Health insurance sector poised for more growth

By Deepak Yohannan
March 21, 2014

(Any opinions expressed here are those of the author and not of Thomson Reuters)

With the arrival of Cigna TTK, there are now five standalone health insurers offering products and services in India. Religare Health is also a recent entrant that started operations only last year.

At a time when we are seeing several exits in the life insurance sector, this is an indicator of the growth potential in India’s health insurance sector.

Health insurance as a vertical has seen very good growth rates in recent years compared to others in the insurance space. The table below shows the numbers:

Year

2009-10

2010-11

2011-12

2012-13

Premium Collected (in 100,000 rupees)

8,388

11,480

13,469

15,701

Growth

37%

17%

17%

What’s interesting is that health insurers are spread across the price spectrum and don’t necessarily play the price-sensitive game to win premiums.

Star Health is more focused on the low premium segment, while Max Bupa also caters to the high premium segment.

But the biggest winner is the customer as we have seen a lot of innovative offerings – mostly from standalone insurers.

Star Health, for instance, has a plan for heart patients and one for diabetes patients. We also have Apollo Munich with its “Restore” feature in which the cover amount gets restored in case it gets exhausted in a particular year.

More companies are now being forced to offer similar benefits, or better them – that too at very attractive prices.

With healthcare getting expensive and awareness increasing, more people are going in for sophisticated plans.

At the same time, there is also a gradual breakdown of the company group plan support structure. An increasing number of companies are asking employees to share a larger part of the premium burden.

The breadth of cover in group plans is also being reduced – like the exclusion of parents from plans provided by the company.

The pattern of employee attrition also makes a very strong case for not relying on company-sponsored cover. Firms, on their part, see higher attrition and hence don’t want to invest in expensive covers for workers. Better to offer employees higher payouts and make the healthier employees happier.

If we see changes in FDI rules as growth picks up in the coming years, we might see more specialised health insurance companies setting up shop in the country.

There is still a long way to go and with increasing competition among insurers, customers will get a lot of benefits.

(For more articles by Deepak Yohannan, visit MyInsuranceClub.com or interact with him on Twitter @dyohannan)

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