Health Insurance Market Penetration in India

8/7/2019 Health Insurance Market Penetration in India

1/24

Health Insurance Market Penetration in India

Student : Narendra RapetiGuide : Dr. Lalitha SubramanianPanel : Dr. Brijesh Purohit

Madras School of Economics


2/24

Dissertation

Why am I doing this study? Who shall be interested in this study?


3/24

Contents

Chapter 1- Introduction of private health insuranceIndias insurance marketObjective of the study

Chapter 2- H ealth InsuranceK ey stake holdersHealth insurance plans

Chapter 3- P enetration of health insurance in recent pastChapter 4- A n analysis

Statistical inferences on health data provided by TAC

K ey issues and concerns Addressing way-outsConclusion


4/24

Chapter 1 Introduction of private healthinsurance

Indias insurance marketHistory till 1972GI C and its subsidiaries from 1972 till 1999IRDA Act, 1999 TA C from 2003

Obj ective of the study To study the health insurance market penetration in India with the help of latest available data presented by Tariff Advisory Committee ( TA C) ontheir website and also the data reported by IRDA on their website tobring out valuable insights to the sector. In a way to

Understand to the updated situationProject and identify the areas or issues which need to be addressed andProvide suggestions and recommendations to tackle the situation for thefuture


5/24

Chapter 2 Health Insurance K ey Stake Holders

Health InsuranceIndustry Government

Distribution channel partners

NGOs / SHGs / MFIs

Media / Telecom

Customer

Insurance companiesTPAs

Health Providers

IRDA - regulator


6/24


7/24

Chapter 3 Penetration of health insurance


8/24

Chapter 3 Penetration of health insurance


9/24

K ey Market Indicators


10/24

Insurance Penetration


11/24

Insurance Density


12/24

Chapter 4 An Analysis

Table 1. AC TUAL DA TA - Source: Tariff Advisory Committee, Data Repository

Tim e Year No. of

Pol ic iesNo. of

Me m bersNo. of Cla im s

Pre mi u m Pa id in

Rs (crore)

Cla im sPayable

inRs (crore) Cla im Rat io

Un d erwr it ingBalance

Rs (crore)

1 2003 - 2004 2265451 8361629 360088 944 785 83% 159

2 2004 -2005 2059449 8987239 555273 987 948 96% 39

3 2005 -2006 3828495 16345575 1016785 1947 1777 91% 170

4 2006 -2007 3110475 17907430 1060047 2,820 2,198 78% 622

5 2007 -2008 3790838 24121625 1436998 2,758 2,904 105% -146


13/24

K ey Observations

1. Table 1 encloses the data related to Paid Claims and not the IncurredClaims.

Why are the Incurred claims data which is crucial and important notreported?How far are the Paid Claims data a good approximation to IncurredClaims data?2. Table 1 contains data of 7 variables over a period of 5 years, which may not be large enough to be used for accurate future predictions.

Are the data heads recorded for future analysis sufficient? Who recommended the current format of the data set, Table 1?

3. The data enclosed in Table 1, is gathered from TPAs and thenconsolidated.Do the data gathered from TPAs represent the whole health insurancebusiness for the corresponding year?


14/24

K ey Assumptions

1. Assuming that the Paid Claims data represents Incurred Claims.

2. Linear fit is a good approximation for projecting the future values.

Therefore, we now proceed forward to project the actual data in Table 1by fitting linear trend and then estimating the future values. The projected

values are recorded in Table 2, given below.


15/24

Cont..Table 2 - L inear F it

Year No. of

Pol ic iesNo. of

Mem bersNo. of Cla im s

Pre mi u m Pa id in Rs

(crore)

Cla im sPayable inRs (crore) Cla im Rat io

Un d erwr it ingBalance in Rs

(crore)

2003 -04 2265451 8361629 360088 944 785 83% 159

2004 -05 2059449 8987239 555273 987 948 96% 39

2005 -06 3828495 16345575 1016785 1947 1777 91% 170

2006 -07 3110475 17907430 1060047 2,820 2,198 78% 622

2007 -08 3790838 24121625 1436998 2,758 2,904 105% -146

2008 -09 4241482 27276755 1683416 3530 3369 98% 161

2009 -10 4704070 32234249 1953454 4177 4030 99% 147

2010 -11 4799719 35921128 2179152 4597 4558 105% 39

2011 -12 5416833 40734244 2489013 5068 5166 112% -97

2012 -13 5733656 44618484 2728337 5733 5719 110% 13

2013 -14 6088286 49112008 2994294 6210 6319 116% -1092014 -15 6459223 53259884 3258110 6718 6881 120% -163

2015 -16 6896682 57645732 3528740 7280 7468 122% -188

2016 -17 7224516 61813383 3782467 7824 8040 125% -216

2017 -18 7617507 66166955 4051202 8329 8623 130% -294


16/24

Cont..

Year N o. o N o. o N o. o P rem i m Cla ims Cla im Underwr i ingPo li ies ember s Cla ims Paid in Payable in Rat io B alanceR s (crore) R s (crore) in R s (cro re)

6 8 6 6

6 88 8 8 %

8 8

8 8 6%

6 8

8 6 6 8 %

6 6

8

8 8% 6

8 8 8

6

6 8

8

% -146

8

6

%

6 8

88

6 6

6 8%

8 6 6

8 % -363

6 6

6 8

% -1298

6 6 6 86

8 66 % -1503

86

6 8

8

866 6% -3283

8 6 6

66

6 8 8

% -5707

6 8

6 6 86 6 8

% -9085

6

8 8 6

6 8 6

8% -14026

8 8 8

66

6 8

6 8 8 % -22732

GROWTH FUNCT I ON - EX PONENT IAL F IT - T A BL E 3


17/24

Contthe projected alarming situation !!!

U n de r ri ing n e - AB LE 2

-400

-200

0

200

400

600

800

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

TIM E ( in yea r )

V A L U E

TIME (in years )

Gross Profit


18/24

Cont..

Issues and Concerns Low level of awareness among consumers about health insurance productsand their benefitsLimited Influence over healthcare delivery mechanism - Limited healthcaredelivery network with top few citiesLow health insurance penetration and lack of affordability of theconsumers in the tier 2/3 cities and rural areas to support the investment inhealthcare infrastructure in these areasInsufficient data on consumers & disease patterns, absence of standardization of healthcare costs & significant levels of frauds leading tounder-pricing of insurance products, difficulty in product development &pricing and higher value of claims


19/24

Addressing some way-outs for issues andchallenges

Creating awareness on Rights & ResponsibilitiesData Pool Regulator as a repository Standardization of Cost

TPAsHealth Providers

Increased Tax benefitGradation of Health service providersPool for Senior CitizenCompulsory Health Benefits for organized sectorGovernment role on mass healthcare initiatives


20/24

The road ahead

There are several other challenges in the health sectorfrom the perspective of policyholder, insurers and the Authority. With a view to promoting healthinsurance in the country and looking for possible solutions to bring in as many people as possible into the insurance net, the IRDA has, over the last few years,given special thrust to addressing various issues concerning health insurance.

These initiatives not only develop health insurance in the country but also addressthe concerns of the policyholders of health insurance. The grievance redressalsystem set up by the Authority enables a detailed analysis of policyholdergrievances and health insurance stands out as a major area of concern from thecustomer viewpoint. It was in this backdrop that the IRDA set up The NationalHealth Insurance Working Group towards the end of 2003. This provided a

platform for stakeholders of the health insurance industry to work together tosuggest solutions to various relevant issues. Some of the Working Groupsrecommendations were implemented and some are under examination.


21/24

Conclusion The legal and regulatory framework of private health insurance, particularly because it operates in the voluntary market, should continually balance competing goals of access, affordability and quality of healthcare and provide health coverageto a larger fraction of the population with varying risk characteristics and ability topay. Regulations, aside from their aim of providing protection of health insurancepolicyholders and beneficiaries, can be potent tools to promote access tohealthcare, control pricing of health coverage vis- -vis healthcare providers and

enhance quality of healthcare. Allowing the participation of other entities thatprovide health coverage, such as Hospital and/or Professional entities, and self-insured health insurance schemes of Mutual Benefit Associations andCooperatives would further increase the reach and depth of private healthinsurance. Licensing standards for compliance which are enforced on health careprovider facilities as well as self-regulation in the medical profession and withinprovider groups are necessary for continuing improvement of healthcare quality.

Private health insurance cannot grow if reasonable consumer expectations relating to access, cost and quality of healthcare remain promises rather than realities.


22/24


23/24

References

IRDA Annual Report 200 -07 http://i rda i nd i a.org Tariff Advisory Committee http://t ac i nd i a.org IRDA Hand Book http://i rda i nd i a.org Private Health Insurance in India: Promise and Reality, prepared by Bearing Point, Inc. for the United States Agency for International Development


24/24

THAN K YOU !!! Questions Please

Documents

Health Insurance Market Penetration in India