Health Insurance business is doing reasonably well but it is largely coming from pure Health Insurance companies or Non-Life companies and the Life

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1 Health Insurance business is doing reasonably well but it is largely coming from pure Health Insurance companies or Non-Life companies and the Life companies seem to be struggling in this space. Discuss the challenges and compare the future of health products under Life and Non-Life Insurers.

2 Flow Health insurance market Why did Life insurance companies struggle? Challenges Future of Health insurance industry

3 HEALTH INSURANCE MARKET

4 Health Insurance in India The Health (Mediclaim/Indemnity) Insurance market : - Retail Health products (Individual/Floater) - Group Health products (Employer s employee/non Employer s employee) - Mass schemes for BPL families sponsored by Government General Insurance (GI) companies offering Mediclaim products: - 4 PSUs - 13 Private players (RQBE, Shriram, Magma HDI & Liberty Videocon not offering Health Insurance as of now) - 4 Stand alone Health insurance companies(cigna TTK recently got IRDA approval) Life Insurance (LI) companies: - Offering mainly Health insurance riders (Fixed benefit e.g. Critical illness Rider)

5 Health Insurance by General Insurance Companies GI companies dominate the health insurance market This sector is the second largest contributor to the non-life industry s premium underwritten The 5 years CAGR at 25% far exceeds the overall GI industry CAGR of 17% As the market size is Rs 15,341 Crore 1% 8% 6% 4% 2% % Segment-wise Premium Underwritten 2% 21% 19% 21% 21% 7% 6% 6% 5% 4% 11% 11% 1% 9% 1% 44% 44% 18% 18% 4% 42% 43% 25% 23% 22% Health Motor Fire Marine Others 18, 16, 14, 12, 1, 8, 6, 4, 2, - Health GWP in Rs Crore CAGR 25% 15,341 13,313 11,2 7,869 6, Source: IRDA website

6 Market Share Breakup (GI Companies) GWP Breakup by Insurers GWP Breakup by Segment 12% 26% 17% 27% 61% 11% 46% PSU PRIVATE STANDALONE HEALTH GOVERNMENT GROUP FAMILY FLOATER INDIVIDUAL PSUs dominate the health insurance business Group Portfolio contributes the most business The significant market share of the Stand Alone health insurers to be noted Source: IRDA website

7 Top Insurers-GWP segment wise (Rs.Crore) FY STAR HEALTH MAX BUPA APOLLO MUNICH UNITED INDIA ORIENTAL Retail Group NEW INDIA Government NATIONAL ICICI LOMBARD BAJAJ ALLIANZ Source: IRDA website

8 Health Insurance by Life Insurance Companies 7 No of Policies in force in ' Non Linked Health Business Linked Health Business Source: IRDA website

9 WHY DID LIFE INSURANCE COMPANIES STRUGGLE?

10 Action Vs Need What they did Products offered complex in nature What was the need Simple products which can be easily understood Long term Fixed benefit products Short term Indemnity product was the requirement of the market Generally high premium for the linked health products Affordable premium Non participation in Corporate and Mass schemes Participate in the segment which contributes more than 6% of Health Business

11 CHALLENGES

12 Challenges for the Industry Indian population is yet to accept Health insurance as a financial vehicle for medical treatment Poor understanding of the products Higher claim ratio specially in the corporate Health business Lack of quality data Life time renewal Portability

13 Challenges for the Industry Fraud and abuse Anti selection and Medical inflation New disease patterns and advancement in Medical technology Interpretation of policy wording and court decisions No standardization of Medical treatment cost across service provider network

14 Challenges for Life Insurance Industry More complex underwriting Challenging claim management - Multiple claims Vs single claim - Hospital network management - Supervising TPA activity / setting up in-house claim team Lack of data for pricing and product design Change in system

15 FUTURE OF HEALTH INSURANCE INDUSTRY

16 Growth Drivers of the Health Insurance Market Economic factors : - Meteoric rise in health expenditure - Out of pocket expenses - Rising disposable income Awareness about availability & need for quality health care Greater incidence of `lifestyle diseases (e.g. diabetes, heart disease) Novel concepts like medical tourism and managed health care

17 Evolution of Health Insurance in India Mediclaim policy introduced in s emergence of private nonlife insurers providing variety of health care products, including OPD Rashtriya Swasthya Bima Yojna launched in 28, for BPL segment - 212s Life insurers getting into reimbursement product space - GI and Stand alone Health insurance companies offering some value added feature like Reinstatement of sum insured Going Ahead : - Product for impaired lives(e.g. Diabetes/Cancer) with a serious approach - Long term managed care as prevalent in USA

18 Future Lately several life insurance companies have plunged into the Indemnity Health Product segment Products: - Minimum exclusions supported by stricter underwriting at pre-acceptance stage - Managed Care for life style diseases like diabetes - Health Saving Account (HSA) - Long term Care product - For senior citizen - Customized product More IT enabled services leading to efficient processes Strong coordination between Insurers and service providers Gate keeping like USA Direct to customer (D2C) channel emerging as an important distribution channel Universal Health insurance scheme for all citizens of the country?