3 health insurers plan general insurance foray

Three more standalone health insurers are likely to join the rat race for grabbing a chunk of the general insurance pie. Only two standalone insurers - Chennai-based Star Health and Allied Insurance and Apollo DKV Insurance - are operating in this sector, which is poised to clock Rs 28,000 crore by 2015. According to the Insurance Regulatory and Development Authority’s data in 2007-08, the health insurance segment was estimated to be around Rs 5,152 crore, with only 2 per cent of the total population being covered. Realising the potential and advantages - the segment has been growing at 37 per cent since 2002 - both life and non-life insurers have already started offering health insurance products.

 

For instance, health insurance in 2007-08 accounted for 0.2 per cent of the individual regular premium for life insurance companies in India. For non-life insurers, it formed a significant proportion of the business accounting for around 18 per cent of the total gross written premium, according to a KPMG study.

Currently, insurance contributes only about 2 per cent of the country’s health expenditure and less than 15 per cent of Indians enjoy some form of third-party payment system (which subsumes health insurance but can also mean a freeôcheap benefit provided by an employer) for their health spends. It means the market is yet to be tapped by the existing players, says an industry expert. The industry’s potential has attracted global brands. For instance, Max Bupa Health Insurance (Max Bupa), a joint venture between Max India and UK-headquartered British United Provident Association (Bupa), would begin to roll out its first health insurance policy in eight to 10 months. Other majors who have envinced interest to start health insurance companies include Aetna, CIGNA and Fortis, according to a senior industry representative.

An industry expert said that the economic changes in the last few years have started to have an impact on both the provision of healthcare and the availability of health insurance. There is a unique opportunity to capture market share, whilst the market is relatively young and in a dynamic phase of development for early entrants, the expert added.

Adding to this, both government and the people have now started becoming conscious about their health and the cost, said V Jagannathan, chairman and managing director, Star Health and Allied Insurance Company, India’s first standalone health insurance company.

Star Health had bagged contracts from two state governments - Haryana and Andhra Pradesh - to offer health cover for people living under below poverty line (BPL) and is getting premium income of over Rs 360 crore. As more governments, recent one is Tamil Nadu, have decided to cover people living under BPL it would require more specialised health insurance companies.

“Health insurance, which used to be a luxury earlier, has become comfort now and soon it would become a necessity especially at this juncture of economic slowdown as people will not be in a position to shell out from their own pockets,” said Jagannathan.

This would drive growth for standalone health insures such as Star Health, which is witnessing 300 per cent growth, and set a target of Rs 650 crore premium income for the current financial year compared to Rs 20 crore five years ago.