Health Insurance in India: Global analysis

By SiliconIndia   |   Tuesday, July 24, 2018
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Health Insurance in India: Global analysis

India is home to over 1.2 billion people. Though the Indian population comprises 17.74 percent of the world population, only 27% any kind of health insurance.This figure isn’t only alarming; it reflects the gaping maw which is yet to be filled by the health insurance sector in India.

Making optimum utilization of technology, platforms such as have made it easier for insurance buyers to buy health insurance in a matter of few seconds.

Participation of foreign players was banned until recently. Oxford Economics predicts that the revenue from health insurance premiums will reach USD 3.5 billion by the year 2021. Since the year 2006, the sector has witnessed exponential growth at the rate of 12 percent per annum.

Factor Affecting the Growth of Health Insurance in India

Here are the factors that affect the growth of health insurance in India.

1. Rising income

The Indian middle-class is growing at an unprecedented speed. From the year 2016 – 2021, it is estimated to grow by a compound annual growth rate of 7 percent.

The rising prosperity in India is acting as a catalyst and triggering a demand for quality healthcare and participation of private sectorplayers.

2. Increased Life Expectancy

With the development in the healthcare sector, the average life expectancy in India has increased. While the average life expectancy has increased, the number of people over 65 years of age is expected to rise. As reported by Oxford Economics, by the year 2021, 95 million Indians will be 65+.

3.Market Potential

The growth prospects for Indian economy are higher than most developed economies. India has a gaping maw of unfulfilled needs in medical care. Because of that, there are many Indians who don’t have health insurance coverage.

Despite being one of thetop emerging economies, health insurance penetration in Indiaisbetween 20-27 percent.

The Challenges in Growth of Health Insurance in India

While there is a wide scope of growth, these growth opportunities come withtheir own set of challenges. Since 80 percent of Indians don’t have health insurance coverage, India ranks among the countries with the highest out-of-pocket expenditure in the medicalsector across the globe.

As per the World Health Organization’s data, the Indianpublic sector spends just 1.46 percent of gross domestic product on medical care.India ranks 187 among 194 countries in the world. China,on the other hand, has made medical care one of its top priorities. China spends double the amount India does on government-funded healthcare.

The State of Health Care in Rural India

As compared to urban India, the state of healthcare in rural India is much worse. In rural India, government-aided basic health care services may be available but arenot enough for patients to be suitably benefitted from this facility.

There are loopholes in regulation and standardizationof health clinics and hospitals. While policies have been formulated, they are weak. To make the matter worse, they aren’texecuted well.

Among the growing middle class(for whom medical insurance is considered to be worth it), an awfullylow number of Indiansunderstand the importance of having health insurance coverage.

The Potential forGrowth of Health Insurance in India

Thanks to techno-savvy and well-educatedmiddle class, the potential for growth of health insurance in India is vast. India is going through entrepreneurial experimentation. Now,Insurance companies are moving beyond providing hospitalization coverage to offering highly comprehensive policies. These policies can revolutionize wellness and promote overall preventive care.

Additionally, the rise in the usage of smartphones is encouraging fintech companies to promote digitization of health insurance. Digitization is being promoted by initiatives to expand telehealth models, disease-specific micro-insurance plans,and new smartphone-based apps that monitor patient behaviors.

Innovation is the key

As mentioned earlier, the number of uninsuredindividuals in India is high.The government spending on health care, as well as health insurance, is not up to the mark. That is why private players are developing innovative solutions. These solutions encourage more Indians to buy health insurance and to recognize the value of preventive health care.

Here are the innovations that are occurring regarding digital distribution as well as the creationof effective underwriting.

1. Linking coverage with wellness

A few health insurance providers are linking health insurance programs to apps that keep a track of physical activity. Aditya Birla’s new health insurance program offers up to 30 percent reimbursement on monthly premium to the policyholders who work out on a regular basis. It is makingthe bestuse of digital technologies to enhance customer engagement.

2. Family Insurance

Employer-provided health insuranceoffers basic insurance coverage. One must enhance this insurance coverage by purchasing a comprehensive health insurance plan. Providing coveragefor hospitalization expenses isn’t a sustainable strategy for a majority of insurance providers. They want to develop a base of insurance buyers and provide insurance coverage to an entire extended family be it infantsor aunts/uncles.

An extended family can includeup to 50 members. By providing coverage to an entire family, insurance companies can grow their customer base.

In a Nutshell

While the health insurance sector of India has scaled many milestones, it has a long way to go. Indeed, it is on the right track, but only positive perception and increased awareness about health insurance will support its journey.

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