‘Transparency in hospital costs is key to affordable health premiums’

Krishnan Ramachandran, managing director and chief executive officer, Niva Bupa Health Insurance.
Krishnan Ramachandran, managing director and chief executive officer, Niva Bupa Health Insurance.


  • While insurers are regulated, and are answerable to Irdai whenever they hike premiums, hospitals aren’t

New Delhi: Medical inflation plays a major role in pricing health insurance policies and hospitals can help in ensuring affordable premiums by maintaining transparency in costs. While insurers are regulated, and are answerable to Irdai whenever they hike premiums, hospitals aren’t. Highlighting the need for greater transparency in hospital costs, Krishnan Ramachandran, managing director and chief executive officer, Niva Bupa Health Insurance, says the healthcare industry needs to move towards evidence-based care and adoption of newer standards and protocols that can reduce the financial burden of a patient. In an interview with Mint, Ramachandran also talked about the benefits offered by Aspire, a new product launched by Niva Bupa that caters to young India so that they can secure themselves against any sudden hospitalization. Edited excerpts:

How is Aspire different from other health plans in the market?

Aspire has been specifically developed for young India. The product has several attractive industry-first features that would influence Gen Z and millennials to consider purchasing health insurance at an early age and accumulate the benefits over time.

Aspire will offer comprehensive maternity coverage called M-iracle which covers not only normal and C-section deliveries but also alternative reproductive treatments, such as in-vitro fertilization or, IVF, besides surrogacy and adoption. It would cover newborns from day 1 and offers guaranteed issuance to them. It offers a future-ready benefit for young consumers that will be shared with their spouses as well soon after marriage. All waiting periods covered by the consumer will be passed on to the spouse also (including maternity waiting period). Moreover, we will offer guaranteed issuance to the spouse immediately after a subscriber’s marriage. Another interesting feature is ‘fast forward’ in a multi-tenure policy, where the entire base and maternity sum insured will be combined and can be used from Day 1 itself.

With Aspire, our policyholders can get medical treatment anywhere in the world and not just India. It also offers a feature, ‘WellConsult’, which covers out-patient department (OPD) treatment and a ‘wellness wallet’ that covers tele/video and physical consultations, and prescribed diagnostics and medicines, besides access to gym memberships, nutritionists and dieticians, and emotional wellness sessions.

Aspire has a very unique ‘cash-bag’ feature that allows customers to get cashbacks on every claim-free year. They can accumulate the same and use it for health-related expenses like premium payment, OPD expenses, deductibles or co-payments option. In Aspire, we have ‘Lock the clock+’ feature in which customers continue to pay the same premium over the years until they make their first claim. For instance, if a consumer buys our policy at the age of 25, and makes no claim till the age of 35 they will continue to pay the premium of a 25-year-old. Here we have introduced a variation and even the maternity claims will not have any impact and not break the lock. Apart from this, we will continue with our flagship benefits like ‘Lock the clock’, ‘Booster+’, ‘Reassure forever, ‘2Hr+ Hospitalization’, ‘60 & 180 days of pre & post hospitalization’ in Aspire also.

Will Aspire’s pricing be similar to other products in the market or will it be costlier? What will be the premium amount for a 28-year-old individual who buys a 10 lakh policy cover?

(Graphic: Mint)
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(Graphic: Mint)

Keeping the consumer in mind, we have kept the pricing of Aspire extremely competitive and comparable to other similar products in the market. For a 10 lakh policy (Titanium+, which is the most comprehensive variant) for a 28-year-old, the base premium is 13,363 with tax.

Are insurers doing any product innovation on the OPD insurance front? What steps are they taking to underwrite this product and make it exhaustive and affordable?

The pattern of OPD consumption varies across India, depending upon where one is living, age of the consumer and several other factors. Some health insurance plans available in the market offer OPD benefit. However, to make health plans more affordable, most products do not provide OPD benefit such as doctor’s consultations, diagnostic tests, minor surgeries like root canal treatment, etc., which actually constitutes around 50-60% of healthcare spends. Currently, an unreasonably high 18% goods and services tax (GST) is levied on health insurance premium, which not only makes hospitalization unnecessarily expensive but is also a serious impediment in building out-patient products into health insurance. This creates a mismatch in availing of healthcare services directly rather than going through insurance mechanism. The government should consider lowering the prevailing GST rate on health insurance. This will allow health insurers to innovate and build OPD components in the product and yet keep the premium affordable.

As per data from an insurance aggregator, Niva Bupa has raised premium on its key plans by 15%. What support is needed from other stakeholders so that premiums can be kept affordable?

We have raised the premium on one of our products, ReAssure, by average of less than 15% and of ‘Health Companion’ by close to 10% only. Insurance premiums are reviewed and revised on products every 1-3 years after looking at the loss ratio of the product, medical inflation and rising cost of healthcare expenses.

Healthcare industry needs to move towards evidence-based care, adoption of newer standards and protocols, and greater use of technology to eliminate friction and improve customer experience. The healthcare industry should also move towards transparency in pricing and focus on publishing quality and outcomes data.

What initiatives are being taken to minimize disputes between the insurance industry and hospitals on healthcare expenses?

We regularly engage with our provider partners to manage medical inflation trend to which health insurance premium is very sensitive.

From which cities do you get most of your business? What efforts are you taking to increase insurance penetration in the country?

Given that retail health insurance penetration is more in urban India compared to rural India, it is obvious that we get most of our business from metros currently. However, we are aggressively expanding our footprint in smaller markets to secure more lives in smaller underpenetrated areas. At the state-level, currently Maharashtra brings us maximum business, followed by Uttar Pradesh, Delhi, Karnataka and Haryana.

What are some of the key distribution trends from your business?

At Niva Bupa, we adopt a multi-channel distribution approach. Our focus is on expanding the existing advisor base to reach out to more people. We encourage people across all age-group and gender to join our adviser ecosystem. Special emphasis and handholding is done for women and senior citizens to become insurance agents.

We create local champions by offering sustainable business opportunities to insurance agents. Niva Bupa has the largest bancassurance network in health insurance. We use our bank partnerships effectively and leverage the distribution network of over 45,000 partner bank branches of our more than 20 bank partners.

Increasing customer touchpoints is our key focus. We currently have over 200 offices across the country. This, combined with our e-agency network, takes our phygital (physical and digital) presence to over 350 cities. We are working toward developing multi-lingual capabilities for ease of services in tier II and tier III markets.

What are Niva Bupa’s plans for an initial public offering? For what purpose will the money be raised?

We hope to take the company public over the next 18 months, subject to regulatory approvals and market conditions. It is early to comment on capital raise and its use at this point.

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