Health cover has been one of the fastest growing segments within the insurance industry. However, despite its growth, the penetration of health insurance remains low in the country, rendering a large section of the population open to huge out-of-pocket medical expenses. With rising medical cost, there is need for a wider penetration of health insurance.
FeMoney spoke to Jyoti Punja, Deputy CEO, Cigna TTK Health Insurance, to understand the trends in the health insurance sector. Here are excerpts from the interview:
How do you see the health insurance market growing in India?
In a country with a population of 1.2 billion people, private health insurance penetration is still only approximately 5 per cent. This provides a huge opportunity for health insurance companies like ours. Moreover, in India the share of out-of-pocket expenditure in overall healthcare expenditure is significantly higher than comparable developing countries as well as the developed countries. Our government healthcare spending is more focused on low income and below the poverty line (BPL) segments.
Therefore, considering the rising healthcare cost inflation and changing disease pattern more towards lifestyle diseases in the urban areas, the need for health insurance will continue to increase. Our recent study (Cigna 360 Well-being report, focusses on monitoring and tracking motivations, perceptions and attitudes towards overall ‘well-being’ amongst consumers in across 11 countries including India) revealed that, majority of Indians in the last year (65 per cent) paid for their medical expense out of their own pocket and in future, they will continue to pay for the expense themselves. Furthermore, during retirement, only about 1 in 4 (26 per cent) claimed they will be covered by private insurance.
There is also a substantial increase in lifestyle and communicable diseases such as diabetes and hypertension. However, only 15 percent of the population has some form of health insurance, making out-of-pocket healthcare payments in India amongst the highest in the world.
What according to you would be the future drivers for growth of the health insurance sector?
Also, the retail sub-segment is expected to grow at a robust pace driven by increased penetration in Tier-II and Tier-III cities, substitution of out-of-pocket expenditure by health insurance spends, increasing urbanisation, demographic shifts and medical inflation. With increase in the maturity of the market, this segment is expected to see innovative products being offered by insurers like wellness management, managed healthcare etc.
This, coupled with the government and the insurance industries’ thrust towards awareness, increased penetration and preventive care, we expect this segment to grow at a robust pace. Insurers need to offer the right product, quick service at the right price and deliver what is unexpected.
Again, the Cigna 360 Well-being study clearly indicated that 73 per cent of respondents in India are familiar with fitness monitoring tools with 1 in 4 using such tools regularly. The most popular fitness tools are online medical guidance, mobile fitness app and connecting with medical professionals. Health Insurance will now be part of this integral change in how consumers look at health and fitness.
Data Analytics will play an important role in understanding customer segmentation and this will help in reaching out to customers in a structured manners. This will help drive growth.
The move to sell insurance through ecommerce platforms is a welcoming initiative by IRDA which will open up new avenues and growth opportunities.
How do you see health insurance premiums moving in the future? Is there a possiblility of them coming down due to competition?
Due to rising medical treatment costs, it is very unlikely that the premium rates will come down. Insurance products provide coverage for medical treatment cost. Hence, in general, in most markets, the premium increase trend follows the medical cost increase trend of the market. Medical cost inflation generally is slightly higher than the consumer price index inflation in most countries. For India too, a similar trend is likely to continue which will lead to insurance premium cost increase at a similar level.