The Indian Health Insurance Industry has been growing constantly in the last few years, even though it cannot be compared to the size of health insurance sectors of the rest of the world. However, as any industry insider will rightly claim, the Health Insurance industry in India is one of the fastest growing segments in the country.
The Compounded Annual Growth Rate (CAGR) of the Indian Health Insurance Sector between FY2002 and FY2008 has been approximately around 30-35%. At the same time, in terms of the total Gross Domestic Product (GDP), expenditure on health in India is around 6%. Roughly speaking, the Indian Health Insurance industry stands at around INR 5,000 – 5,200 crores, which means that only around 2% of the total Indian population is insured.
The reasons are more than evident for anybody involved in the industry. The problem is how health insurance is seen amongst the people. Firstly, the Indian Youth Index is on the rise, which means that there are more youngsters than senior citizens and this results in the first misconception i.e. only older people need health insurance. Furthermore, most people are not sure of benefits that can be derived from health insurance. There is this prevalent idea that most health insurance schemes have hidden terms and clauses, which would allow the companies to renegade on their promises.
Since the Health Insurance Sector in India is growing at a whopping speed, there have to be substantial benefits which many don’t realise. The reason for this leaping growth rate is the fact that health insurance schemes are tremendous tax saving instruments. In addition, they act as long term investment vehicles and provide extended financial security. Therefore, they are ideal for someone who is looking for a good mix of security, returns and medical assistance.
In reality, the Health Insurance Sector in the country can grow at a much faster rate, if India could only develop proper health care infrastructure. Currently, Health Insurance companies are carrying the dead weight of increasing health care costs, lack of proper care for senior citizens, increasing instances of new diseases and health risks and the percentage of Indian population below the poverty line. The effect of lack of health care infrastructure can be highlighted by the simple fact that employer based insurance and community based insurance outweigh the private insurance bracket by over 5% each. This reveals that there are very few people who actively search out health insurance but are willing to take it up when it is provided conveniently. Hence, accessibility and awareness take special importance for the industry.
To conclude, the scenario can be underlined very effectively by listing key issues and challenges faced by the private health insurance sector as specified by one of the leading insurance companies in India. As listed by the company, the following are the problems:
- Limited influence over health care delivery mechanism.
- High claim ratio.
- Low awareness.
- Limited product development.