The Indian Perspective of Health Insurance Industry During the Covid-19 Pandemic
The health insurance industry of India has surged due to the Covid-19 pandemic as several individuals are opting for health insurance covers. Inclusion of coronavirus disease under active health insurance policies and treatment of this disease outside government hospitals can create strain on the insurance companies in India.
An article published by the economic times reported that India’s global position in terms of accessibility and quality of healthcare is 145th among the 195 countries. Surprisingly, India lags behind some of the smaller countries like Sri Lanka, Bhutan, and Bangladesh in terms of healthcare facilities. Nevertheless, according to a study conducted by Global Burden of Disease, India’s healthcare access has improved since 1990. The study also revealed that the HAQ (Healthcare access and Quality) index increased in 2000-2016. Furthermore, as of in 2016, the top five countries with excellent healthcare access and quality levels were Iceland, Norway, Netherlands, Luxemburg, Finland, and Australia.
How has Covid-19 Affected the Health Insurance Industry in India?
According to a report published by Research Dive, the global health insurance market is expected to cross $1,992,636.5 million by 2027, with a healthy CAGR of 4.0% in the 2020-2027 timeframe. As far as the Indian scenario is concerned, there was a 16% increase in premiums in the first half of 2020-21 and beyond this, the premium share in September 2020 (half year) stood at 30%.
Apart from this, the health insurance took a lead for the first time in India and earned the top spot in the non-life segment. This growth in health insurance was witnessed during the Covid-19 pandemic as lockdown backfired on several insurances like motor, crop, and fire; this in turn paved way for health insurance industry to enhance. Moreover, high hospitalization costs during the coronavirus outbreak forced numerous individuals to opt for a health insurance cover.
According to the General Insurance Council, the non-life insurance companies collected around 29.7% health insurance premium in April-September (2020-21) period. Whereas, the motor insurance missed out by a narrow margin and stood 2nd with 29% premium during the same time period. As per the 2014-15 report, the motor insurance comprised of 44.4% and health consisted of 23.4% insurance premiums.
The health insurance policies surged all time high during the Covid-19 crises because lockdown resulted in the rapid fall of the sale of vehicles across India. The loss of the automobile sector is predicted to stretch beyond the Covid-19 pandemic. Furthermore, the motor insurance faced a drop by 13.8% at year-on-year basis and took a heavy fall by ranking at 2nd position amongst the ten non-life segments.
The usual scenario of the health insurance is that they are bought by the companies as group policies for their employees; therefore, eliminating the need to buy at individual basis. However, the Covid-19 pandemic changed the outlook of health insurance as individuals started buying these policies. The April-September timeframe saw a 34% rise in individual policies as compared to group policies. Apart from this, government schemes related to healthcare also fell along with overseas (insurance for foreign travel) insurance policies.
In India, there are almost 32 non-life insurance companies but not all of them gained profits in the pandemic season. The few who harbored a positive growth are New India, Star Health, United India, National, and Oriental insurance companies.
The National Sample Survey (NSS) conducted a study on health expenses in 2017-2018 and the report mentioned that 81% of urban individuals and 86% of rural households were without healthcare cover. The total number of people amounted to 1,135 million Indians without a health insurance policy. This opens up opportunities for expanding health insurance in India at a wider scale. One such example is the PM-JAY (Pradhan Mantri Jan Arogya Yojana) which covers almost 107 vulnerable and poor households with an annual amount of INR 5 Lakh per family.
What Challenges Indian Health Insurance Companies are Facing during the Covid-19 Pandemic?
IRDAI (Insurance Regulatory and Development Authority of India) suggested that coronavirus disease can come under the active insurance policies. However, this factor can be a burden on the insurance companies if Covid-19 is treated outside government hospitals.
As coronavirus also affects people suffering from diabetes, cardiovascular diseases, renal, and some other chronic diseases; people might also claim insurance for non-Covid-19 cases as well. This aspect might put a strain on the insurance companies and the claim recovery period might go beyond the pandemic phase.
The Ayushman Bharat Scheme started by the government with PPP (Public Private Partnership) agreement can put a strain on the center as numerous health insurance claims fall under the government. The private companies might just have to adjust their finances according to the future conditions.
Uncertainty while applying for health insurance claims might create problems between the insurer and customer as every client demands a hassle free insurance claim. Apart from this, expenses related to items such as PPE (Personal Protective Equipment) kits, gloves, and sanitizer which fall under general Covid-19 protocol are non-payable. Moreover, lack of consensus between hospitals and insurer over variations in treatment costs creates additional problems; thus making health insurance claims unpredictable.
The government has decided to reduce repo rates and bond interests due to the Covid-19 pandemic. This aspect can generate challenges for the health insurance companies for sustaining high reserves, credit risks, and liquidity risk.
The Way Ahead for the Health Insurance Industry:
Digitization of insurance policies and claiming procedures can reduce manual work and save time. User-friendly policies and conversion of offline insurance products to online can be adopted overtime. Moreover, simplification of the document work and easy-to-understand policies can help in building trust in insurance companies. Apart from this, faster claim settlements with minimum manual work can popularize these health insurance companies for a longer period of time.