Mumbai: Industrialist Anil Ambani’s flagship financial services company Reliance Capital Ltd, or R-Cap, is betting big on the health insurance segment and will soon offer three-five-year policies through Reliance Life Insurance Co. Ltd.
Reliance Life Insurance is a wholly owned subsidiary of R-Cap, and is looking to tap the capital markets as soon as it gets regulatory approval.
The company is choosing its life insurance arm to focus on the health segment instead of its general insurance subsidiary because the former has a larger retail distribution network and also because only life insurers are licensed to offer policies of more than a year. “We are looking at three to four types of health insurance products to be sold through our life insurance company,” R-Cap’s chief executive Sam Ghosh told Mint. “Our target is to be among the top three players in this segment in the next three years and that will mean a market share of minimum 10%.”
Ghosh added that the company will focus on selling three-five-year policies to individuals.
These products, for which approvals will be sought in October, will cover standard indemnity care, hospitalization charges, critical illness expenses and some outpatient processes such as dental and eye care.
Most patients seek outpatient treatment, which does not require hospitalization, but their expenses are largely not covered by health insurers.
Health insurance penetration in India is low, with only 0.5% of the billion-plus population covered by private health insurers and 8% by various government schemes, leaving vast room for growth.
In 2008-09, life insurance companies collected Rs352 crore in premiums on a total health insurance market of Rs6,977 crore, with non-life companies accounting for the bulk of the health plans sold.
According to data provided by R-Cap—citing reports from consulting firm Ernst and Young and regulator Insurance Regulatory and Development Authority of India—the health insurance market is expected to grow nearly sixfold to Rs41,586 crore in the next six to seven years.
Reliance Life Insurance, the third largest in the domestic market by new business premiums, is also gearing up for a public issue that will offload up to a 20% equity stake, but the plan is contingent on a key clearance from the Union finance ministry.
Indian laws require an insurance firm to have been at least 10 years in the business before it can sell shares to the public; Reliance Life Insurance only has a seven-year track record.
The waiver can come only from the ministry and Ghosh said the firm will hit the market soon after it does, but declined to specify a timeline.