tertiary and tertiary plus based on infrastructure and care facility available with the hospital as well as how it is recognized in the area evaluated by footfalls of the patients observed for inpatient care. This categorization is only a price related function and has nothing to do with any certification of quality or infrastructure. By packaging rates and freezing SOCs (Schedule of Charges) over a period of one to two years the insurers expect to cut expenses in a world of care where medical inflation is much more than ordinary inflation rates. It promotes in a way some standardization in protocol and in the cost of treatment. More hospitals are now getting into the Preferred Provider Network (PPN) as the advantages of the programme are felt by them.

Transition from fee-based care system to episode based payment has some inherent issues and arguments are given against this model and on fixing one price for one procedure in advance for there can be cases which cannot be treated within expected number of days for complication or for co-morbidity reasons. Insurers however recognize these needs and deal such complications and co-morbidity issues on merits. Another issue that is confronted is the cost of implants and discounts on medicines.

Health insurance is growing at rapid rate in India. The size of health insurance market is now more than Rs 25000 crore and Public Sector Companies hold more than 60% of market share. Looking to new pattern of diseases and recognized need of cashless treatment expected at hospitals the Health Care Providers argue why insurers do not recognize all hospitals into their network. The plea is simple, as given by insures, that if everybody is taken on network how come preferred tag be attached to them. The network is for those care providers who anticipate volumes and provide sufficient discount against medical or surgical care cost, like in any other business model.

 (The views expressed in the Article are in personal capacity of the writer.)