The Burgeoning Indian Health Insurance Industry……Yet miles to go !!! IIRM - National Seminar on “A Decade of Experience: Health care Insurance…. Present Scenario”, 24 th January, 2012 V. Jayalakshmi Siva Sivani Institute of Management Hyderabad 1

 Indian Health Insurance – bare facts  Objectives of the Study  Methodology  Household Survey Analysis  Summary and Conclusion

Brief Background  Indian Economy : LPG ………year 2000  Insurance industry ‘engine for growth’  Consumers today have choice and variety JAYALAKSHMI3

Health Insurance Facts  Rs 7,803 crores in year , CAGR of 25-30%  Poised to grow to Rs cr industry by 2015  Out of the total population 15 % - covered under all prepaid schemes 2 % - covered under private insurance  Total healthcare expenditure constitutes 5% of GDP  Public Funding – 1% of GDP  OOP spending – 76%  HEALTH INSURANCE – A NECESSITY TODAY 4

Health Expenditure in India by Source of Financing 5 OOP – SIGNIFICANT AND BURDENSOME

Universal Truths & Facts  Private health care expenditure is greater than that of public health care  Little preference for Government health delivery system vis-à-vis the private  Reliance on the government need to be reduced  Voluntary health insurance schemes – globally acceptable model  Health insurance plan - income protection plan 6JAYALAKSHMI

Key Stakeholders 7 “ Policyholders” – missing

General Insurance Premium composition [2003 – 09] 8 Health insurance significantly contributing ………..

Health Insurance Premium Growth [2003 – 09] 9

Indian Health Insurance Market INDIA RANKS : 78 th in terms of insurance density 52 nd in terms of insurance penetration OOP expenses met out of * Borrowings / * Sale of assets / * Past Savings * Current incomes

Huge market to tap…… JAYALAKSHMI11

NCEAR (2008) Survey Report:  Penetration 1.2 per cent (US – 4.2%)  ASI of Rs 98,604 per policy  Population covered – just 15%  Population covered by Private Health insurance companies – 2%  Huge untapped market

 Total health care spending in India lakh crores [ ]  Insurers’ payouts barely Rs. 5,000 crore!!!  Rs. 1,00,000 crore - OP Treatment (non-hospitalization) expenses and  Rs 70,000 crore - hospitalization expenses  Insurers’ claims % claims [ ]

 Out of an average annual income of Rs 62,114, an Indian household spends  6.7% (Rs. 4,079) of income on for routine medical expenses  37.4 %(Rs. 23,237) of income for major sicknesses  Huge Out-of-pocket spending!!!

 Indian HHs not taking health insurance policy to mitigate huge OOPs?  Are the existing insured HHs satisfied ?  Why are few HHs discontinuing their policies ?  Health insurance has not yet achieved the desired levels of penetration?

Present study makes a humble attempt to find answers to these question through a household survey

 Insured households in AP only 0.62 % ( National Average 1.2%)  AP Health Index Rank - 20 th with 0.46 score (National 0.54)  Average annual HH income Rs 45,372  Annual health expenses - Rs 19,566 (43% of HH income)  9 % households surveyed faced major sickness, with average expenditure being Rs 16,463

 Examine perception of HHs towards Health Insurance  Study factors influencing health insurance purchase decisions  Identify coverage needs, reasons for discontinuation or unwillingness to purchase health insurance  Help insurers tap potential market

Policyholders’ Perceptions on Health Insurance JAYALAKSHMI19

 Household Survey – primary data  Questionnaire  Twin cities of Hyderabad & Secunderabad  221 Households

Socio-economic and demographic profiles Health Care Facilities and Preferences Insurance awareness and Coverage

Willingness to Purchase Health Insurance Factors influencing Health Insurance purchase decision

Analysis of Household Survey

Socio-economic & Demographic Profiles of Households

70 percent of respondent were between 35 years to 45 years

Around 86 percent of Households were educated

Health care Provisioning and preference

Healthcare Expenditure Experience of Households

Hospitalization/ Acute / Chronic Diseases

Duration/ Reasons for Hospitalization

Range / Impact of Medical Expenses

Treatment Preference/ Satisfaction Type of Medication  About 65% of Households preferred Allopathic treatments  Homeopathy  Ayurvedic

OP Experience of Households ………….

Sources of Finance for OP & IP Care  Current income being major source  Drain of liquid income  Huge OOP spending …………….. Potential market

Insurance Awareness Of Households

Awareness / Sources of Information  Life insurance awareness significant  Agent’s role very prominently seen

Perception on Health insurance ………….  Although Health insurance is perceived as necessary by majority  Almost half of HHs Uninsured !!!  Understanding and evaluating reasons important  Family Floater policies significant

Health Insurance Claims Experience  Unpaid claims significant  Delays in claims settlement to be efficiently reduced  Result in disinterest to continue or unwillingness in puchase

Reasons for rejections Part rejections, discouraging factor No Claim reflects lack of understanding of insurance fundamentals Insurers’ quality tested through claims settlement………………

Policy Coverage desired Perception shift in purchase and continuation observed Coverage desired if integrated will reduce Out-of- pocket spending

Preference of Households Willing to Buy New Policies Low Cost policies for a longer term more than one year from Public Companies seem to be the choice of majority HH willing

Households un-willingness to buy HI  Financial constraints hindering element  Low-cost policies to be concentrated on  No past history of illness reflects ignorance about insurance

Summary and Conclusion  Health insurance a necessity in present times  Lower income households face the brunt of the escalating costs severely  Huge out of pocket spending resulted in indebtedness and erosion of assets  Lower aged people and people from lower income strata had more awareness and willingness for health insurance policies

Need of the hour………  Design low cost need based policies  Focus on “Customer satisfaction”  Improve quality of service of insurer  Ensure good quality of care at the network hospitals  Increase awareness for need for HI  Convert unwilling customers through good counseling  Tap huge potential market by changing MINDSET towards “ No premium refund, no prior illness history  Promote Health insurance as a RISK management tool  Agency channel most popular and hence emphasize on professionalism

 Insurers to focus on health insurance as distinct from other insurance  Ensure that large part of the population should not get left behind  Efficiency and equity must be adhered too  Those willing and able, those unwilling but able and those willing and unable to be given all the attention

Last Thought ………… “ One of the greatest investments which we can make is to invest in health, for there is no other investment like it. Health is Life Insurance, success and … happiness insurance ”... Mahatma Gandhi 55JAYALAKSHMI

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