Professional Documents
Culture Documents
ISSN No:-2456-2165
Abstract:- In recent years, health insurance sector has overall growth of the industry. It regulates and monitors all
become one of the fastest growing sectors in India. India the insurance companies (including those involved in the
still offers a huge untapped market for health insurance. health insurance business) operating in India. Indian
Thus, not only increasing numbers of general insurers, insurance companies and banks were in the hands of public
but some standalone health insurance companies have sector until 2000. From the first decade of 21st century, health
also penetrated into the industry, challenging others with insurance started getting due importance. Initially health
better offers and wide array of services. The present study insurance was offered by general insurers. Later, several
is an endeavour to fill up the existing research gap by companies started coming up with various health insurance
testing the existence of linkage between the financial services as a separate product line. They started dealing solely
parameter (i.e.; dependent variable) ‘premium collection in health insurance products and hence are known as
intensity’ and selected performance indicators (i.e.; Standalone Health Insurance (SAHI) companies. Health
independent variables), namely; ‘Incurred Claim Ratio’, insurance premiums have been registering a significant
‘number of offices’, ‘market share’ and ‘number of Compound Annual Growth Rate (CAGR) of 24.6% in the
policies issued’ over the five years i.e., from 2013-14 to preceding ten F.Y. The Gross health insurance premium
2017-18 by the six Standalone Health Insurance (SAHI) underwritten which was Rs. 2221 crores in the year 2005-06,
companies operating in India at present using multiple has increased to Rs. 20,096 crores by 2014-15
correlation analysis. The study is based on secondary data (Bandyopadhyay et al., 2018). The premium collection in
and the findings show that there is strong correlation health segment continued to surge ahead at Rs. 41,981 crores
between the dependent and independent variables and in 2017-18 from Rs. 34,527 crores of 2016-17, registering
hence it can be concluded that premium collection growth of 21.59%. The six standalone health insurers together
intensity of the selected health insurance companies has registered a growth rate in premium collection of 41.93%
significant degree of linkage with the performance against 41.06% growth rate during the previous year. The
indicators considered in the study. market share of health segment has increased to 27.86% from
26.95% of the previous year. As a result, the standalone
Keywords:- Health Insurance; Premium Collection Intensity; health insurers taken together infused a total capital of Rs.
Performance Indicators; Linkage; SAHI Companies. 217 crores, which is almost 6.59% of the total capital, infused
by the general insurers and re-insurers to their equity capital
I. INTRODUCTION base. The number of lives covered under health insurance
policies during F.Y. 2014-15 was 28.80 crores (Lama et al.,
Before liberalization, when India was a closed economy, 2015). During 2017-18, the general and health insurance
financial institutions were facing decrease in their interest companies have issued around 1.47 crore health insurance
margin. This was due to the rise in competition, changes in covering a total of 48.20 crore lives and registered a growth
technology, and the deregulation of the financial sector as of 10% in number of lives covered over the previous year. In
well as globalization. The major source of income by banks terms of number of lives covered, three fourth of the lives
is interest income. The insurance companies were also facing were covered under Govt. Sponsored Health Insurance
many difficulties in selling their insurance products through schemes and the balance one fourth were covered by group &
insurance agents. As the economy was downsizing, financial individual policies issued by general & health Insurers during
performance of banks and insurance companies were also the F.Y. 2017-18 (IRDA Annual Report, 2018). Thus,
deteriorating. Banks and insurance companies were in need undoubtedly it can be said that health insurance plays a great
of alternate source to increase their income. Indian economy role in shaping Indian economy today.
went through several changes when the first set of reform was
announced by the government of India in the year 1991. After In recent years, health insurance sector has not only
liberalization in 1991, many changes in the government become one of the fastest growing sectors in the non-life
policy occur; among them, insurance sector is one which got insurance industry in India, but it is also emerging as a
a major boost. Insurance Regulatory and Development significant business for non-life insurance sector. Different
Authority of India (IRDA) was set up as an autonomous body reasons including increasing awareness of health insurance,
under the IRDA Act, 1999 to regulate the Indian insurance rising healthcare costs etc. have become the driving factors
market to protect the interests of the policyholders and for for more people to go for health insurance in the last few
1
Assistant Professor in Commerce and Professor-in-Charge; Xavier Law School; St. Xavier’s University, Kolkata; Email id:
chakrabortysudipta1993@gmail.com; Contact no.: 9836417323
Data shows almost no company was able to achieve happed with Aditya Birla, which started its business in late
“ideal ICR” benchmark. However, except Aditya Birla, all of 2016.
them have managed to keep their ICR between 50% - 100%
throughout these five years taken under consideration. While C. Number of offices of SAHI companies:
ICR is a fine yardstick with which the performance of a Number of offices that a health insurance company have
company can be measured, it is not the sole consideration on is an important parameter of growth in terms of market share
which the reputation of an insurance provider depends. It does and revenue generation of the company. This is because
not tell the whole story as it does not take into account the having a greater number of offices ensure maximum outreach
time taken for the settlement of claims. Moreover, insurers to common public and potential customers. It does not only
who operate start-ups may not have earned a substantial create awareness relating to the necessity of health insurance
amount of money through premiums initially in its first few among the local people, but also paves the way for their easy
years of operations. As a result, the ICR of the company may access to the representatives of the companies for purchasing
be more than 100% indicating that the insurer is incurring of health insurance products and services.
losses due to the fact that the claim incidence in the initial
years may have been significantly higher. This is exactly what
From the figures, it is evident that all the SAHI D. Percentage of total market share:
companies have notably increased the number of their offices Market share of a company denotes the portion of a
over the years which in turn has added to their amount of market controlled by a company. Market share represents the
premium collected. This is because, these companies have percentage of an industry, or a market's total sales, that is
become more recognised and accessible by general public due earned by a particular company over a specified time period.
to their increased number of branches and has secured the Market share is calculated by taking the company's sales over
public confidence to make these SAHI companies their health the period and dividing it by the total sales of the industry
insurers. Further analysis of data shows that Star Health has over the same period. This metric is used to give a general
the maximum number of offices and it continues to add on to idea of the size of a company in relation to its market and its
the existing number over the years. Apollo Munich has competitors. Market share increases can allow a company to
managed to open good number of offices in between the FYs achieve greater scale with its operations and improve
2016-17 and 2017-18. Aditya Birla, though a very new profitability. A company can try to expand its share of the
entrant in the market, has opened too many offices within just market, either by lowering prices, using advertising or
one and a half years superseding Cigna TTK and Max Bupa, introducing new or different products. In addition, it can also
and almost touching Religare in terms of the number for grow the size of its market size by appealing to other
better recognition and accessibility by the customers. audiences or demographics.
Figures show that over the years all the companies have Secondly, these companies being specialised for providing
managed to increase their market shares. This is mainly health insurance products and services have earned the
because of two reasons. Firstly, the health insurance market confidence of potential customers. As a result, in case of
is growing at an increasing rate, which contributes to the health, they prefer SAHI companies as their insurers, rather
overall growth of market shares of all the SAHI companies. than the general insurance companies. Moreover, the facility
SHARE OF POLICIES
Aditya Birla Apollo Munich Cigna TTK Max Bupa Religare Star Health
65 65 64 64 63
3 5 7 8 9
10 9 8 8 6
0 1 2 3 4
21 19 18 17 17
0 2
2 0 1 3 -1 4 2 0 1 4 -1 5 2 0 1 5 -1 6 2 0 1 6 -1 7 2 0 1 7 -1 8
Figures in %
Source: Compiled by researcher from IRDAI Annual Reports 2013-14 to 2017-18
Considering the share of new health insurance policies F. Number of persons covered:
issued by the individual companies on the total number of This is an important indicator both in terms of
new health insurance policies issued by all the SAHI understanding the premium collection trend as well as it has
companies together, it is seen that over the years the share of significant social implication. In a developing country like
Star Health, Apollo Munich and Max Bupa has slightly India, where insurance density and penetration are very less,
decreased, whereas share of the other three SAHI companies a growth in the number of persons covered under any of the
including Aditya Birla has increased. Attractive health health insurance policy of any company is a sign of
schemes, low premium cost and tie-ups with banks (i.e.; development in economic well-being. Insurance is a contract
bancassurance) and other corporate organisations have of indemnity, not profit. Thus, though profit cannot be earned
contributed to such growth in the share of new health out of multiple policies on the same person, still there is a
insurance policies issued of these companies. tendency to have more than one policy in the name of the
same insured to ensure minimum out of pocket expense in
case of repudiation of a valid claim by any company.
9.4 13.8
16.0 18.7 8.3
15.4 13.2
11.5 14.1 2.5 3.2
13.2 1.0
6.5 0.3 18.1
17.5 19.7
12.2 14.5
1.3 3.9
2 0 1 3 -1 4 2 0 1 4 -1 5 2 0 1 5 -1 6 2 0 1 6 -1 7 2 0 1 7 -1 8
Figures in %
Source: Compiled by researcher from IRDAI Annual Reports 2013-14 to 2017-18
The figures clearly shows that Star Health has covered companies is different, they are not comparable only on the
maximum number of persons throughout the five FYs under basis of gross premium collected. Thus, in order to
study. There is a cut-throat competition among Apollo standardise the variable, a new variable has been obtained
Munich, Max Bupa and Religare for the position of second, namely premium collection intensity, which acts as the
third and fourth company in terms of coverage of persons for dependent variable in this study. The independent variables
all these five years. However, the figures are much less as are Incurred Claim Ratio, number of offices, market share and
compared to the figures exhibited by Star Health. number of policies issued. In order to avoid the problem of
Significantly, Aditya Birla has covered commendable multicollinearity, number of persons covered by the said
number of persons under its health products within just one insurance companies has not been taken into account as an
year of starting its operations. When considered the independent variable.
percentage of persons covered by each company on the total
number of persons covered by SAHI companies, it is seen that In this study, the dependent variable is a financial
the results are fluctuating every year. Apollo Munich and performance indicator, whereas the independent variables are
Aditya Birla have been able to increase the percentage of operating performance indicators. Thus, this study aims to
persons covered over the years, whereas, percentage of find out whether there is any linkage of the operating
persons covered has decreased for Star health over the said performance indicators with the financial performance
five years. In case of the other SAHI companies, the indicator; i.e., if any correlation of the independent variables
percentages show a dip during the period of 2014-15 to 2016- exists with the dependent variable. For this purpose, the
17; however, they have been able to regain their positions in relationship has been analysed using the statistical tool
terms of percentages of persons covered in the year 2017-18. ‘multiple correlation’ with the help of statistical package
software IBM SPSS (Version 15). For this purpose, the
G. Linkage between premium collection intensity and other following hypotheses are made:
selected parameters: H0: There is no linkage between premium collection intensity
and performance indicators
Premium collection intensity refers to average premium H1: There is linkage between premium collection intensity
collected from the insureds, i.e.; Gross Premium Collected / and performance indicators
Number of persons insured. It basically represents the amount
of premium collected per person. Since, the size of the The results have been tabulated as under –