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Health Insurance Industry Boom to arise out of increased policy sales in India

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Published on March 17, 2021 | Est Read Time: 2 min

Health care costs in India had been steadily rising until the unexpected happened. The coronavirus pandemic led to a steep rise in medical expenses with hospital care bills running in tens of lakhs per person. How many people in India have the ability to pay off medical bills of this size without seriously threatening their overall financial health? Not a lot, even having pre-Covid policies, which ran anywhere from3 to 5 lakhs could not shield them during this time. This is the reason that the global pandemic has changed the Indian health insurance industry like never before. With many people to either buy coronavirus health insurance or upgrade their cover.

First the good news…

Top seller:

One really good news for the Indian general and health insurance industry, in particular, is that more and more people are now buying health insurance. The General Insurance Council has reported that in April to September 2020, the health insurance premiums contributed to 29.7% of collections. This was one case where it was able to beat motor, which generally comes at the top of the revenue sources.

While most insurance companies in India have reported a steep rise in the number of policies sold, some of the top sellers have reported 30 to 40 per cent sales growth and some have gone even higher. Were it not for a global pandemic, this kind of market growth in any sector is a cause of great celebration!

Growing Shift to Digitalisation:

Further, the fact that the country was in complete lockdown for months meant that insurance companies with strong digital sales channels have taken the largest slice of the pie. The lockdown had made the traditional agents driven sales model almost impossible to run.

Another great change in the health insurance sector has been the fact that overall industry has started to accept and bring digital technologies to every aspect of their business. What may have started as a push for digital sales techniques has transformed the entire business process model for health insurance companies to go the digital way. Everything from application processing to documentation delivery, customer support, claims processing and even underwriting has taken up the binary route, leaving the analogue world behind in an era gone by.

Increased Consumer Awareness:

In addition to this, the customer side approach to health insurance has also undergone significant transformation. The days where people purchased health insurance solely for Income Tax Saving purpose under Section 80D, are at an ebb.

People are now planning to buy medical insurance for its real purpose, to support them when the need for healthcare arises. Industry experts believe that from now on, more customer-pull-driven market approaches will help health insurance sales grow. The days of push marketing where companies had to convince people to buy health insurance are a thing of the past now.

Now the challenges...

The picture also presents challenges and complications for the insurance industry. The industry is facing multiple challenges on many fronts.

Confusion Regarding Treatment Costs:

The biggest challenge in front of most medical insurance providers is that since Covid-19 is a very novel disease, the healthcare providers are still scrambling to estimate the cost of treatment for patients.

The healthcare industry across the globe has never ever come under such deep and systemic stress where, many people had to rely on them. The situation is such that everyone has to learn and feel their way as they go. In the absence of a reliable pricing model with expense estimates to fall back upon, healthcare providers and health insurance underwriters, as well as claims processors, are still trying to find a financial model that will help them predict the future.

Difficulty in Onboarding:

Another big challenge has been the adoption of digital technologies at an unprecedented pace. While the insurance and financial sectors have always been the forerunners at the adoption of new technology, even they have never seen such rapid adoption of digital technologies in every aspect of their business.

This has meant many challenges, including the optimisation of business processes and training of the workforce in the new way of doing business. Add to this, the fact that many other businesses have also come under the need to go digital, means that the world has changed a lot in just a few months.

The Claims Dilemma:

Even the claims processing division has encountered considerable challenges. Items like PPE kits and other protective gear were never covered by policy claims, but were never in such high consumption levels either. The extremely infectious nature of the disease is such that different hospitals are following varying processes and standards. This has made the job of claims processor much harder.

There is light at the end of the tunnel…

Rapid development and delivery of vaccine have led us out of the darkest portions of the tunnel. The road ahead is getting clearer by the day.

• For starters, most people on the customer side, hospital side and insurer’s side have whole-heartedly supported increased efforts at digitisation.

• Product managers have started to come up with simple and innovative health insurance products.

• Another great advantage is that the emergence and rapid adoption of digital technologies will enhance the business methodologies of insurance companies all round. Everything from policy sales to underwriting and claims processing will become much faster and simpler. This will also make regulatory reporting easier, thus reducing the operational overheads for all insurance companies as well as Insurance Regulatory and Development Authority of India.

The future is very bright…

As more and more people realise that medical insurance has helped many people tide over the coronavirus pandemic, demand and acceptance of effective medical insurance will grow. The immediate cash pump-in that was caused because of a really large number of people buying health policies at the same time will allow the insurance companies to invest in development of specialised health insurance products and customer-focused add-ons.

Another important factor that insurance providers must consider is that rapid digitisation of their business processes will lay the perfect groundwork for adoption of next-generation technologies like machine learning and artificial intelligence. These next-gen technologies will make it much easier for insurance companies to better predict customer behaviour as well as considerably reduce the risk of claims fraud. It will allow underwriters to better predict, which treatment patterns and methodologies will be able to deliver the highest health benefits for lower prices.

All in all, what is most certainly a time of great global peril, is expected to strengthen the health care industry in India. The increased awareness and demand for health insurance in a population as large as India will act as a turning point. It will make affordable and great quality healthcare more accessible to a larger set of people.

Disclaimer- The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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