New Delhi: Several general insurers in India plan to launch new health insurance products to boost their expansion, including cover for outpatients and policies that will not require annual renewal. The pricing of such policies, can however, be a challenge in the absence of sufficient data, say experts.
Existing health insurance policies offer only annual covers for hospitalization expenses.
“We are working on policies for treatment of outpatients and long-term disease management,” said C. Chandra Shekhar, chief marketing officer, Apollo DKV Health Insurance Co. Ltd, a joint venture between Apollo Hospitals Group and Germany’s Deutsche Krankenversicherung AG (DKV). “Like life insurance policies, these health policies can be subscribed for as long as 10 years.”
To target low-income households, state-run general insurer New India Assurance Co. Ltd is launching health insurance products that it plans to sell through retail outlets, such as petrol pumps and kirana, or grocery, stores.
“We are working on simple health and personal liabilities products that can be sold through any retail outlet. The purpose of this is to increase insurance penetration in the country,” said B. Chakrabarti, chairman and managing director, New India Assurance.
Max India Ltd, which has interests in life insurance and health care, is also working on a range of new health insurance products that it plans to roll out in the next 18 months.
“We look to provide consumers a comprehensive range of products that will address issues of prevention, wellness and illness,” said Analjit Singh, chairman of Max India. “We will roll out our first product in the next 18 months,” he said, without elaborating.
Max India and the UK-based British United Provident Association Ltd, or Bupa, entered into a joint venture early this month to set up Max Bupa Health Insurance Ltd, a stand-alone health insurance company. “The company expects to break even in four-five years from the date of operation,” said Singh.
While welcoming the new products, industry experts say pricing will be a problem.
“We earnestly look forward to these new products but with no data available on morbidity patterns in India, pricing can be a challenge for these companies,” said Deepak Mendiratta, managing director of Health and Insurance Integrated, a health care consultancy.
New-Delhi-based independent health insurance consultant Aloke Gupta agrees. “Pricing is going to be a challenge because not much data is available, especially for companies which are new in the market.”
Gupta, however, says there are options. “They (the companies) can use shadow pricing or surrogate data for pricing of such policies. But such products are definitely required in the market to have better penetration of insurance in the country,” he said.
While group health insurance in the country has been a tough business, retail business has always been a profitable segment for insurers.
The claims payout in retail business is around Rs50-60 for every Rs100 collected as premium, but in group insurance the payout claims are much higher, says Mendiratta.
J. Hari Narayan, chairman of Insurance Regulatory and Development Authority, said: “Fundamentally we are trying to encourage the development of products whose pricing will be such that it will appeal to those who have got less income while providing them fair amount of security...it can be for life, personal and general insurance products.”
The domestic insurance market remains under-penetrated. The size of the Indian insurance market is about 4.1% of the country’s gross domestic product, or GDP, well below the global average of 6-9% of GDP, according to a recent report by consultant McKinsey and Co. The report underlines the immense potential of insurance in the country, saying the $40 billion (Rs1.88 trillion)-a-year Indian market is expected to grow to $100 billion by 2012.