Ethika Insurance Analysis on Future of Health Insurance in India


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Health insurance is a contract between the customer and insurance company in which the insurance company agrees to settle the hospitalization claim bill of the insured customer due to any insured illness or disease up to the sum insured mentioned under the policy in return for a considerable amount known as “premium”. As per the Niti Ayog report at least 30 crore population are devoid of any health insurance coverage.

The bottom 50 crores of our population are covered under the State and Central government schemes such as Ayushman Bharath etc., which are focussed to cover the people below poverty line. The remaining 20% of population or 25 crores are covered through private health insurance and social health insurance schemes. Before the introduction of government schemes the percentage of population covered under health insurance was considerably low and only few people who purchased private health insurance and social health insurance were covered.

But with the growing awareness among the public to have a health insurance policy, the demand for private health insurance has been rising in the past few years. The advent of coronavirus has further increased the health insurance sales during the pandemic period.

For instance the health segment grew by 34.2% in the YTD July FY 2021-22 in comparison to a growth of 9.9% witnessed in YTD July FY 2020-21. This multifold increase in the percentage can be solely attributed to the fear of coronavirus among the public and the associated hospitalization costs. The pandemic is new to our country and there is no special treatment and fixed costs associated with it since it involves high risk for the people treating the patients as well.

Due to this there was no fixed limit for claim costs resulting in different hospitals charging different rates. For the best covid-19 group health insurance plan please fix a call with our health insurance experts from Ethika insurance.

Let us understand the future of Health insurance in India:-

  • Traditional health insurance vs. specialized health insurance: In future there would be specialized health insurance products based on the demand from customers. There was a time when the alternative treatments were not covered under the traditional health insurance policies, but in 2013 IRDA has made it cover the alternative treatments such as Ayurveda, Yoga, Unani, Siddha and Homeopathy under the regular health insurance policy up to the sum insured limit. Likewise the pre-existing disease waiting period which was for 4 years in the initial stages was reduced to 1 year by Digit Insurance. The demand for customized and specialized health insurance is on the rise in the Indian market.

The traditional health insurance policy has no flexibility and is uniform to all the people. Due to the changes in lifestyle and many options available in the market the demand for traditional health insurance products is on the fall. For instance congenital conditions were a strict exception in the traditional health insurance plans but now most of the insurance companies are offering congenital coverage both for internal and external.

Recently IRDA has asked the insurance companies to include the mental illness under the coverage of health insurance and provide hospitalization expenses for the same. Mental illness was excluded in the traditional health insurance policies. IRDA has been upgrading the existing health insurance policy coverages with change in time and the demands from different sections of people.

In future insurance companies would even pay for the pharmaceutical bills such as tablets, injections etc without the need for hospitalization. For example the Hypertension, Diabetes, Thyroid medicines would be covered under a standard health insurance policy without the actual need for hospitalization.

  • Rising health care costs: The health care costs are on the rise in India due to the advancement in technology as well as the increase in demand for treatments. Most of the hospitals are not regulated by the governments and charge the fees as per their wish. This makes the hospitalization a costly affair in particular to metro cities.

India is a country where the basic health care is provided by the state but when it comes to advanced treatment people have to depend on either private hospitals or Charitable hospitals. The changes in lifestyle also have a great impact on the health of people. Due to the advent of technology many people are confined to their chairs requiring less effort on a daily basis.

A sedentary lifestyle leads to different diseases such as Diabetes, Obesity, Hypertension, and Cancer. Many people are resorting to tobacco and alcohol consumption as a part of lifestyle thereby increasing the chance of hospitalization.

Health insurance in the future would be a costly affair as the premium is directly related to the claim experience. Due to the increase in health care costs, the claim amount paid by the insurance company is also increasing. This directly translates to the increase in premium by the insurance companies.

In future the health insurance premiums of Covid-19 cover are bound to increase, and in case where the increase in premium is not possible insurance companies would resort to including co-pay in the policy. This reduces the claim amount to be paid by the insurance companies in case of hospitalization.

But in any case the health insurance premiums are bound to increase sharply in the future with more players competing in the market.

Insurance companies have already experienced a high claim ratio in health insurance policies during the Covid pandemic period where the insane hospital bills are claimed by insured customers. The pandemic resulted in a hike in the health insurance premiums of covid-19 cover.

The best Covid-19 insurance plan in India can be availed online from Ethika insurance by booking a 15 minutes call with Ethika insurance broking.

  • Add-ons: Add-ons are the extra coverage offered by the insurance companies on payment of additional premium. There are different Add-ons available on the market such as personal accident cover, deletion of waiting period, companies on payment of extra premium in the existing insurance policies.There are already certain add-ons in the health insurance segment such as Deletion of waiting period, room rent waiver, hospital cash cover, maternity cover, critical illness cover, personal accident cover, zone upgrade cover etc.The zone upgrade cover is the new add-on introduced by Digit insurance in which the customer can upgrade his/her existing zone to avail hospitalization benefits. For instance if the customer has taken a policy in Zone B and wants to avail health care in Zone A hospitals then the insurance company would upgrade it on payment of additional premium.

The add-ons such as Zone upgradation cover are new to the health insurance market and many such add-ons would be introduced in the near future based on the demand from the customers. The Worldwide coverage add-on is also available in the market which is introduced to help the customers avail quality health care in any part of the World.

Medical tests are waived off for a certain age limit by most of the insurance companies due to the advancement in technology and the waiver is given based on the declaration given by the customer in the proposal form.

  • AI based claim settlement: The future of health insurance in India with respect to claim settlement is also bound to change. Artificial intelligence would take over the claim settlement process in the insurance industry. Already the motor insurance claims are being settled using the AI technology thereby reducing the turnaround time and increasing the customer satisfaction. The use of AI in health insurance claims would start from the time the claim is reported and would continue throughout the claim settlement process.

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Susheel Agarwal

Namaste. I'm Abhinay Nedunuru, a Fellow of the Insurance Institute of India with a passion to make insurance simple and crisp. I write on insurance and investment. I have a passion for teaching and training in particular to insurance. I'm currently doing my PhD from IIM in Management.