Health Insurance Portfolio – An Analysis

Few years back we were very enthusiastic about the growth of Health Insurance portfolio. This was especially true during 2007-08, when this portfolio grew from Rs 3210 Cr to Rs 5110 Cr. i.e by 59.20%. Let us look at the growth figures from 2006 to 2013:

% Growth of Health Insurance over the Years

Year	Amount (Rs Crores)	% Growth
2006-2007	3210	14.45
2007-2008	5110	59.20
2008-2009	6634	29.82
2009-2010	8305	25.68
2010-2011	11480	38.22
2011-2012	13184	14.84
2012-2013	15341	16.36

We have drawn graph showing the % growth YOY and, it shows that figure is fluctuating and is becoming less and less attractive as the years have passed by.

Let us try to make projections for next 6 years.

We have done this with growth rate of 12%, 20%, 30% & 60%.

If we achieve figure of 30% then the portfolio will be Rs 56960 Cr. in 2017-2018.

If some one asks me- What should be the growth with which you I will be happy?- I will say it should not be 30% gross but it should be 30% net (as we have to discount for inflation of 10% per annum in normal costs and 20% per annum in health care costs). Let us not be satisfied with meager growth of 16%- let us aim for 60%.

It means we should have growth of 60% year over year and then the figure will reach Rs 160862 crores in 2017-18

Health Insurance Portfolio – An Analysis

Few years back we were very enthusiastic about the growth of Health Insurance portfolio. This was especially true during 2007-08, when this portfolio grew from Rs 3210 Cr to Rs 5110 Cr. i.e by 59.20%. Let us look at the growth figures from 2006 to 2012:

% Growth of Health Insurance over the Years

We have drawn graph showing the % growth YOY and, it shows that figure is fluctuating and is becoming less and less attractive as years have passed by.

Graph Showing % Growth Year  Over Year

Let us try to make projections for next 6 years.
We have done this with growth rate of 12%, 20%, 30% & 60%.

Projections for Health Insurance Portfolio

If we achieve figure of 30% then the portfolio will be Rs 64414 Cr. in 2017-2018.

If some one asks me- What should be the growth with which you will be happy?- I will say it should not be 30% gross but it should be 30% net (as we have to discount for inflation of 10% per annum in normal costs and 20% per annum in health care costs). Let us not be satisfied with meager growth of 16%- let us aim for 60%.
It means we should have growth of 60% year over year and then the figure will reach Rs 223892 crores.

Is compulsory Co Payment of 20% in Group Health Insurance Policy a solution?

We understand that for controlling the losses of Health Insurance portfolio a circular has been issued by Ministry Of Finance to 4 PSU’s namely

• New
• National
• Oriental
• United

This circular has many guidelines out of which few guidelines are such, which are to be strictly followed:-

(i)     Co-payment (20%) shall be made compulsory in every Group Health Policy.

Let us see the implication

Employer- Should it pay this Co payment as and when any member of Group Health Insurance Policy undergoes hospitalization and lodges claims to the insurance company.

Employee- Should it be borne by him/her.

Employer is ready to pay higher premium (but without Co Payment clause) in the beginning so that it does not have uncertainly with respect to

• Payment under Co Payment clause.
• Funds planning.
• Avoid unnecessary paper work in accounts/ administration department of the company in dealing with copies of bills etc. In case employer pays this- taxation aspect also is to be taken care of as payment beyond Rs 15000 may have implication of TDS.

Is it that with this move an effort is being made to?

-          decelerate the growth of health insurance portfolio

-          Move business to Private sector companies?

What will be the repercussions of this?

Only Time will tell- let us wait.

Our suggestion is that insurance companies should be asked /instructed to give 2 quotations:-

Option 1- Premium with Co-payment 0% (as at present). We know it will be higher.

Option 2- Premium with Co-payment 20%. Let customers choose this option if budget is the constraint at their end.

Let the Market and the customer decide whether they need Option 1 or Option 2?

Indian Health Insurance Market- 2010-11

Indian Health Insurance Market- 2010-11

Estimates of Indian Health Insurance Market for the year ending March 31, 2011 are now available and according to it this market has touched figure of Rs. 11000 Crores.

Group Corporate portfolio and Group Government portfolio (Schemes like RSBY,) continue to be a loss making portfolio. Retail portfolio continues to be the group where insurance companies have been successful in reducing the claims figures by following rigid norms. May be the decision of PSU’s to go in for strictness i.e. July 1, 2010 and strengthening of PPN has resulted in good results.

Let us hope that all segments of health insurance portfolio will be profitable in few years.

Are they supporting each other Or are they fighting with each other?

Recently we came across a news item that 64% of the cases which came up before Insurance Ombudsman (located all over the India) was pertaining to health insurance portfolio. Let us look at the facts;

Health Insurance as % of non life insurance portfolio = 32%
Group policies issued under Health Insurance portfolio = 50%
Policies issued to Individual/ Families = 50%

It means policies being issued to Individuals/ Families are only 16% of total non life insurance portfolio.

General impression is that claims arising from group policy get paid because they have the bargaining /negotiating power .It means that Individuals/ Families are the worst sufferers as this is the group which is having claims being disallowed.

The question before us is how many of the dissatisfied customers are able to reach the office of Insurance Ombudsman?

64% figure is really a very high figure .Let us try to look at the reasons for this scenario or why it is so?

There are 3 players.

Role of every player is to provide good service to the customer. When the insured has to go in for hospitalization then each one ( Insurance Company /TPA/Health care Provider ) is trying to pass on the buck to other player as if the objective or job description of each one is who can harass the customer most so that he runs away and forgets about claim .
Health care provider says that this insurance company is blacklisted or this TPA is black listed

TPA says that this health care provider is black listed.

Insurance Company says that they are ready to consider the payment of the claim but it will not be on cashless but on reimbursement basis. This defeats the basic assumption of the client that when the need arises he will be able to have payment coming from insurance company.

We need the change in thinking at all levels.