Facts Indian Health Insurance 2010

Facts Indian Health Insurance 2010

IRDA has released statistics pertaining to Indian Health Insurance Industry for the year 2008 -09 and some of the facts are:
This is the truth. If you do not agree the do let us have your comments.

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Health Insurance Policy with sum assured of Rs 50 Lakhs seems to be a favourite number of Indian Insurance Companies – Yes the time has changed

Health Insurance Policy with sum assured of Rs 50 Lakhs seems to be a favourite number of Indian Insurance Companies – Yes the time has changed

Max Bupa made the beginning in our country by coming up with Health Insurance Policy for maximum sum assured of Rs 50 Lakhs and within few weeks it has been able to sell 15 policies. This shows that there was an unfulfilled demand for such product. May be the initial success of this product has appealed so much to other insurance companies that now we hear:

•New India Assurance
•Apollo Munich
•Iffco Tokio

all of them have started working actively for coming up with similar or a competitive product. An improvement being considered by New India is that its product will not be a normal domestic product (only within India) but will also be valid for overseas treatment.

We welcome this move to upgrade the Indian customer by offering premium product to him.

We have questions before us:

(i) Under the name of Medical Tourism USA Insurance Companies are sending their patients to India which shows that Indian Health Care industry has achieved certain level of acceptance in the world and is economical also.

(ii) Under New India policy- will HNI’s of India start going to foreign countries during summer season for treatment under the policy. Will the travel expenses be also paid as part of claim? If we are charging higher premium let us charge something more and include this facility also. This is the wish of many potential customers, who talked to me in last 2 days.

(iii) Is it worth while to have a product where few hundred policies are to be issued during the year? Will these polices be handled by same TPA’s or a special team will be set up.

If you have some more questions do let us know. We will be pleased to have your comments.

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Yes difficulties are being faced by portability of health insurance

Some time back I had mentioned that we went on hearing for portability of mobile phone numbers and nothing has happened for many years.The players come out with some excuse and it gets deferred.

Let us hope this does not happen with portability of health insurance.

The proposal received by the Regulator has the following conditions ;
Sum assured Rs 1 lakh only
Entry age -upto 40 only

We understand that Regulator wish is

Sum assured upto Rs 2 lakh
Entry age -upto 60 years

Proposal is going back to General Insurance Council.Let us hope it comes back with improved conditions in a short time.

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Portability of health insurance

As predicted by us vanilla product will be introduced by all general insurance / health insurance companies in near future as the product details are being sent to IRDA. New health insurance product to be sold by all companies will have following features:

•Max sum assured – Rs 2 Lakhs only

•Preexisting diseases will be covered after 4 years

•Max entry age will be 65 years

•No claim bonus – Reduced premium or increased sum assured will be given. Companies like Oriental will have to change their policy of not giving benefit to the customers as far as this policy is concerned.

•Indicative premium for Rs 1 Lakh – up to age 18 years will be Rs 1000, which means that we are sticking to existing rates. We can expect Rs 1400 for someone who is in the 18 -35 age bracket.

•To be introduced by all companies. We feel Max Bupa may not come out with this product. Let us see what will be the stand of Regulator (IRDA) with respect to this-will Max Bupa be asked to introduce this product ?

Let us see what is the ultimate outcome when the product is introduced?

Our suggestion :

Let all the companies come out with a joint advertising campaign –explain benefits of having health insurance. We should aim for 10 crores policies to be sold under this category. With an average policy size of Rs 2500 this should mean premium of Rs. 25000 crores.

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Health Insurance is an important part of Indian Insurance market

Health Insurance is an important part of Indian Insurance market and it portfolio which growing at the highest rate. Therefore various proposals are under consideration at different levels with IRDA, Insurance Companies, Government Agencies & Corporate bodies. According to newspaper reports some of these are:-

17 General Insurance Companies and 3 Health Insurance companies are at present selling health insurance. During 2009-10 premium figure is estimated to have touched Rs. 8100 crores.

(1)- Number of stand alone Health Insurance companies is increasing at a slow pace. Star Health was the first health insurance co and it was followed by Apollo Munich which started operations in August 2007. Max Bupa has started operations in April 2010. Religare is planning to start operations in near future but without any foreign partner.

(2)- In view of increase in medication as well as health care costs the sum assured limit of Rs. 5,00,000 has been steadily increasing and now many companies are issuing policy of Rs, 10,00,000. Max Bupa has introduced a product where even a policy of Rs, 50, 00,000. can be issued and that too to a person of 80 years. It is a good charge.

(3)- More and more life Insurance Companies are now selling Health Plans –which is a combination of Health Insurance and Mutual fund. It is foreseen that SEBI view on Mutual fund will have impact on this product also.

(4)- Hospitals / Pharma Co’s may become promoters / investors in health insurance companies. It may result in better healthcare management as resources can be effectively utilized for the welfare of the society. But reach can be limited as India is a very large country. Contribution of 3 large corporates Max, Fortis & Apollo will be merely a symbolic thing.

(5)- Our projections are that by 2015 Health Insurance premium will touch Rs, 35,000 crores and by 2025 it will be Rs, 4,00,000 crore industry.

(6)- Concept of Co pay or co payment will get strengthened year by year and we foresee it will be introduced for all type of health insurance polices by 2013.

(7)- RSBY has become a success. More and more states will introduce this and coverage of those who are BOP (Below the poverty line) and are in unorganized sector will increase.

(8)- In 8 to 10 years most of the General Insurance companies in India will withdraw from Health Insurance scene as they will not be able to cope up with losses and we will see more and more stand alone Health Insurance Companies entering the field and they will become stronger year by year. Their number will also increase as Government may:

- Permit 100% foreign ownership in stand alone Health Insurance companies in near future.
- Reduce equity requirement for Health Insurance Companies at Rs 50 crores (instead of Rs 100 crores at present).

(9)- General Insurance Companies will consider setting up of 100% owned Health Insurance Companies as subsidiary companies. Reliance General may make the beginning by setting up Reliance Health Insurance.

(10)- Mergers & Acquisition will start in Indian Insurance industry and in 2011 (may be in 2010) we will see firms like Royal Sundaram getting merged with Reliance General Insurance.

At present (2009-10) Private insurance players are having market share of 40% in health insurance. Their market share has increased from 12 per cent in 2003-04 to 40.00% during this year. The market share of public sector companies has come down to 60%, which was expected by us as well as predicted on our website. We foresee 4 PSU’s may set up 1 strong Health Insurance Company as a stand alone company to face competition. They may also go in for 1 stand alone TPA fully owned by them.

Star Health has become No. 4 company as far as Health Insurance is concerned. They have beaten National Insurance.

(11)- Some of the small TPA’s may exit the scene as they will find business to be unviable as more and more insurance companies will go in for in house processing of claims.

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