Since the outbreak of the Covid-19 pandemic, health insurance premiums have remained the principal driver in the non-life insurance sector. Despite a nationwide lockdown for a considerable period that led to the closure and loss in several sectors, the health industry showed a significant rise of 34.2% in YTD July 2022, when compared to the previous year’s growth of 9.9%.
Depending on the scenario, the Indian health insurance sector can be classified into several segments:
- Types of Insurance Providers: Private, public, standalone health insurers
- Types of Schemes: Community-based, mandatory, voluntary, employer-based
- Types of Coverages: Family, individual
- Coverage Term: Lifetime, term
- Type of Product: Income protection, disease, medical
- Demographics: Senior citizens, adults, minors
Although we have fast growth in the overall health insurance sector, there are some of the major highlights that need special mention:
Consistent Momentum of Growth
The growth graph will continue to prevail in the market as the industry has gained considerable attention from consumers like never before. As the basic understanding and perception of the consumers have changed, the focal point has gradually shifted from ailment insurance to health insurance.
Consumers have realized that purchasing a comprehensive health cover is a wise choice as it extends a holistic approach with enhanced coverage against several diseases, pre-existing ailments, and future lifestyle situations too. This has resulted in consumers thinking that investing in health insurance is essential as it brings wholesome health coverage.
A New and Innovative Approach
The enhanced scope and growing opportunity have shown promise for fulfilling the unfulfilled requirements of the consumers. The innovative approach recently undertaken has shown encouragement for filling the gaps prevalent in this sector.
The boom in this sector has boosted the sales of various types of health insurance like senior citizens health insurance, critical illness insurance, personal accident insurance, hospital cash insurance, exclusive health insurance for heart patients, health insurance for surgery, health insurance plans for self-employed, child health insurance plans, etc.
Coverage for the Missing Middle
The commencement of the Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana and the extension of the state government schemes offer comprehensive hospitalisation coverage to nearly 50% of the population from the bottom category, resulting in around 70 crores of people. Another 2.5 crore individuals receive social health insurance coverage along with voluntary private health insurance. The remaining 30% lack any sort of health insurance coverage, which is technically termed the missing middle. This section is composed of the self-employed in the informal sector in the rural regions along with a wide array of other occupations in the urban areas, including formal, semi-formal, and informal.
The current Ayushman Bharat infrastructure is dedicated to extending the coverage toward the missing middle population.
New Channels for Distribution
We are beginning to witness the gradual emergence of wide consumer tech platforms as potential and effective distribution channels for several health insurance plans. With the need for rising value and need for health insurance, the emergence of such new channels will effectively aid in a refined consumer experience, by enabling curated offerings with a touch of customisation. This even aids in designing models that are both personalised and transparent. It is supposed to be more data-oriented with a digital touch, easing out the entire procedure of reviewing and buying.
The consumption behaviour of the consumers has also encountered a change. The emergence of these new channels will help in broadening the industry’s reach, especially among the younger population and the millennials.
Digitisation and Technology
The enhanced usage of digital mediums and technology is supposed to create new scopes, not only for enhancing the consumer base but also for aiding effective lifecycle management of the consumers. The new customers are comparatively more adept in availing various services on the digital platform and have significantly increased the usage of the app of the concerned health insurance provider and their official site for processing and accessing information.
The trend also predicts an increased convergence in several administrative tasks like health insurance claim settlement, handling and processing customer inquiries, underwriting, etc.
Key Market Trends
Different healthcare providers like private hospitals and pharmacies are the chief health insurance providers, maintaining a coverage share of over 50%. The Indian health insurance sector has currently encountered several major restraints and drivers that have significantly challenged the market scenario for both the long as well as short term.
Drivers
- Improved awareness level in the healthcare sector leading to hiking of the average healthcare expenses.
- The recent restructuring of the business involving general insurance compelled the health insurance companies to focus more on health insurance businesses.
- Increased availability of various products and tools for children and senior citizens popularized the health insurance business further.
- Improved availability and accessibility of several types of products, catering to the varied requirements of the customers.
- An increased medical inflation rate of over 15% has effectively made the healthcare costs beyond reach.
Restraints
- Lack of practical and effective marketing strategies incapable of attracting customers and enhancing the existing customer base.
- Although there has been the development of several channels for marketing various products related to health insurance, they have still not been able to make their way in smaller towns and regions. It has developed mostly in the urban context.
- The significantly higher loss ratios, especially in the group health insurance schemes, have proved to be essentially challenging for the existing players in the industry.
Conclusion
The above discussion has focused attention on the principal factors that have contributed to the increased growth and popularity of the health insurance sector in the Indian context. Government initiatives have also added to this growth trend to a considerable extent.
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