While the country’s health insurance sector faces several challenges, industry experts are of the opinion that if all the stakeholders work together, many of these problems can be overcome.
Speaking at FE thinc — a platform for discussion on issues currently relevant — on Monday, G Srinivasan, the chairman-cum-managing director, The New India Assurance, pointed out that the health insurance business has been bleeding for many years as costs had mounted significantly and claim ratios remained high.
This is probably one of the reasons why the segment has not shown much growth in India, Srinivasan observed, saying penetration remained low.
“At this point of time, hardly 20 per cent of people in India are covered by health insurance and of this, 12 per cent is through government schemes which are completely subsidised,” said Srinivasan. Another problem he pointed out is that today hospitals and other medical services providers may charge at will, without a question being asked.
Echoing similar sentiments, Antony Jacob, the chief executive officer, Apollo Munich Health Insurance, said it may be a fact that some hospitals are charging more to their patrons, which leads to higher insurance claims.
However, Jacob is still confident there is some difference that the insurance industry can bring about in terms of efficiency, how the industry manages its network of hospitals, processing and underwriting.
Another problem the panelists pointed out was the tendency of insurance companies to underprice their products to gain an edge over competition, which is also allowing the industry to bleed.
“Artificial pricing leads to artificially excessive competition. There are a lot of people chasing the same amount of business and when it comes to fulfilling the promises and the claims hit home, that is when everyone will realise what went wrong,” Rakesh Malik, chief executive officer, Aon Global Insurance Brokers, observed. indeed the sharp rise in premiums charged by insurers is compelling corporates to revisit the benefits they are offering their employees.
A recent study conducted by insurer Marsh reveals that in the next few years, several corporates will be introducing cost-control measures by excluding parental coverage and introducing several restrictions on the health insurance provided to their employees.
Ramesh Shankar S, the executive vice president, human resources, South Asia, Siemens, however, believes that corporates are concerned about employee health and critical care.
However, Shankar agreed the insurance cost as an employee cost to the company has been growing every year. He suggests there might be some sort of simplification of procedures, which will improve transparency for the policyholder.
“India is multiple markets within one country, so we need to segment the market to manage this market properly. We are just using the common denominator now and this is where the real challenge comes,” opined Ranjit Shahani, the vice-chairman and managing director, Novartis India.
One solution that New India’s Srinivasan suggests to larger general insurers is by cross-subsidising their businesses, rather than raising premium rates on health insurance.
“Otherwise we will be limiting the number of people who can afford a health insurance product,” he said.