NEW DELHI: Three of the world’s top healthcare insurers, including Aetna Inc., the largest, have hired consultants to advise them on entering Indian market. Worth about $711 million (Rs3,128 crore) at present, the Indian market is likely to grow more than four times by 2012.
Both Cigna Healthcare and Bupa Healthcare, who first attempted to enter the India market in 2001, are also looking at the segment, sources close to the situation said. While Cigna had forged a partnership with Fortis Healthcare, Bupa had a similar agreement with Nicholas Piramal, but both these ventures failed to take off.
The move comes at a time when the government is planning to increase overseas investment in the sector to 49% from the existing 26%, and lower the minimum amount investors need to bring into the partnership. This is the second attempt by the world’s major insurers to tap the market, which they abandoned after entering six years ago, citing an immature market. Since then, however, a slew of private hospital chains have sprung up, making healthcare more expensive and sophisticated. That’s expanded the market which was then worth barely $12 million.
In a shift in regulation this year, the premium charged by insurers is now set by demand and supply and not stipulated by the government. That coupled with an economy, which is growing at 9% a year, is putting more money in the hands of Indians and helping them meet their aspirations for better healthcare.
“The size of the market has increased manifold and that has suddenly put India on their radars,’’said Deepak Mendiratta, an independent insurance consultant. “Detariffing of premia from 1 January this year has meant that a viable model for stand-alone health insurance will come up, which had been a loss making venture so far.”
Connecticut, US-based Aetna is believed to have engaged Ernst & Young to advise them. Aetna’s compatriot, the $ 17 billion Cigna has been scanning the market through its people in India, according to sources who did not wish to be named. After these surveys, the players will scout for Indian partners.
A top-level team of UK-based Bupa had visited India about four months back, and KPMG India had facilitated their meeting with some of the Indian stakeholders in the healthcare market. The advisory firm may even be called upon to provide studies on the current health insurance scenario to Bupa.
“Bupa is weighing the opportunities in the Indian health insurance market. It is a rapidly changing market,’’said Trevor Watson, senior consultant with Bupa, who is overseeing the Indian foray. He declined to give any timeline for the entry of the insurance player that has almost $10 billion in revenues. “We are watching the (regulatory) changes that might come in capital and foreign direct investment conditions.”
The spokespersons for Cigna and Aetna could not be reached. An email questionnaire went unanswered.
The health insurance sector is set to touch $3.8 billion in collected premium by 2012, according to a recent healthcare study by Federation of Indian Chamber of Commerce and Industry and Ernst &Young. Star Health & Allied Insurance is the only player in India that is focused on covering the health segment right now. The joint venture between Apollo Hospitals Group and German DKV, a unit company of Munich Re, is just waiting for the regulator’s licence before it commences operations.
“There is a feeling among those sitting on the fence that if they keep out for too long, they might just miss the bus,” said Mendiratta.