February 11, 2016
The health insurance sector, which grew by about 20% per year in the last decade, is forecast to see the same growth trend in coming years, as it is today the most popular and voluntarily sought-after insurance in the country, according to Mr G Srinivasan, Chairman and Managing Director of The New India Assurance, India’s biggest non-life insurer.
“I think with increasing life spans, increasing medical advances and increasing cost of medical treatment, today, health insurance has become absolutely mandatory for every individual and every family, and people understand that,” Mr Srinivasan said in an interview with the Financial Express.
Govt schemes dominate
He said that health insurance premiums in India totalled about INR210 billion (US$3.1 billion) last year, half of which was generated by the corporate or group health insurance segment, another 40% came from individuals and 10% from government health schemes. But the picture is different in terms of the number of people covered by health insurance, he pointed out. Around 25% of the people in the country have some form of health insurance. A large part of it is through government health schemes such as the Rashtriya Swasthya Bima Yojana, and health schemes adopted by states like Tamil Nadu, Maharashtra, and Rajasthan. So, in these cases, the government itself funds the premium and people are covered, especially those below the poverty line, he said. About 16-17% of the population are covered by government health insurance schemes where people don’t really pay much, about 4% would be corporate insurance which employers pay for, and only about 5% of individuals buy health insurance policies, he said.
Challenges
Mr Srinivasan believes that all Indians should be covered by health insurance. “But it is not happening because: firstly, there is lack of awareness, people don’t know that there is a product available that takes care of their health needs, secondly, some of them clearly cannot afford to take up health insurance, thirdly, there is a question of accessibility. People want someone to come to their home, explain the benefits of health insurance. So, these are some of the reasons why health insurance has not achieved higher penetration. “As insurers, we have to make sure that there are more intermediaries available, more foot soldiers who can reach out to customers and make our products more simple and affordable. Then I think that the penetration levels will go up.” As for New India, health insurance is a very important segment, he said. “We are the market leader in health insurance. About 28% of our business comes from health insurance. It is also growing at about 20% each year. Thus, it is a key portfolio for us,” Mr Srinivasan said.