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PROBLEMS & PROSPECTS OF INSURERS IN HEALTH INSURANCE SPACE IN INDIA

PROBLEMS & PROSPECTS OF INSURERS IN HEALTH INSURANCE SPACE IN INDIA. BY G SRINIVASAN CMD CMD UNITED INDIA INSURANCE COMPANY LTD 24/01/2012.

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PROBLEMS & PROSPECTS OF INSURERS IN HEALTH INSURANCE SPACE IN INDIA

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  1. PROBLEMS & PROSPECTS OF INSURERS IN HEALTH INSURANCE SPACE IN INDIA • BY G SRINIVASAN • CMD CMD UNITED INDIA INSURANCE COMPANY LTD • 24/01/2012

  2. HEALTH INSURANCE IN INDIA – A SNAPSHOT • OVER A DECADE OF FORMATION OF THIS DEDICATED SPACE • 22 GENERAL INSURANCE COMPANIES WITH 3 HEALTH MONOLINE COMPANIES • LIFE INSURANCE COMPANIES HAVE ALSO ENTERED THIS SPACE • # OF POLICY HOLDERS INCREASED FROM 8.3MILLION IN 2004 TO OVER 200 MILLION IN 2011 G SRINIVASAN, CMD

  3. HEALTH INSURANCE IN INDIA – A SNAPSHOT • HEALTH INSURANCE PREMIUM Rs 11480 Crs IN 2010-11 WITH A GROWTH RATE OF OVER 36% • IN THE CURRENT YEAR HEALTH INSURANCE PREMIUM UPTO DECEMBER 2011 WAS 0VER Rs 9661Crs, GROWING AT ABOUT 18% • HEALTH INSURANCE EXCLUDED IN INDIA : OVER 950 MILLION (FICCI-McKINSEY SURVEY 2011) G SRINIVASAN, CMD

  4. HEALTH INSURANCE IN INDIA – A SNAPSHOT • HEALTH INSURANCE BREADTH OF COVERAGE IN INDIA HAS INCREASED FROM 4% TO 20% OF THE POPULATION IN LESS THAN 5 YEARS (ISB – INSIGHT VOL 9 ISSUE 2) G SRINIVASAN, CMD

  5. HEALTH INSURANCE IN INDIA – A SNAPSHOT • HEALTH INSURANCE PENETRATION IN INDIA IS LOW – ONLY AROUND 2.2% OF THE POPULATION IS COVERED UNDER PRIVATE HEALTH INSURANCE & RURAL HEALTH INSURANCE PENETRATION IS LESS THAN 10% (PwC HEALTH INSURANCE IN INDIA REPORT-MARCH 2011) G SRINIVASAN, CMD

  6. HEALTH INSURANCE IN INDIA - POISED FOR AN ACCELERATED GROWTH CURVE! • NEAR ABSENCE OF ANY SIGNIFICANT RISK PROTECTION AGAINST MAJOR HEALTH RELATED EXPENDITURE IN INDIA, AS INSURANCE & OTHER ORGANISED FORMS OF PAYMENT FOR HEALTH SERVICES (ESIS, CGHS) BARELY CONSTITUTES A TENTH OF ALL HEALTH EXPENDITURE • NEARLY 80% OF HEALTHCARE EXPENSES FUNDED OUT OF POCKET BY PEOPLE IN INDIA AND IS A LEADING CAUSE OF IMPOVERISHMENT IN THE COUNTRY G SRINIVASAN, CMD

  7. HEALTH INSURANCE IN INDIA - POISED FOR AN ACCELERATED GROWTH CURVE! • NEARLY 39 MILLION PEOPLE ARE PUSHED TO POVERTY BECAUSE OF ILL HEALTH EVERY YEAR • ABOUT 47% OF HOSPITAL ADMISSIONS IN RURAL INDIA & 31% IN URBAN INDIA WERE FINANCED BY LOANS & SALE OF ASSETS - 74% 0F MEDICAL EXPENDITURE WAS INCURRED ON OUT-PATIENT TREATMENT(THE LANCET – HEALTH REPORT 2010) • INDIA SUFFERS 20% OF GLOBAL DISEASE BURDEN (THE LANCET REPORT 2010) G SRINIVASAN, CMD

  8. HEALTH INSURANCE IN INDIA - POISED FOR AN ACCELERATED GROWTH CURVE….. • RISING DISPOSABLE INCOMES AND LIFESTYLE CHANGES BRING IN NEW HEALTH RISKS – GROWING LONGEVITY OF THE POPULATION • HEALTHCARE SPEND IN INDIA ESTIMATED TO DOUBLE TO Rs 2250 BILLION(US$ 42 BILLION) BY 2014 • COMPLEMENTING THE SAME , HEALTH INSURANCE IN INDIA IS PROJECTED TO GROW AT A CAGR OF OVER 15% TILL 2015 ( BCG REPORT- APRIL 2011) G SRINIVASAN, CMD

  9. HEALTH INSURANCE IN INDIA - POISED FOR AN ACCELERATED GROWTH CURVE….. • AT THIS RATE ONLY 50% OF THE COUNTRY’S POPULATION WOULD HAVE SOME HEALTH INSURANCE COVER BY 2033 (PwC HEALTH INSURANCE IN INDIA REPORT-MARCH 2011) • INCREASED GOVERNMENT FOCUS ON HEALTH INSURANCE FOR THE MARGINALISED POPULATION • HEALTH INSURANCE TO EMERGE AS THE BLOCKBUSTER SEGMENT IN THE NON-LIFE INSURANCE SPACE, IT COULD ACCOUNT FOR 40% OF THE TOTAL NON-LIFE INSURANCE PREMIUM IN INDIA BY 2020 (BCG REPORT 2011) G SRINIVASAN, CMD

  10. HEALTH INSURANCE PREMIUM IN INDIA G SRINIVASAN, CMD

  11. CHALLENGES BEFORE THE INSURERS • HIGH INCURRED LOSS RATIO OVER THE YEARS – 111% IN 2009-10 & 100% IN 2010-11 • TPA MANAGEMENT • HEALTHCARE PROVIDER MANAGEMENT • ISSUES OF ADVERSE SELECTION OF RISKS G SRINIVASAN, CMD

  12. CHALLENGES BEFORE THE INSURERS • LACK OF DATA AVAILABILITY ON DISEASE & USAGE PATTERNS OF DIFFERENT SOCIO-ECONOMIC SEGMENTS IMPACTING PRODUCT INNOVATION • LIMITED PRODUCT RANGE IN COVERAGE RESULTING IN MISMATCH BETWEEN THE DEMAND & SUPPLY OF INSURANCE – WHICH STEMS PENETRATION G SRINIVASAN, CMD

  13. CHALLENGES BEFORE THE INSURERS • HIGH INCIDENCE OF DOUBTFUL /SUSPECT CLAIMS: ACCORDING TO A McKINSEY REPORT (2010), ATLEAST 20% OF HEALTH CALIMS IN INDIA ARE SUSPECT/DOUBTFUL • RISE IN MORAL HAZARD AMONG ALL THE STAKE HOLDERS IN THE INSURANCE – TREATMENT VALUE CHAIN RESULTING IN LARGE VARIATIONS IN HEALTHCARE COSTS FOR THE SAME AILMENT/TREATMENT (PROF K SRINATH REDDY EXPERT COMMITTEE REPORT ON HEALTH INSURANCE IN INDIA -JANUARY 2011) G SRINIVASAN, CMD

  14. CHALLENGES BEFORE THE INSURERS • LACK OF INNOVATION IN BUSINESS MODEL TO PENETRATE THE HUMONGOUS UNSERVED RURAL MARKET • TRUST-DEFICIT IN THE CUSTOMERS/ CONSUMERS, WHICH NEEDS TO BE IMMEDIATELY CLOSED OUT • LACK OF STANDARDISED POLICIES ACROSS THE INSURERS G SRINIVASAN, CMD

  15. CHALLENGES BEFORE THE INSURERS • LOW AWARENESS AMONG THE POPULATION ABOUT THE BENEFITS OF HEALTH INSURANCE • LACK OF CAPACITY TO BUY HEALTH INSURANCE • FAILURE TO PROVIDE QUALITY HEALTHCARE IN THE COUNTRY, ESPECIALLY IN TIER 2 & 3 TOWNS & RURAL HINTERLAND TO MATCH THE GROWING HEALTH INSURANCE PENETRATION G SRINIVASAN, CMD

  16. CHALLENGES BEFORE THE INSURERS • LACK OF STANDARDISATION & ACCREDITATION NORMS IN THE HEALTHCARE INDUSTRY • ABSENCE OF REGULATOR FOR HEALTHCARE SECTOR G SRINIVASAN, CMD

  17. SOLUTIONS • PROACTIVE REGULATOR & INSURERS ARE WORKING TOWARDS RAMPING UP HEALTH INSURANCE AWARENESS LEVELS THROUGH VARIOUS METHODS • INNOVATIONS IN PRODUCT OFFERINGS & SERVICE DELIVERY IS BECOMING THE ORDER OF THE MARKET G SRINIVASAN, CMD

  18. SOLUTIONS • TIGHTER CONTROL & MONITORING OF TPAs & HOSPITALS • STANDARDISATION ACROSS THE INSURANCE VALUE CHAIN IS BEING SERIOUSLY LOOKED AT- (1) CRITICAL ILLNESS DECISION & DETAILS (2) TREATMENT PROTOCOL, FOR ATLEAST MAJOR AILMENTS (3) BILLING PROCEDURES (4) LIST OF NON-MEDICAL EXPENSES G SRINIVASAN, CMD

  19. SOLUTIONS • FRAUD IDENTIFICATION & CONTROL STRATEGIES BEING IMPLEMENTED • INSURERS ARE BUILDING THEIR DATABASE & THUS A LARGER INDUSTRY DATA IS BECOMING AVAILABLE G SRINIVASAN, CMD

  20. SOLUTIONS • BIG DATA ANALYTICS & PREDICTIVE MODELLING TOOLS WOULD BUILD A ROBUST FRAMEWORK FOR PRODUCT DESIGNING, PRICING & CLAIMS MANAGEMENT • ENHANCED LEVEL OF CUSTOMER CARE SERVICES & STRONG GRIEVANCE REDRESSAL MECHANISMS PUT IN PLACE G SRINIVASAN, CMD

  21. SOLUTIONS • MORE TRANSPARENCY BEING BROUGHT ABOUT IN POLICY COVERAGE & CLAIM PROCESS • RISK-BASED PRICING, ESPECIALLY FOR GROUP COVERS • IDEATION & INCUBATION OF NEW DISTRIBUTION MODELS TO PENETRATE THE UNTAPPED & UNDER-TAPPED RETAIL & MOFUSSIL MARKETS G SRINIVASAN, CMD

  22. INSURERS MAJOR INNOVATIONS TO DRIVE HEALTH INSURANCE PENETRATION # MASS HEALTH INSURANCE SCHEMES - RSBY & OTHER GOVERNMENT SPONSORED HEALTH INSURANCE PROJECTS FOR DIFFERENT TARGET POPULATION- ESPECIALLY BPL FAMILIES # OTHER DISTRIBUTION MODELS LIKE COMMUNITY - BASED HEALTH INSURANCE PROGRAMS & MICRO HEALTH INSURANCE PROGRAMS FOR VICTIMS OF NATURAL CALAMITIES G SRINIVASAN, CMD

  23. INSURERS MAJOR INNOVATIONS TO DRIVE HEALTH INSURANCE PENETRATION # VILLAGE ADOPTION PROGRAM ( AS A VEHICLE TO PUSH HEALTH INSURANCE INCLUSION OF THE ENTIRE VILLAGE POPULATION) G SRINIVASAN, CMD

  24. MASS HEALTH INSURANCE SCHEME - RASHTRIYA SWASTHYA BIMA YOJANA (RSBY) • A TRANSFORMATIVE GOVERNMENT SPONSORED HEALTH INSURANCE SCHEME FOR BPL POPULATION • SCHEME STRUCTURED HEAVILY LEVERAGING IT BACKBONE(BIOMETRIC SMART CARDS,REALTIME DATA CAPTURE & MONITORING) AND ACTIVE COLLABORATION BETWEEN THE KEY STAKE HOLDERS (HOSPITALS, TPAs, STATE GOVERNMENTS,ETC.,) • RAPIDLY ROLLED OUT ACROSS 26 STATES BY COVERING ABOUT 265 BPL FAMILIES COVERED & ABOUT 6.40 CRORE BPL POPULATION COVERED TILL DATE G SRINIVASAN, CMD

  25. CHALLENGES OF MASS HEALTH INSURANCE PROGRAMS • FRAGMENTED HEALTH INSURANCE INCLUSION MEASURES OF THE GOVERNMENT • PRICING INADEQUACIES • FRADULENT & SUSPICIOUS CLAIMS G SRINIVASAN, CMD

  26. CHALLENGES OF MASS HEALTH INSURANCE PROGRAMS • POOR QUALITY OF HEALTHCARE ESPECIALLY IN TIER II & III TOWNS & RURAL AREAS • DIFFICULTY IN RAMPING UP ENROLMENTS UNDER THE SCHEMES • HIGH INCURRED LOSS RATIO G SRINIVASAN, CMD

  27. THE LONG HAUL…… • LONG TERM VIABILITY OF HEALTH INSURANCE SEGMENT CRITICAL–KEY REQUIREMENTS– RIGHT PRICING, HIGH PRODUCT INNOVATION, PROACTIVE CLAIMS MANAGEMENT • HEALTH INSURANCE IN INDIA HAS TOUCHED THE INFLECTION POINT & IS ON A HUGE GROWTH TRAJECTORY FOR THE NEXT FEW YEARS G SRINIVASAN, CMD

  28. THE LONG HAUL…… • THE INDUSTRY IS GOING THROUGH THE ADJUSTMENT & ALIGNMENT PHASE WHEREIN THE MULTIPLE STAKE HOLDERS ARE UNDERSTANDING ONE ANOTHER’S CONCERNS AND TRYING TO ADDRESS THE SAME FOR A WIN-WIN PROPOSITION TO ALL • THE REGULATOR IS ACTIVELY ENGAGING WITH ALL THE STAKEHOLDERS TO PROTECT & PROMOTE THE CAUSE OF THE INSURANCE INDUSTRY AND MORE PARTICULARLY THE CAUSE OF THE CUSTOMERS/CONSUMERS G SRINIVASAN, CMD

  29. THE LONG HAUL…… • A FOCUSSED/DEDICATED REGULATORY OVERSIGHT ON HEALTH INSURANCE WOULD BRING MORE VALUE TO THE INDUSTRY, AS HEALTH INSURANCE IS FUNDAMENTALLY DIFFERENT FROM THE OTHER LoB • A REGULATOR FOR THE HEALTHCARE PROVIDER SECTOR WOULD GO A LONG WAY FOR A CONCERTED ACTION TO GROW THE HEALTH INSURANCE SEGMENT G SRINIVASAN, CMD

  30. THE LONG HAUL…… • TECHNOLOGY DEPLOYMENT (WEB APPS, HAND-HELD DEVICES, CLOUD SERVICES,ETC,.) & DATA ANALYTICS WOULD BE THE ULTIMATE GAME CHANGERS-FOR FURTHERING PENETRATION, PRODUCT INNOVATIONS & DELIVERING SUPERIOR CUSTOMER SERVICE • AWARENESS NEEDS TO BE ENHANCED ACROSS THE CUSTOMER/CONSUMER SEGMENTS ON THE BENEFITS OF HEALTH INSURANCE AS A PROACTIVE PURCHASE AND THE DOWNSIDE OF A REACTIVE BUY G SRINIVASAN, CMD

  31. THE LONG HAUL…… • GOVERNMENTS SHALL CONTINUE TO BE THE KEY DRIVER OF PENETRATION OF HEALTH INSURANCE IN THE COUNTRY • INSURERS HAVE TO COLLABORATE WITH A MULTITUDE OF ENTITIES, WHO HAVE OUTREACH CAPABILITIES, TO DISTRIBUTE HEALTH INSURANCE PRODUCTS, IN A MASSIVE WAY, ACROSS THE RETAIL SEGMENT & RURAL HINTERLAND G SRINIVASAN, CMD

  32. THE LONG HAUL…… HEALTH INSURANCE IS A CRITICAL REQUIREMENT FOR INDIAN GOVERNMENT’S ASPIRATION TO COVER THE ENTIRE 1.2 BILLION POPULATION UNDER THE UNIVERSAL HEALTH INSURANCE COVERAGE BY THE END OF THE 12TH PLAN (2012-17) AND, INSURERS SHALL SEIZE THE OPPORTUNITY NOT JUST AS A BUSINESS PROPOSITION BUT ALSO AS A SOCIAL OBLIGATION TO OUR COMPATRIOTS G SRINIVASAN, CMD

  33. THANK YOU G SRINIVASAN, CMD

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