Health insurance industry in India has undergone a sea-change over the last three years. Covid- 19 had given a big push to health insurance, making people realise the uncertainties of life, and their under-preparedness, in case of mass or even individual health crisis.
Statistically speaking, the premiums around health insurance collection increased from around ₹500 crore in early 2000s to around ₹74,000 crore in FY 2022. This shows a massive growth in demand in the last two decades.
The demand for health insurance is progressively growing from the smaller towns and cities, where almost 700 million people are still under-insured. In addition to the already growing consumer base in the metro cities, there has been a huge demand from consumers (post the pandemic) who do not have deep pockets, younger age group/ millennials, consumers in tier 2/3 cities and beyond, people with limited income brackets.
Along with increased awareness towards health insurance, medical inflation and hospitalisation, are significant reasons for this growing demand. Room rent capping has inflated by 3-4% in the last 1-2 years. India’s current medical inflation rate is around 15%, a further inflation of around 10% is expected in FY 2023.
In the last 1-2 years, there has also been a growing demand towards low-cost health insurance policies. People from smaller cities and limited income brackets also want to protect their families today. For consumers who do not have abundant funds; low-cost health insurance has proven to be fruitful in preventing them from paying out of pocket in case of any medical emergency.
This segment needs health insurance which are simple and easy to understand; cost-effective, compared to the general health insurance policies and are a permanent solution to non-hospital costs.
A Niti Aayog report indicates that the existing health insurance schemes can potentially cover 70% of the population, the remaining 30% face challenge in obtaining proper, need-based health insurance plans. This signifies the need for customised health insurance, which is tailored to one’s individual medical requirements.
Using AI/ML based technologies, companies today acquire data on an individual’s lifestyle habits, income, medical history and curate products which are closest to an individual’s medical needs. Niche products are being offered by insurance companies that allow consumers to include or exclude product benefits as per their requirements.
Personalised health insurance products offering critical illness plans, maternity plans, OPD based health cover, health insurance covering lab tests, medications, no room rent capping are increasingly getting popular amongst consumers today.
Both insurance companies and InsurTech players are playing a significant role today, in providing customised health insurance as per consumer needs. IRDAI too has played a vital role by introducing ‘Use and File’, which has given freedom to insurers to launch insurance products as per consumer needs and address the dynamic market needs of today.
The industry needs to join hands and increasingly work towards customization of health insurance, as it will play a significant role in increasing insurance penetration in the country in the times to come.
Balachander Sekhar, Co Founder & CEO, RenewBuy