India’s health insurance industry:  Low priority despite current developments

In India, health insurance has always figured low on people’s priority list. But the COVID-19 pandemic changed priorities on healthcare since the subsequent ‘infodemic’ (information epidemic) raised people’s awareness about their vulnerability. One way or the other, the pandemic has affected every person across India due to the disruptions caused by lockdowns and social distancing norms.

As a result, enquiries about health insurance policies rose. Yet, in the first few weeks of the lockdown imposed on 24 March, the number of health policies sold may not have kept pace with the enquiries as the lockdown prevented personal meetings and direct sales. But soon, insurers and insurance seekers began embracing digital means in selling and buying health policies. Regardless of an increase in enquiries, though, major sections continued being lukewarm to the idea of insurance purchase due to the lack of trust or low comfort with online transactions. Even those interested in purchasing policies need some handholding, especially when it comes to the digital mode.

Despite the distrust, as the number of COVID positive cases and deaths kept rising each month, more people were willing to buy online rather than risk the future of their near and dear ones. The change in mindset also occurred among millennials, who earlier ignored health insurance. Simultaneously, the pandemic has increased the number of healthcare insurance claims, including larger ticket sizes. Even with a drop in daily cases, as the pandemic continues raging, insurance players and applicants both realise that digital means should be embraced in buying/selling policies. Insurers also need to deploy ‘phygital’ means in pushing insurance penetration and attracting more customers.

Meanwhile, IRDAI (Insurance Regulatory and Development Authority of India) has initiated multiple measures in ensuring customers find it easier to manage health insurance policies and make claims easily. The regulator has asked insurers to ensure an extension of policy renewal dates, offer cashless payments, take premiums in instalments, standardise all health insurance exclusions besides directing them to add telemedicine as part of the claim settlement policy. These measures will benefit customers by improving service offerings, in turn helping the sector grow faster. Already, mergers and acquisitions are becoming a strategic option in driving greater business growth. This is evident from HDFC Ergo’s acquisition of Apollo Munich as well as the merger of Bharti Axa and ICICI Lombard.

In the interim, statistics on health expenses continue to cause concern. As per the PHFI’s (Public Health Foundation of India) 2018 study, out-of-pocket (OOP) health expenditure pushed 55 million people into poverty in 2017. According to the NHA (National Health Accounts) 2016-17, OOP expenditure as a percentage of the total healthcare expenditure stood at 58.7%. The pandemic has only worsened the plight of tens of thousands of families across India, directly or indirectly. Directly as victims of COVID-19 and indirectly as victims of the lockdown, business closures and other events that have led to job losses and salary suspensions, among others. In such situations, affected families have been forced into debt traps to keep their home fires burning.

Driven by the tailwinds from the coronavirus outbreak, standalone health insurance companies are expected to register an average growth of 20 percent in the current fiscal’s premium collections. In fact, by July 2020 itself, premium collections had recorded a 40 percent growth. But this is expected to be a short-term surge and sales could drop once the pandemic comes under control. As vaccines are being rolled out across various countries, the impact of the outbreak will gradually wane. In due course, this could impact the sales growth of health insurance plans.

Given that individual health insurance penetration in India is only around 3 percent, the sector must continue deploying a ‘phygital’ approach for greater pan-India penetration. As for prospective customers, they can depend on digitally-savvy companies such as BimaKaro.in for buying policies online safely, securely and swiftly, including those customised according to their personal needs.

Source: CNBC Tv18