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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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Presentation on theme: "PROBLEMS & PROSPECTS OF INSURERS IN HEALTH INSURANCE SPACE IN INDIA BY G SRINIVASAN CMD CMD UNITED INDIA INSURANCE COMPANY LTD 24/01/2012."— Presentation transcript:

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 Crs IN 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 YEARHEALTH PREMIUM (Rs Crs) GROWTH RATE (%) HEALTH PREMIUM AS A % OF TOTAL PREMIUM G SRINIVASAN, CMD

11 CHALLENGES BEFORE THE INSURERS HIGH INCURRED LOSS RATIO OVER THE YEARS – 111% IN & 100% IN 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 12 TH PLAN ( ) 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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