Mydigitalfc, August 02, 2013
The ability to fund one’s healthcare is constantly diminishing, due to lower savings. Health insurance is the only way to fund that gap
It costs more to stay healthy in modern India. The average medical cost has been rising and there are a number of factors driving this increase. Newer technologies have been introduced that have far superior medical outcomes than previously available. However, these treatments and procedures are substantially more expensive than earlier costs.
Growing urbanisation and changing lifestyles, which include unhealthy eating habits, limited exercise and increased stress are leading to greater prevalence of chronic ailments such as diabetes, hypertension, obesity, cardiac diseases and gastrointestinal diseases. At the same time, poor prevention practices and sanitation have led to newer forms of viruses and diseases.
All these factors will directly effect a sharp rise in healthcare spends in the country, which are expected to touch Rs 2,250 billion by 2014.
Earlier generations met their healthcare spending needs from their own pocket. With increased consumerism leading to lower savings, the ability to continue funding one’s healthcare needs from one’s own pocket is diminishing steadily.
Health insurance was created precisely to fund this gap, and to protect people from financial catastrophe in the event of a healthcare event, while ensuring that they get access to the best care available.
While the need for health care is growing, the current penetration level of around 5 per cent is abysmally low; we still have a long way to go.
Health insurance should be an essential component of one’s future financial planning. It should accord the same, if not greater, importance than that a life insurance policy does. Holding a health insurance policy allows people to stay healthy in the long run, given its benefits such as annual check-ups and access to numerous quality healthcare facilities. Health Insurance companies such as Apollo Munich are doing everything they can to educate customers on this need.
However, reaching customers in a cost-effective way remains an issue. The five per cent population that is covered by health insurance except the Rashtriya Swasthya Bima Yojana (RSBY), mainly resides in metros and large cities. In order to reach out to the masses across the country, more efforts are required to make health insurance accessible and affordable. Making this product available to every Indian requires wide distribution, and we are working with the regulator to further open up the avenues of distribution available to us. Recently, the IRDA allowed Banks to tie up with standalone health insurers as corporate agents. This is a welcome step in the right direction.
Insurance companies are ready to step up their efforts in order to increase their presence in tier 2 and tier 3 cities as well as rural areas. Innovative distribution channels are being developed to increase penetration at many levels.
Insurance agents play a prominent role in the distribution of insurance products and this will continue. However, the opportunity is too big to be fully leveraged by one channel alone. Distance and access to locations hinder insurance agents from entering and connecting with all segments of the population. The move by the country’s insurance regulator to open the bancassurance channel for standalone health insurers will play a role to better the penetration levels.
The bancassurance model can bring in a paradigm shift in the way health insurance is sold in the country, eventually helping us to address the growing need of efficient distribution model for health insurance. Insurers would be able to tap the Indian consumer based in the smaller cities as well as those in the rural areas. Products with low sum insured and tailor-made coverage can be designed for these segments. In addition, there is a small but growing segment of the population that can be reached and served via the Internet. This is another critical emerging trend that will develop further over the next few years.
We have witnessed the level of awareness and the need for health insurance among people improving in the last few years. It’s a matter of time before the penetration reaches the desired standards. A positive note is that people are starting to realise that health insurance is a much-needed mechanism to finance healthcare costs and therefore, demand is growing. With this as a backdrop, the market has great prospects, but the need of the hour is to identify products that will suit customers’ insurance needs and win their confidence with superlative service.