Presented By

Debadrita Chakraborty
Indranil Mukherjee
Mohit Damani
Neha ShivKumar
Naveen Sharma
 Why is Health Insurance important?
– Rising medical costs
– Sharing of health related risk
– uncertain hospital bills
– Expensive/quality health care services
– Money value – Sick Vs Healthy
– Family health insurance
– Tax benefit
– Productivity of workforce
– Removes some of the burden from the state
– Keeping pace with the customer needs while
achieving profitability 2
 Health Insurance – Scope
• Health Insurance - potential to
become a Rs.25000 crores industry
by 2012.

• No. of Elderly People in the

Developing World will TRIPLE in
25yrs. (WHO)

• In India, the no. of people above 60

yrs is about 8% today, with that no.
expected to hit 21% by 2025.
(Source:Asia Insurance Review)

Source: NIA Library

 …..Health Insurance – Scope
• Medical tourism on the rise
• Healthcare infrastructure expansion
• Increasing burden of new diseases and
health risks and neglect of preventive and
primary care and public health functions
due to under funding of the government
health care.
 Objective of The Study
• To find out the necessity of health
insurance
• To find out the position of different types of
health insurance schemes available in
India
• To discuss the past & present scenario
and future prospects
• To launch a new health insurance scheme
based on the analysis of the current
schemes
Progression of Health Insurance business in India

Policy Growth Rate

2007-08 2008-09

Health Insurance Policies Procured by lines of business Standalone 282% 117%

Non-life 67% 23%

12,000,000 2,361
10,66

Life 110% 124%

10,000,000 ,2 51
8,637

Total 70% 29%

8,000,000 Standalone

Non-life
,9 68
6,000,000 5,166
Life

4,000,000

356419 798588
2,000,000 169703 332,541
40,078 153,097

0
% share of Health insurance policies
2006-07 2007-08 2008-09 sold
2007- 2008-
2006-07 08 09
Standal
one 0.75% 1.67% 2.82%
Non-life 96.10% 94.43% 90.41%
Life 3.16% 3.90% 6.77%
100.00 100.00
Total 100.00% % %
6
 Current Health Insurance Scenario: India

Health Insurance Penetration in India

Uninsure d
8 2 .6 5 %

Indian Railways
0 .5 9 % Pvt. se c tor
ESIS Community
Ente rprise (Se lf
Pvt.He alth 3 .1 9 % Insuranc e
Funde d)
Insuranc e 4 .1 9 %
4 .6 1 %
1 .4 2 % CGHS
3 .3 5 %

Low penetration of Insurance and Low Govt. expenditure in India . . .

Has resulted in high Out-of-Pocket spend

Source: Business World (India) – Oct 2007 7

 Health Insurance Plans
Health Insurance Plans

Community Based /
Private Social
Micro Insurance

Community
Risk Rated & Non- Risk Rated &
offered by Rated & Normally
Commercial Government managed by
Organization initiated Community /
Groups
 Health Insurance : Need
Indian health financing CHALLENGES:
Population covered under some form of Healthcare
Prepayment
• Increase in health care costs
• High financial burden on the poor
16 14.3
14 • Need for long term and nursing care
12
10 for senior citizens
8
e(%)

6 5 5
Increasing burden of new diseases
g

3.4 •
nta

4
rce

0.9
e

2 and health risks

P

0
Private Social Employer Community Total • Due to under funding, preventive and
Health Insurance Spend Insurance
primary care and public health
Insurance
Healthcare Type functions are yet to meet their
objectives.
Source: Mckinsey
Some facts on Health Expenditure in India…
■ The magnitude of health expenditure in India for the year 2001-
02 was about 4.8% of the GDP at current market prices

■ Over three-fourths of all health spending is private spending

■ Less than 15 percent of people in India have some form of

health insurance coverage

■ More than 40 percent of the people hospitalized had to borrow

money / sell assets to cover expenses

■ A quarter of those hospitalized fall below the poverty line

because of high costs #

■ Medical care is one of the 3 main causes of impoverishment in

the country.

■ Recent NSSO data (60th round) indicates a large share of

consumption expenditure is on health (13% in rural, 10% in
urban)
Trends in Product Variety:
• Health insurance in India was first marketed by non-life insurers as a standardized
annual indemnity product, Mediclaim, in 1986, with an annual limit of indemnity
chosen by the insured beforehand, and the premiums being largely based on the annual
limit chosen and the age of the prospect.

• The product variety available has increased substantially now, though the indemnity-
based annual contract continues to be the form which predominates
• Requires increased emphasis on consumer understanding of product scope and
options.
Products now available include:
– Individual and Group Floater Indemnity products

– Critical Illness Indemnity and Benefit products

– Hospitalization Benefit and Surgical Benefit products

– Hospitalization Daily Cash Benefit products

– High Deductible and Top-Up covers

– Micro health insurance products

– Overseas travel and International comprehensive coverage

Products

– Disease Management products

– Specific disease products- Cancer, HIV, Diabetes

– Products for different age groups- Senior Citizens, children

Dental insurance

– Products with outpatient coverage in some form

 Social / Government Schemes:
Issues &Challenges

• Catering to Mass Population based on Income criteria

 Price Pre-fixed
 A challenge to administrator – TPA working with synergies in NGO’s to ensure
a successful model
 Subsidized schemes
 To be run on community based models

• Health Care for Government Employees & Workers

 Self Funded schemes
 Impressive network
 Covers small segment of population
 Cumbersome procedure

“No National Health Care Coverage catering different strata segments”

 Present scenario
1. Enormous mismatch in global healthcare financing
2. Developing countries have 84% of population & 90% of disease
burden Household 68.8%
3. By 2020, estimated world population-7.5
billion Central Govt . 7.2%
By 2050, estimated world population-9
billion State Govt. 14.4%
4. According to NHA of India 2001-02,
sources of finance in health sector- Private Firms 3%

Public Firms 2%

External Funds 2%

Local Govt
2.2%
Penetration of health insurance
 Table 1. ACTUAL DATA - Source: Tariff Advisory Committee, Data Repository

Claims
Premium Payable Underwriting
No. of No. of No. of Paid in in Balance
Time Year Policies Members Claims Rs (crore) Rs (crore) Claim Ratio Rs (crore)

1 2003 - 2004 2265451 8361629 360088 944 785 83% 159

2 2004-2005 2059449 8987239 555273 987 948 96% 39

3 2005-2006 3828495 16345575 1016785 1947 1777 91% 170

4 2006-2007 3110475 17907430 1060047 2,820 2,198 78% 622

5 2007 -2008 3790838 24121625 1436998 2,758 2,904 105% -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?
 GROWTH FUN CTION - EXPON EN TIAL FIT - TABLE 3
Year N o. of N o. of N o. of Premium Claims Claim Underwriting
Policies Members Claims Paid in Payable in Ratio Balance
Rs (crore) Rs (crore) in Rs (crore)

2003-04 2265451 8361629 360088 944 785 83% 159

2004-05 2059449 8987239 555273 987 948 96% 39
2005-06 3828495 16345575 1016785 1947 1777 91% 170
2006-07 3110475 17907430 1060047 2,820 2,198 78% 622
2007-08 3790838 24121625 1436998 2,758 2,904 105% -146
2008-09 4493349 32422234 2203227 4426 4322 97% 104
2009-10 5323360 44431783 2882139 6317 6206 98% 112
2010-11 5501574 54877506 3675942 7777 8140 104% -363
2011-12 6776295 75522610 5307482 10422 11720 112% -1298
2012-13 7647569 99460493 7198628 15101 16605 109% -1503
2013-14 8645012 130596430 9508732 19583 22866 116% -3283
2014-15 9836703 171462366 13052023 26140 31848 121% -5707
2015-16 11483470 229755216 17964586 36097 45182 124% -9085
2016-17 12914784 300806429 24061174 48745 62771 128% -14026
2017-18 14804382 397596699 32710371 64826 87558 134% -22732
 The projected alarming situation !!!

Underwriting Balance - TABLE 2

800

600

400
TIME (in years )
VALUE

200
Gross Profit
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
-200

-400
TIME ( in years )
Issues and Concerns
1. Low level of awareness among consumers about
health insurance products and their benefits
2. Limited Influence over healthcare delivery
mechanism - Limited healthcare delivery network
with top few cities
3. 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
4. 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
– 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
 Recent initiatives of IRDA

Committee to formulate regulations

Pure health insurance products

Allowing the formation of an stand alone health

insurance company

 Standalone health insurance companies

Renewability

Senior citizens
 Obstacles to providing Health Insurance….
Lack of Data

Moral Hazard/Adverse Selection

Complex nature of the product

Medical Inflation

New treatments

Unnecessary treatments

Difficulty in pricing

Government provision of health care

Long term nature

Changing life style & fraud companies’ presence……

How to mitigate/address these impediments contd…

Insurer
 Designing a less complex product

 Transparency in the product features

 Clarity in policy terms, conditions & exclusions

 Efficient back-office support for underwriting and claims processing

higher Reinsurance

 Need for quicker services. Eg: Toll free no.s, cashless, quick response

 Expense analysis on a regular basis

 Product innovation

 Efficient training of sales force

How to mitigate/address these impediment contd……

Policyholder:
• Pay attention to policy conditions

• Read the exclusions and limitations very carefully

• Compare premium costs, deductibles, co-payments

• Take an informed decision

How to mitigate/address these impediments contd…

Regulator/Government
• Come out with health insurance regulations
• Centralized data base for health insurance experience
statistics
• Provider rating
• Cap on renewal premiums
• Ensure that a decent portfolio of health coverage
represent the rural sector
• Guard against ill effects of privatization
• Further tax incentives
• Compulsory savings towards health care
• Should emphasize the need to employ actuarial methods
in various aspects of life and non-life businesses
Challenges and Road Ahead:
• Health System Issues:

– Healthcare costs
– Regulation of providers
– Accreditation/ Grading/ Quality issues

• Consumer Awareness and Empowerment

– Decrypting the jargon
– Product innovation to match consumer needs
– Simplification and standardization of key terms
– Process efficiencies
– Performance benchmarks for operations and service
– Transparency and best practices
– Leveraging technology

• Minimizing moral hazard in the system

• Increasing reach, access and affordability
 QUESTIONNAIRE
Name of Respondent: - ____________________________

Date: -

Gender
(a) Male (b) Female

Age (in Years)

(a) 18 – 25 (b) 26 – 35 (c) 36 – 45 (d) above 45

Qualification
(a) 12th (c) Graduate (d) Postgraduate (e) Professional

Monthly Income (in Rs.)

(a) Below 10,000 (b) 10,001-20,000 (c) 20,001-30,000 (d) above 30,000

Occupation
(a) Student (b) Private Employee (c) Govt. Employee (d) Business Man
Q.1 Do you have any Insurance Policy?
(a) Yes (b) No

Q.2 Are you aware about Health Insurance?

(a)Yes ( b) No

Q.3 If yes, do you know benefits of health insurance?

(a) Yes ( b ) No

Q.4 Do you have any Health Insurance Policy?

(a) Yes (b) No

Q.5 If yes, which companies plan do you avail?

(a)LIC (b) Bajaj Alliance (c) ICICI Lombard (d) HDFC (e) Others

Q.6 How did you get this health Policy?

(a)Employer Provides (b) Own purchase (c) Family Provides

Q.7 How much premium do you pay annually?

(a) 1000- 5000 (b) 5001- 10000 (c) 10001 – 15000 (e) Above 15000

Q.8 Why did you purchase this health insurance plan?

(a) Health Expenses recover (b) Tax benefits (c) Recover Future uncertainty
Q.9 Please Rank all these companies as per services provided by them from 1-5
 “Ideal Health Insurance”-Our
Invention….
Benefits of the policy:

• It takes care of the medical treatment costs incurred during

hospitalization due to serious accident or illness
• The policy can be taken as add on cover to your existing
hospitalization – medical expenses policy
• In case of higher expenses due to illness or accidents the Ideal
policy takes care of the additional expenses.
 Special Features of The Policy
• Floater Policy (sum insured floats over members covered)
• Competitive premium rates
• No Medical tests up to 55 years subject to clean proposal
form.
• For all cases where medical tests have been conducted in our
empanelled diagnostic centre, and the proposal has been
accepted / and premium received the Company would
reimburse50% of the medical test charges
• Pre-existing diseases covered after 4 years
• Continuity for waiting periods would be given for any
indemnity cover irrespective of Sum Insured in the earlier
policy and discounts on child health insurence
 
 Age Flexibility
• Age of entry for proposer 18years – 70 Years.
Renewable up to 80yrs
• Children from 3 Months - 5 years can be covered if
both the parents are insured with us
• Children from 6 years to 18 years can be covered if
either of the parents are covered with us
• Children from 18yrs to 25yrs can be covered as self
proposer or as dependents
 Dependants Under Our Policy

• The primary member or the proposer can

cover Self, Spouse, and 3 Children under
this policy

• The premium would be calculated as per

the highest age of the family member
 
Eligibility Criteria For The policy
• Members covered under Medical expenses
(Hospitalization) policy. This policy covers the
medical expenses in excess of the specified
deductible amount

• Members who do not have any Health policy can

also opt for this policy; the expenses up to the
deductible limit (per hospitalization) have to be
borne by the member
 WHAT WOULD BE THE PREMIUM COST

Sum insured/ No of members 1 Lakh 2 Lakh 3 Lakh

Deductible
1 2500 3750 5900
2 3500 5250 8100
PLAN 3 4025 6038 9255
90 days-40 years 4 4430 6645 10145
5 4870 7305 11115

1 4500 5500 7900

PLAN B 2 5850 7150 10150
41-60 years 3 6435 7865 11125
4 7080 8655 12200
5 7645 9345 13145

1 4750 5750 8150

PLAN C 2 6175 7475 10475
61-80 years 3 6795 8225 11485
4 7475 9045 12595
5 8070 9770 13570
 Details of Coverage of The
Policy
• Single Sum Insured and single premium for the
whole family
• the member has access to cashless facility in more
than 2400 empanelled hospitals across the country
subject to terms and exclusions
• In case the member opts for hospitals other than the
empanelled ones the expenses incurred would be
reimbursed within 14 days from the date of
submission of all documents
 Details of Coverage of The
Policy Contd……
• The policy covers ambulance charges in case
of emergency subject to a maximum of Rs.
3000
• The limit of indemnity /Sum Insured is the
maximum liability above the deductible
• Discounts provided on child insurence
Crystal Ball Gazing………. Trends for the near
future

• Growth trajectory likely to continue- health insurance will be an increasingly

important mode of payment for hospital services

• Product and delivery innovations, distribution innovations .Increasing and

professionalization in the system

• Quality, Standards, Cost optimization

• Providers contributing to sharing risk-

– Provider payment mechanisms
– New dimensions of Provider ‘Networks’

• More comprehensive products- overcoming limitations

due to health system issues

• Savings linked, Differentiated and Multi-tiered products

Thank You