Health Insurance Market Penetration in India Student : Narendra Rapeti Guide : Dr. Lalitha Subramanian Panel : Dr. Brijesh Purohit Madras School of Economics

Dissertation Why am I doing this study? Who shall be interested in this study?

Contents Chapter 1- Introduction of private health insurance Indias insurance market Objective of the study Chapter 2- Health Insurance Key stake holders Health insurance plans Chapter 3- Penetration of health insurance in recent past Chapter 4- An analysis Statistical inferences on health data provided by TAC Key issues and concerns Addressing way-outs Conclusion

Chapter 1 – Introduction of private health insurance Indias insurance market History – till 1972 GIC and its subsidiaries – from 1972 till 1999 IRDA Act, 1999 – TAC from 2003 Objective of the study To study the health insurance market penetration in India with the help of latest available data presented by Tariff Advisory Committee ( TAC) on their website and also the data reported by IRDA on their website to bring out valuable insights to the sector. In a way to Understand to the updated situation Project and identify the areas or issues which need to be addressed and Provide suggestions and recommendations to tackle the situation for the future

Chapter 2 – Health Insurance –Key Stake Holders Health Insurance Industry Government Distribution channel partners NGOs / SHGs / MFIs Media / Telecom Customer Insurance companies TPAs Health Providers IRDA - regulator

Chapter 2 – Health Insurance – Plans Health Insurance Plans PrivateSocial Community Based / Micro Insurance

Chapter 3 – Penetration of health insurance

Key Market Indicators

Insurance Penetration

Insurance Density

Chapter 4 – An Analysis Table 1. ACTUAL DATA - Source: Tariff Advisory Committee, Data Repository TimeYear No. of Policies No. of Members No. of Claims Premium Paid in Rs (crore) Claims Payable in Rs (crore)Claim Ratio Underwriting Balance Rs (crore) % % % ,8202,19878% ,7582,904105%-146

Key Observations 1. Table 1 encloses the data related to Paid Claims and not the Incurred Claims. Why are the Incurred claims data which is crucial and important not reported? How far are the Paid Claims data a good approximation to Incurred Claims data? 2. Table 1 contains data of 7 variables over a period of 5 years, which may not be large enough to be used for accurate future predictions. Are the data heads recorded for future analysis sufficient? Who recommended the current format of the data set, Table 1? 3. The data enclosed in Table 1, is gathered from TPAs and then consolidated. Do the data gathered from TPAs represent the whole health insurance business for the corresponding year?

Key Assumptions 1. Assuming that the Paid Claims data represents Incurred Claims. 2. Linear fit is a good approximation for projecting the future values. Therefore, we now proceed forward to project the actual data in Table 1 by fitting linear trend and then estimating the future values. The projected values are recorded in Table 2, given below.

Cont.. Table 2 - Linear Fit Year No. of Policies No. of Members No. of Claims Premium Paid in Rs (crore) Claims Payable in Rs (crore)Claim Ratio Underwriting Balance in Rs (crore) % % % ,8202,19878% ,7582,904105% % % % % % % % % % %-294

Cont..

Cont…the projected alarming situation !!!

Cont.. Issues and Concerns Low level of awareness among consumers about health insurance products and their benefits Limited Influence over healthcare delivery mechanism - Limited healthcare delivery network with top few cities Low health insurance penetration and lack of affordability of the consumers in the tier 2/3 cities and rural areas to support the investment in healthcare infrastructure in these areas Insufficient data on consumers & disease patterns, absence of standardization of healthcare costs & significant levels of frauds leading to under-pricing of insurance products, difficulty in product development & pricing and higher value of claims

Addressing some way-outs for issues and challenges Creating awareness on Rights & Responsibilities Data Pool – Regulator as a repository Standardization of Cost TPAs Health Providers Increased Tax benefit Gradation of Health service providers Pool for Senior Citizen Compulsory Health Benefits for organized sector Government role on mass healthcare initiatives

The road ahead… There are several other challenges in the health sectorfrom the perspective of policyholder, insurers and the Authority. With a view to promoting health insurance in the country and looking for possible solutions to bring in as many people as possible into the insurance net, the IRDA has, over the last few years, given special thrust to addressing various issues concerning health insurance. These initiatives not only develop health insurance in the country but also address the concerns of the policyholders of health insurance. The grievance redressal system set up by the Authority enables a detailed analysis of policyholder grievances and health insurance stands out as a major area of concern from the customer viewpoint. It was in this backdrop that the IRDA set up The National Health Insurance Working Group towards the end of This provided a platform for stakeholders of the health insurance industry to work together to suggest solutions to various relevant issues. Some of the Working Groups recommendations were implemented and some are under examination.

Conclusion The legal and regulatory framework of private health insurance, particularly because it operates in the voluntary market, should continually balance competing goals of access, affordability and quality of healthcare and provide health coverage to a larger fraction of the population with varying risk characteristics and ability to pay. Regulations, aside from their aim of providing protection of health insurance policyholders and beneficiaries, can be potent tools to promote access to healthcare, control pricing of health coverage vis- à -vis healthcare providers and enhance quality of healthcare. Allowing the participation of other entities that provide health coverage, such as Hospital and/or Professional entities, and self- insured health insurance schemes of Mutual Benefit Associations and Cooperatives would further increase the reach and depth of private health insurance. Licensing standards for compliance which are enforced on health care provider facilities as well as self-regulation in the medical profession and within provider groups are necessary for continuing improvement of healthcare quality. Private health insurance cannot grow if reasonable consumer expectations relating to access, cost and quality of healthcare remain promises rather than realities.

Personalities I met during the dissertation work Shri G.V. Rao (ex-CMD Oriental Insurance Company Limited) Shri Ramakrishnan (ex-Actuary LIC ) Shri K.K. Rao ( Dy. G. M United India Insurance Company Limited

References IRDA Annual Report Tariff Advisory Committee IRDA Hand Book Private Health Insurance in India: Promise and Reality, prepared by Bearing Point, Inc. for the United States Agency for International Development

THANK YOU !!! – Questions Please