KIT: Health insurance

Strategic tools for the practising manager

The health insurance industry, which had underwritten premium of over Rs 8,000 crore in 2009-10, is expected to expand manifold with an annual growth rate of 30 per cent for the next five years. The health segment contributed over 21 per cent to the total insurance sector premium in 2009-10.

In spite of the potential, high costs limit the access to quality healthcare in the private sector. Only 16 per cent of India’s population has any form of medical cover, that is, coverage for less than 183 million people out of over 1.2 billion.

The distribution of this coverage can be outlined as: Employer cover contributing to 14 per cent of the coverage share; voluntary insurance or for-profit schemes accounting for another 18 per cent; and community insurance schemes accounting for 38 per cent.

Mandatory health insurance schemes or government-run schemes and social insurance policies such as Employees State Insurance Scheme (ESIS) and Central Government Health Scheme (CGHS) contribute 30 per cent to the sector.

This scenario is changing with health insurance emerging as the preferred tool to finance the entire healthcare expenditure. The Insurance Regulatory and Development Authority (Irda) stipulates that 5 per cent of the business for insurance companies must be from the rural sector.