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The Burgeoning Indian Health Insurance Industry…… Yet miles to go !!! IIRM - National Seminar on “A Decade of Experience: Health care Insurance…. Present Scenario”, 24 th January, 2012. V. Jayalakshmi Siva Sivani Institute of Management Hyderabad. Presentation Outline.
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The Burgeoning Indian Health Insurance Industry……Yet miles to go !!! IIRM - National Seminar on “A Decade of Experience: Health care Insurance…. Present Scenario”, 24th January, 2012 V. Jayalakshmi Siva Sivani Institute of Management Hyderabad
Presentation Outline Indian Health Insurance – bare facts Objectives of the Study Methodology Household Survey Analysis Summary and Conclusion
Brief Background • Indian Economy : LPG ………year 2000 • Insurance industry ‘engine for growth’ • Consumers today have choice and variety
Health Insurance Facts • Rs 7,803 crores in year 2009-10, CAGR of 25-30% • Poised to grow to Rs. 28000 cr industry by 2015 • Out of the total population 15 % - covered under all prepaid schemes 2 % - covered under private insurance • Total healthcare expenditure constitutes 5% of GDP • Public Funding – 1% of GDP • OOP spending – 76% • HEALTH INSURANCE – A NECESSITY TODAY
Health Expenditure in India by Source of Financing OOP – SIGNIFICANT AND BURDENSOME
Universal Truths & Facts • Private health care expenditure is greater than that of public health care • Little preference for Government health delivery system vis-à-vis the private • Reliance on the government need to be reduced • Voluntary health insurance schemes – globally acceptable model • Health insurance plan - income protection plan
Key Stakeholders “ Policyholders” – missing
General Insurance Premium composition [2003 – 09] Health insurance significantly contributing ………..
Indian Health Insurance Market- 2010-11 • INDIA RANKS : • 78th in terms of insurance density • 52nd in terms of insurance penetration • OOP expenses met out of * Borrowings / * Sale of assets / * Past Savings * Current incomes
Indian Heath Insurance Estimates at a glance NCEAR (2008) Survey Report: Penetration 1.2 per cent (US – 4.2%) ASI of Rs 98,604 per policy Population covered – just 15% Population covered by Private Health insurance companies – 2% Huge untapped market
Total Healthcare spending at a glance at Macro level…….. Total health care spending in India - 1.7 lakh crores [2007-08] Insurers’ payouts barely Rs. 5,000 crore!!! Rs. 1,00,000 crore - OP Treatment (non-hospitalization) expenses and Rs 70,000 crore - hospitalization expenses Insurers’ claims - 100-105 % claims [ 2007 - 2009]
Micro level .............. Out of an average annual income of Rs 62,114, an Indian household spends 6.7% (Rs.4,079) of income on for routine medical expenses 37.4 %(Rs.23,237) of income for major sicknesses Huge Out-of-pocket spending!!!
But then, ……………Why? Indian HHs not taking health insurance policy to mitigate huge OOPs? Are the existing insured HHs satisfied ? Why are few HHs discontinuing their policies ? Health insurance has not yet achieved the desired levels of penetration?
Present study makes a humble attempt to find answers to these question through a household survey
Relevance of study Insured households in AP only 0.62 % ( National Average 1.2%) AP Health Index Rank - 20th with 0.46 score (National 0.54) Average annual HH income Rs 45,372 Annual health expenses - Rs 19,566 (43% of HH income) 9 % households surveyed faced major sickness, with average expenditure being Rs 16,463
Objectives of the Study Examine perception of HHs towards Health Insurance Study factors influencing health insurance purchase decisions Identify coverage needs, reasons for discontinuation or unwillingness to purchase health insurance Help insurers tap potential market
Methodology, Sample Source& Size Household Survey – primary data Questionnaire Twin cities of Hyderabad & Secunderabad 221 Households
Data pertaining to…. • Socio-economic and demographic profiles • Health Care Facilities and Preferences • Insurance awareness and Coverage
Data pertaining to…. • Willingness to Purchase Health Insurance • Factors influencing Health Insurance purchase decision
Analysis of Household Survey
Socio-economic & Demographic Profiles of Households
Healthcare Expenditure Experience of Households
Treatment Preference/ Satisfaction Type of Medication • About 65% of Households preferred Allopathic treatments • Homeopathy • Ayurvedic
Sources of Finance for OP & IP Care • Current income being major source • Drain of liquid income • Huge OOP spending …………….. Potential market
Insurance Awareness Of Households
Awareness / Sources of Information • Life insurance awareness significant • Agent’s role very prominently seen
Perception on Health insurance …………. • Although Health insurance is perceived as necessary by majority • Almost half of HHs Uninsured !!! • Understanding and evaluating reasons important • Family Floater policies significant
Health Insurance Claims Experience • Unpaid claims significant • Delays in claims settlement to be efficiently reduced • Result in disinterest to continue or unwillingness in puchase
Reasons for rejections • Part rejections, discouraging factor • No Claim reflects lack of understanding of insurance fundamentals • Insurers’ quality tested through claims settlement………………
Policy Coverage desired • Perception shift in purchase and continuation observed • Coverage desired if integrated will reduce Out-of- pocket spending
Preference of Households Willing to Buy New Policies Low Cost policies for a longer term more than one year from Public Companies seem to be the choice of majority HH willing