Health Insurance Should be Sold Through Banks

The health insurance sector will become the largest component in the general insurance industry by 2016, but there are several challenges for growth. Antony Jacob, chief executive officer of Apollo Munich Health Insurance in an interview to FE's Saikat Neogi talks about issues in health insurance portability, growth and challenges for the sector ahead.

How do you see the health insurance sector moving in the next five years? 

The health insurance sector has been growing quite impressively in the last few years and in 2010-11 the sector saw one of its highest growth ever in the recent past. The growth was around 34% over the previous year 2009-10. The health insurance sector offers huge opportunity entirely based on low penetration levels of health insurance in the country. Looking ahead, I do see health insurance sector to continuing to grow between 25 to 35% every year for the next five years making it the largest component in the general insurance industry by 2016. Currently, motor is the largest component in the general insurance industry and health insurance accounts for around 23%.

What are the challenges that the sector is facing for growth? 

There are several challenges for growth as the sector has been unprofitable in the past because of cross subsidy which had taken place when there were tariffs in fire and marine in the past. Almost every player is now conscious of not subsidising and the claims ratios are coming down, which suggests that in the years to come we will see profitability in the health insurance sector. So, the immediate challenge will be to make the sector profitable, grow faster from a penetration point of view and that's where we will need some regulatory changes like access to health insurance products to be sold through banks. If health insurance companies are given an opportunity to leverage the distribution network of banks, that could help the industry to grow. We will have to work with the regulator to find out cost effective distribution channels. There is also a huge need to increase the awareness level amongst people about health insurance to finance health care. About 70 to 80% of today's healthcare is funded out of pocket and as healthcare costs go higher because of medical inflation, there is an urgent need to educate potential consumers on health insurance.

What are the issues that still need to be resolved before the industry rolls out health insurance portability from July 1 this year? 

I am not so sure about July 1 as there are a lot of process and procedures that need to be clarified as to how it will work in terms of the fine print. All of us do need some more time to put the processes and system in place. It is important for the regulator, companies and customers to be clear as to how the system will work because we have about 50 companies who are engaged in health which includes life, general and specialist health insurance companies. The products vary in terms of features, limits, sub-limits and pricing and the industry needs and the regulator will have to understand how some of the finer processes and features will work when we flag off portability.

Since we have a large younger population, what are the products that you are offering to this category?
If you look at the age group of 20 to 45 years, the big need is outpatient cover. We have a policy called Maxima which covers outpatient and inpatient. We have cashless or reimbursement for doctor's consultation, laboratory and diagnostic tests and these are costs which are most likely to be incurred in that age group. There is also a fair amount of hospitalisation expenses incurred on maternity and in the past there was no cover which covered maternity. Our Easy Health products have certain variants which cover maternity expenses.

How are you looking at health insurance products for senior citizens? 

Insurance products for senior citizens will become common now and grow. For example, at Apollo Munich, once you enter our products before the age 60, you can continue till life long. We offered life-long guaranteed renewals and now we are in the process of finalising a product, which we will shortly file with the Irda, where anybody at any age can subscribe to the product forever. We are working out the cost structure which will be risk-based. As India is the diabetes capital of the world and with changing lifestyle there are more and more issues which a common man will face. The other area where we are working on is disease management. We will bring out a hospitalisation cover along with the disease management.