Health insurance

Boom in the health insurance sector Main challenges

Indians have kept health insurance on their list of priorities. According to reports, the major non-life insurance sector recorded a huge growth of 25% in just one year between fiscal 2021 and 2022, due to an increase in demand for medical facilities across the world. country.

The pandemic more than anything else has made people realize that a healthy future means investing in health. Huge personal medical expenses have made people opt for health insurance coverages.

An article published by the National Insurance Academy, a Pune-based institution under the Union Ministry of Finance in early May, revealed that a jump of Rs 14,758 crore had been made in premiums insurance in FY21-22 alone, while in FY2020-21 the premiums collected by the medical insurance sector were Rs 58,572, this increased to Rs 73,330 crore in during the following financial year of 2021-22.

“The insurance industry has grown at a rapid pace. The industry has developed new innovative product offerings; and there is increased demand for specialty products, including disease-specific health insurance products that can meet specific consumer needs. said Ajay Shah, Director and Head – Retail, Care Health Insurance, while commenting on the recent industry boom.

Aside from Covid, a growing middle class, with a rising burden of new diseases and NCDs (non-communicable diseases) can be attributed to the boom in the health insurance market.

“Traditionally, Mediclaim only covered inpatient needs (IPD). Post Covid, IRDA asked insurers to allow telemedicine consultation in the insurance contract. And now, many health insurance plans also cover a portion of OPD benefits and pre- and post-hospitalization care. But, as the demand and expenses increased, the use of health insurance also increased and had a direct impact on the amount of the premium. said Vaibhav Singh, co-founder and MD, Visit Health, on the changes the health insurance market is witnessing.

Health insurance premiums remain the main drivers of the non-life insurance industry and will continue this trend as the sector is expected to grow in the coming years.

“Few of the interesting trends we are witnessing right now are, the younger age profile has started taking out health insurance in large numbers, health insurance used to be a talking point for people in their 40s, but now we see people in their mid to early thirties also buying health insurance for themselves and their families, so that’s a really good sign for the future The limits of health insurance coverage that people purchases have also increased by at least 20-25% over the past two years, so people are opting for higher coverage,” said Anand Roy, Managing Director of Star Health and Allied Insurance Co. Ltd, while commenting on emerging trends in the health insurance industry.

Main challenges ahead

Although the trends show a continuous expansion in the growth rate, the challenges are stark, different reports from NITI Ayog and National Health Family Survey-5, reveal that the penetration of insurance coverage among the Indian population is far from being satisfactory, while the NITI Ayog report showed that 30% or about 40 crores of Indians are excluded from health insurance coverage. The NHFS-5 showed that 41% of Indian households have at least one person covered by a health insurance scheme, highlighting the urgent need to cover the remaining stack of the population.

The union government’s flagship scheme PMJAY (Pradhan Mantri Jan Arogya Yojana) launched in 2018 under The Ayushman Bharat project provides hospital coverage to the bottom 50% of the population, or about 70 million people, while that social health schemes and voluntary private health insurance still cover 20 per cent.

This leaves a 30% gap referred to as the “missing middle”, although the NITI Aayog report suggests coverage claims may be overstated as the actual uncovered population is higher due to PMJAY’s inherent coverage gaps and overlap. between regimes in the country. Awareness, identification and awareness, and affordability are some of the reasons cited in the report for the “missing middle”.

Mr. Roy explained that the affordability of the health insurance product is directly linked to medical inflation in the country, inflation has skyrocketed over the past two years, during the pandemic, hospitalization costs have increased dramatically, “I think medical inflation is a big challenge because the whole industry depends on it, and ultimately it’s health insurance coverage, people go to hospitals and if the costs hospitalization rates increase, the insurance premium must also be high,” said Mr. Roy.

The actual number of uncovered population is difficult to decipher, but overall there appears to be vast uncharted territory and a huge market for insurance companies and investors to play with and provide health insurance coverage until last mile.

Mr. Roy further added that the penetration of health insurance is still very low in India, it is one of the lowest in the world, therefore, health insurance will continue to be one of the segments fastest growing in the industry. “Globally, wherever there has been an earlier outbreak, disease or endemic, such as the SARS outbreak in Hong Kong or the MERS outbreak in the Middle East, the insurance business disease in these markets has increased rapidly over the next 3 to 5 years, due to the awareness that these epidemics have created,” commented Mr. Roy on the future growth aspects of the sector.

The slice of the pie is important for the health insurance industry, as growth is expected to continue in the coming years. According to the organization Invest India, the non-life insurance segment is expected to grow by 16% in FY22 and 14% in FY23. The standalone insurance segment is expected to grow 25% in FY22.