Sanjay Datta, Chief Underwriting, Claims, Reinsurance and Actuary, ICICI Lombard General Insurance shared his view on low penetration of health insurance in the country in a conversation with Nirmala Konjengbam.
Health insurance is the need of the hour for Indians and to make quality healthcare affordable, insurance service providers must be used effectively to ensure the health of citizens. The health insurance penetration in the country is below the desirable rate and the biggest factor that contributes to this unawareness of health insurance is illiteracy.
What are the reasons behind low health insurance penetration in India?
Health insurance penetration in India is abysmally low. Currently, 34 per cent of the country’s population is covered under any health Insurance. The percentage of people covered under health insurance in rural areas is much lower than that of urban areas, despite the fact they get benefits from government health insurance called Rashtriya Swasthya Bima Yojana (RSBY) for unorganised workers and those below the poverty line, CGHS for government employees, and ESI for organised workers.
The biggest factor that contributes to this unawareness of health insurance is illiteracy. The existing burdens of loans on the poor make them reluctant to think of the credit policies that are actually issued in their interest. Even though right to information is a fundamental right in our country, a considerable section of Indians lack the exposure to information that is issued in the national interest of the people.
We are all aware of the healthcare scenario and the rising costs but a large majority of people in India believe that health insurance is not a worthy investment and therefore, avoid buying such insurance products. Even when economically backward population is aware of such policies, it does not have the distributional cash flow.
What are the challenges faced by insurers?
Given the vast geographic and economic variations, it is difficult to cater to these differing markets - one of the key reasons for low coverage rates. Distributional challenges, such as last time access, lack of sustainable products, transactional inconvenience have been some of the key internal challenges plaguing insurers in the country.
How to increase health insurance penetration?
The penetration of insurance in India is much lower than most of the counties in the world.
The potential market is still untapped, and with the rising middle class, increasing awareness for health and increase in marketing efforts, insurance companies now have the opportunity to reach out to a broader customer base. With the use of technology and effective distribution channels we can now expand to a wider geography especially in Tier 2 and Tier 3 cities
What are the factors that lead to rise in health insurance demand?
The demand for health insurance is rising as a financing option to be able to afford quality healthcare. Some factors causing this shift are:
1. Changing disease profile of population
The prevalence of lifestyle diseases like diabetes and hypertension are rising due to changing lifestyles. Moreover, non-communicable diseases are now affecting more young adults than before. In rural areas and among urban poor, the burden is double since infectious diseases are prevalent too. All these are leading to increasing demand for healthcare.
2. Innovative products
Insurance companies are constantly trying to design innovative products with comprehensive coverage. Products with optimal pricing and coverage are being designed keeping in mind the healthcare needs of different strata of population.
3. Regulatory and technological advancements
Improved regulatory environment and technological advancements will help health insurance industry to better tackle the issues and challenges. This will definitely lead to growth and advancement in the market, enabling insurance companies to serve their customer better.