DECADE OF EXPERIENCE: HEALTH CARE INSURANCE- PRESENT SCENARIO

1. DECADE OF EXPERIENCE:HEALTH CARE INSURANCE- PRESENT SCENARIO PROBLEMS & PROSPECTS OF DISTRIBUTORS/BROKERS IN HEALTH CARE INDUSTRY IN INDIA India Insure Risk Management & Insurance Broking Services Pvt. Ltd

2. SCOPE OF PRESENTATION MARKET SCENARIO Broad overview of the Health care industry in India Broad overview of Health insurance in India Current market dynamics DISTRIBUTION SET UP OF THE HEALTH INSURANCE INDUSTRY Channel wise premium Channel wise concerns Broker concerns – in detail THE WAY FORWARD Leveraging the Distribution network Agency force restructuring Bancassurance restructuring Enhanced marketing through broking India Insure Risk Management & Insurance Broking Services Pvt. Ltd

3. HEALTH CARE IN INDIA • Healthcare is one of India’s largest sectors, in terms of revenue and employment and the sector is expanding rapidly. • Heath care spend in India is currently poised to touch 8% of GDP in 2012 ( 5.5% in 2009) • Health care industry size in 2011 – USD 50 bn • Forecast to touch USD 235 bn by 2020 • Private sector accounts for more than 80% of total healthcare spending in India India Insure Risk Management & Insurance Broking Services Pvt. Ltd

4. HEALTH CARE IN INDIA • Drivers of growth in the healthcare sector include: • India’s booming population – Rising life expectancy • Expanding middle class – rise in disposable income • Rise in infectious, chronic degenerative & lifestyle diseases • Emergence of a robust pharmaceutical industry • Health insurance proliferation • Medical tourism • Bottlenecks to growth : • India’s deteriorating healthcare infrastructure • The healthcare divide between the urban middle class & the rural poor (education divide) • A widespread lack of health insurance compounds the healthcare challenges that India faces • An abysmally low government spending on health - at USD 32 per capita India Insure Risk Management & Insurance Broking Services Pvt. Ltd

5. HEALTH INSURANCE IN INDIA • Why is Health insurance required? • Fastest growing segment in the insurance industry – presently growing at 32% • Health insurance sector poised for immense growth • The growth chart • Projected growth – INR 30000 crs by 2015 India Insure Risk Management & Insurance Broking Services Pvt. Ltd

6. SHIFT IN SEGMENT MIX from FY 2009 - FY 2011 • The industry’s focus is now on health insurance whose contribution has increased to 25% in 2010-11 compared to 11% in 2005-06. • Health insurance has been the fastest growing market segment registering a CAGR of 32% for last 6 years. • The growth drivers include ageing population, increasing healthcare costs, improving per-capita income and awareness and increasing health insurance by employers. India Insure Risk Management & Insurance Broking Services Pvt. Ltd

7. WHAT AILS HEALTH INSURANCE IN INDIA • High Claims Ratio -Competition forcing insurers to undercut prices - Insurer health portfolios in red • System leakages - Provider malpractices leading to over-charging and over- treatment • Large employee groups have traditionally abused the scheme – member impersonations, malafide claims etc – leading to large losses. • Healthcare costs continue to outpace inflation India Insure Risk Management & Insurance Broking Services Pvt. Ltd

8. MAJOR ISSUES IN HEALTH INSURANCE – SURVEY FINDINGS India Insure Risk Management & Insurance Broking Services Pvt. Ltd

9. MAJOR ISSUES IN HANDLING HEALTH INSURANCE POLICIES- from the policyholder perspective India Insure Risk Management & Insurance Broking Services Pvt. Ltd

10. CURRENT MARKET DYNAMICS • Effects of cross-subsidization have rescinded. • The trend until Dec 2009 was Premium = Expiring claims • The trend today is Expiring claim + Inflation (10%) + Administrative Charges + Service Tax • Overcharging Providers being increasingly blacklisted by Insurers • Claims upsurge => Mid-term cancellation notice from insurer • Loss control measures increasingly being introduced - caps on room rent, surgery limits, parental claims etc. • PPN concept tasting some degree of success…likely to be emulated for other cities also. India Insure Risk Management & Insurance Broking Services Pvt. Ltd

11. DISTRIBUTION • Distribution channel development in India • Channel wise Health premium • Leveraging the Distribution network • Channel wise analysis • Broker Concerns • Way forward India Insure Risk Management & Insurance Broking Services Pvt. Ltd

12. DISTRIBUTION CHANNEL DEVELOPMENT IN INDIA India Insure Risk Management & Insurance Broking Services Pvt. Ltd

13. CHANNEL WISE HEALTH PREMIUM India Insure Risk Management & Insurance Broking Services Pvt. Ltd

14. India Insure Risk Management & Insurance Broking Services Pvt. Ltd

15. BROKER CONCERNS • No access to repository of data • Still competing with Insurer…. Not yet ‘included’ by Insurer • Multiple mandates beating the logic of insurers …. What is L1? • Margins thinning • Price the only concern of customer- Quote vending machines • Market reacting slowly to wellness, prevention and cost control programs India Insure Risk Management & Insurance Broking Services Pvt. Ltd

16. OUR SURVEY FINDINGS The adjacent chart indicates the level of competition in the Indian insurance industry. 44% of the respondents utilize multiple insurance brokers- depending on the brokers area of expertise and also to pitch them into the competition to get them the best price. India Insure Risk Management & Insurance Broking Services Pvt. Ltd

17. A GLIMPSE INTO THE MARKET FEEDBACK ON BROKERS India Insure Risk Management & Insurance Broking Services Pvt. Ltd

18. LEVERAGING THE DISTRIBUTION NETWORK • Enhancing Customer awareness • Product innovation to suit different segments of society rather than “one size fits all” • Agency model to be restructured to tap the rural market • Finding new business opportunities in the micro insurance segments • Bancassurance channel not capitalizing on the available data base • Brokers contribute to about 18% of health insurance market – Focus only on urban, group policies • Brokers can tap the worksite marketing opportunities available • Virtual marketing activities such as electronic kiosk stands, mobile advertising and the Internet to be tapped India Insure Risk Management & Insurance Broking Services Pvt. Ltd

19. India Insure Risk Management & Insurance Broking Services Pvt. Ltd

20. CAN WE EMULATE? • A study of developed markets reveals that health insurance in Netherlands has developed to a very great extent – Uninsured individuals is about 1.5% of the population and in Switzerland it is < 1% • Every person who resides or pays payroll tax in Netherlands, mandatorily must take insurance and in Switzerland every resident must take basic health insurance. • Insured has the freedom to select the insurer and subsequently switch during an annual enrolment period (semi annual in case of Switzerland) and insurers must accept all applicants. Internet premium comparison sites available • Group insurance through employers exist in Netherlands (57% covered through such contracts) whereas it is not permissible in Switzerland India Insure Risk Management & Insurance Broking Services Pvt. Ltd

21. WAY FORWARD – REGULATIONS SUGGESTED • Encourage innovation – segment based and channel based • Discourage insurer / broker, broker/ broker competition – single mandates to control price drop • Incentivize products for the rural segment • Govt. to make health insurance mandatory in select segments • Govt to check intervene on variable tariffs – with / without insurance • Bidding system – one insurer – one state - so that risk is spread uniformly • Pool for identified segments India Insure Risk Management & Insurance Broking Services Pvt. Ltd

22. WAY FORWARD – AGENCY MODEL SUGGESTED • Tight recruitment process • Align performance metrics and incentives to build long term franchise • Rigorous systems to ensure ground discipline • Enhance interface between sales force and operations – market feedback PRESENT • High level of attrition • Low economic incentive • Weak management practices – low control on distribution India Insure Risk Management & Insurance Broking Services Pvt. Ltd

23. WAY FORWARD – BROKING CHANNEL PRESENT • Focus on Group policies • Focus on Urban market only • Price negotiators SUGGESTED • Incentivize rural market schemes – with emphasis on service parameters • Claim controllers • Insurer acceptance – not competitor India Insure Risk Management & Insurance Broking Services Pvt. Ltd

24. CHANGING ROLE OF BROKERS India Insure Risk Management & Insurance Broking Services Pvt. Ltd

25. WAY FORWARD – BANCASSURANCE SUGGESTED • Leveraging the strengths of both parties • Simple products to reach out to rural masses • Standardized sales scripts for training bank employees • Integrate IT link- insurer - bank India Insure Risk Management & Insurance Broking Services Pvt. Ltd

26. WAY FORWARD • Focus on rural India through micro insurance initiatives • Central Govt. initiatives to reach Health insurance to the masses • Priorities for insurers to be • Product innovation • Managing channel costs, Improving channel productivity and exploring new channels with a focus on IT enablement in channels • Brokers role to increase only for claims analysis and claims minimization advise • Engaging all stakeholders to hold the line on costs and focus on quality of care • Effective Information Delivery - Because policyholders are increasingly responsible for making decisions about their health care, participants must be familiar with the health care system and understand their health care options India Insure Risk Management & Insurance Broking Services Pvt. Ltd

27. THANK YOU India Insure Risk Management & Insurance Broking Services Pvt. Ltd