Health insurance remains underpenetrated and expensive in the eyes of consumers in India: FICCI-EY Knowledge Paper

Health Insurance is a key pillar not just for a family's physical health, but also for their financial well-being. It enables access to appropriate health care while reducing the impact of an untoward health event on a family's earning and payment capacity. However, in India health insurance remains underpenetrated and expensive in the eyes of consumers. Insurers have been working tirelessly to expand coverage and distribution, leveraging newer distribution models and technology to reduce the cost of acquisition and consequently bring down the cost of cover for consumers. This is in addition to several governmental initiatives and the work that the regulator is doing to enhance awareness, as well as quality of service to consumers.

Despite the effort put in till date, there is still a significant opportunity to expand distribution, while reducing the cost of customer acquisition and servicing. In order to deep-dive into issues that the industry faces and the hindrances towards improving distribution of health insurance in India, FICCI and EY conducted a joint study. A report titled "Distribution 2.0 - Improving Distribution in Health Insurance" released by Mr. T S Vijayan, Chairman, IRDAI at FICCI's 10th Annual Health Insurance Conference provides key insights and recommendations designed to enhance the distribution (and acceptance) of Health Insurance.

Speaking on the report, Mr. Sandeep Patel, Co-Chair, FICCI Health Insurance Committee and CEO & Managing Director Cigna TTK Health Insurance said "India stands apart from most other countries on account of its diversity, across practically every parameter, whether it be age, socio-economic distribution, education levels, financial literacy, wellness, geographical spread or even growth rates across different parts of the country. This only make it more challenging for the insurance industry to ensure that appropriate products and distribution systems are in place to cater to each customer's need. On its part, the health insurance industry have been leveraging the new channels to expand outreach and reduce the cost of selling. However the acceptance of health insurance remains low. The need of the hour is to address the underlying reasons which drive purchasing behaviour. This paper attempts to identify the key drivers and inhibitors of health insurance purchase and lays out recommendations that will help improve acceptance, and penetration of Health insurance."

Sharing his views on the report, Mr. Girish Rao, Co-Chair, FICCI Health Insurance Committee; Chairman & Managing Director, Vidal Healthcare Services said "There is a need to increase consumer faith in the industry, and a perception of the value of the product. This will require a concerted effort by all the stakeholders - from the regulator, the insurers, distributors, health care providers, third-party administrators (TPA) and even pharmacies. This paper provides recommendations designed to enhance the distribution (and acceptance) of Health Insurance and we hope that this paper will pave the way for stakeholders, policy makers and regulators to take initiatives to build on the need for Health Insurance of an individual and support the transformation that the Health Insurance industry requires."

Sharing his views on the report, Mr. Rohan Sachdev, Partner & Leader, FS Advisory and Global Insurance Leader for Emerging Markets, EY said "Health insurance is a key pillar in building a financially secure future for any family. Over the past few years the health insurance industry has undertaken significant product and channel innovation to drive penetration. However a significant proportion of our population still remains uncovered. There is a need for the entire health insurance and health care ecosystem to work together on this challenge. This paper identifies key recommendations in this regard."

Despite the effort put in till date, there is still a significant opportunity to expand distribution, while reducing the cost of customer acquisition and servicing.

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