Let me first start with the overall health insurance scenario market in India. In my opinion there is no other industry in India or around the world which I know of, which has been growing at about 25-30% per annum and has the potential to grow for the next 5 years, in my opinion, at 20-25%. But I must admit that this growth has been on a small base. For example just 30 million people have health insurance policy in this country. If you set aside the railways and the ESIs and other government schemes, which is about 30%, the final percentage hovers around 3% and this number is pathetically low. Now I think that the specific 500 million target is a very good target to keep in mind and it’s a very good goal for the industry to work towards but the question is when is it reachable?
I am firm believer that everything is possible in this world as long as there is a clear plan with a clear roadmap. Now specifically on 500 mn in 5 years I think it hugely depends not on the coverage of people in metros and tier-1 and tier 2 cities, it actually depends on how much and how quickly we can cover the masses of India. The Ministry of Labour has made an excellent beginning in this regard with a scheme called RSBY (www.rsby.in) and this is covering the population below the poverty line. I think this scheme is now available as a policy in almost every State except in those states which have their own schemes example- Andhra Pradesh and Tamil Nadu. Now that is a great scheme, as I have seen and as we have participated in the State of Meghalaya. We had won the tender for the state of Meghalaya and we are currently insuring people below the poverty line in our own way. We started our enrollment in Meghalaya in late December and we hope to cover about one million of people between January and March 2010. We hope to cover around 200 thousand families, with an average family of about 5 per family. This scheme which has public and private sector companies participating in it, including Apollo Munich, is an excellent scheme where the coverage is right and the principle under which it operates is correct. We are hoping and we are confident that Apollo Munich would do an outstanding job on this and hopefully next year this time we will have the statistics to show how well we have done this assignment. So if every company participating in these schemes has the same aims and objectives, I think we will reach beyond 500 Million.
Now at the same time we also need to make sure that in the other segment i.e. people above poverty line also do not fall behind. In this sector too there is a huge under-penetration, as only a small percentage of insurance is secured. Therefore this segment also needs to grow at the same time for which public and private sector along with the regulator and the Government will first need to raise the level of awareness of people. They should know why health insurance is needed and what its benefits are. And each company will have to do its own marketing like you would have seen very recently Apollo Munich has started a very big campaign and we have committed continuing it for the next 5 to 10 years. So we believe that additional awareness, creating through companies like Apollo Munich will also raise the awareness and also increase the penetration in tier-1 and tier 2 cities and people above poverty line.
Health insurance products have been sold and perceived as complicated products, when in fact they don't need to be. We have started to take the lead in uncomplicating health insurance so that more and more people can be comfortable using it to protect themselves from the growing health care costs while getting access to the best quality health care. We have no disease-specific sub limits in our plans, and we offer lifelong renewal with no restrictions with respect to age or any specific disease. This is one way in which we are uncomplicating health insurance.
What led to Apollo DKV being relaunched as Apollo Munich?
There is no change in partnership but only a name change as Munich Health is the new brand under which Munich Re is now offering its health care sector services. Munich Re is thus bringing together under one banner its global insurance and reinsurance know-how in health. We also went in for a change of our brand name. We feel with the name change it is easier for customers to identify with.
Could you elaborate on the new campaign 'let's uncomplicate'?
'Let's uncomplicate' is our belief and our journey. Health insurance is not yet seen as the ideal vehicle to finance health care expenditure. Our campaign showcases Apollo Munich as a straightforward, user-friendly and hassle-free health insurance company. As the campaign stated, Apollo Munich will take the fear out of faces, the jargon out of words, the bitter out of the medicine and the trouble out of the treatment to uncomplicate health care and, more specifically, health insurance.
How do you see the first decade of liberalization of Indian insurance industry?
The insurance sector in India has come a full circle from being an open competitive market to nationalisation and back to a liberalised market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost two centuries. Although there has been rapid growth of the sector over the last decade, insurance in India still remains at an early stage of development. Insurance is one sector whose contribution to the GDP has been quite significant. During the last three decades, insurance penetration as a percentage of the gross domestic product has more than doubled from around 3.5 per cent in 1970. The insurance sector thus has grown more strongly than the overall economy.
What according you are some of the most important developments and also the disappointing factors during the last decade?
The biggest development in this industry was the opening up of the industry following the 1999 IRDA regulation. Also with the proliferation of bancassurance, it is rapidly changing the way insurance products are distributed in India. This will also have strong implications on the process of financial convergence and capital market development in India. On the regulatory side, there are outstanding concerns regarding certain taxation and accounting issues, caps on foreign equity shareholdings, as well as the enforcement of price tariffs in the non-life insurance sector. Health insurance is still underdeveloped in India but offers huge potential, as there will be increasing needs to purchase private health cover to supplement public programmes. Similarly the deficiencies in the current pension schemes should offer significant opportunities to private providers. With the majority of the population still residing in rural areas, the development of rural insurance will be critical in driving overall insurance market development over the longer term.