The Health insurance industry has been going through a lot of changes post-COVID-19. While the regulator has brought several new regulations with an aim to increase insurance penetration, the industry is also focussing on innovative products to cater to the different demands of customers. In an interaction with Business Today Prasun Sikdar, MD and CEO, ManipalCigna Health Insurance talks about how the health insurance industry is shaping up post-pandemic.
BT: IRDAI has now allowed banks and IMF to sell 9 and 6 insurance policies, respectively. What are your views on it? Will banks go for these many tie-ups?
Prasun Sikdar: The IRDAI circular on allowing corporate agents to tie up with nine insurers (initial three) will allow an open architecture framework. This is a big boost for the insurance sector and insurance penetration and is a big step towards the goal of ‘Insurance for all, by 2047’. It will enable customers to choose products from a variety of options. This will also correct the insurance gap between rural and urban populations, and this reform will give a big boost thus increasing the penetration to a large scale across India. Banks have better accessibility across geographies. By allowing banks to tie up with 9 insurers, customers of these geographies will get a chance to choose affordable health insurance products to access quality healthcare and provide them long term financial security.
Customers have trust and confidence while buying insurance policies from banks. Insurance companies should go aggressive on this channel to leverage bank’s customers, network, and infra to boost insurance. This reform will benefit the banks and increase their current customer network as they can cross-sell them for other financial products. The challenge for banks would be to upgrade their digital and tech infra to incorporate the new insurers from three to nine in the system. With robust technological capabilities, banks can leverage their wide customer segments and help insurance distribution across India.
BT: Is more PE funding expected in the industry now? How have rules changed as PE was investing earlier also?
Prasun Sikdar: Yes, Investment by PE funds is expected to bring in more foreign investment to the country. The private equity investment will improve the access to capital and drive investment in the insurance sector.
Earlier, PE Investment Guidelines used to prohibit direct investment by PE Funds into Indian insurance companies and permitted investments only through a special purpose vehicle upto specified proportion of paid-up equity capital of insurers. Now under soon to be notified regulations, the above-mentioned restrictions will be eased, with increased investment limits for PE Funds in Insurance Companies. This is intended to enable investment flexibility and pave the way to the “Insurance for all” goal that the IRDAI has carved out for 2047.
BT: What are some of the important amendments proposed in the Insurance Bill. What are your views?
Prasun Sikdar: The proposed amendments in the Insurance Act primarily focus on enhancing the financial security of the policyholders, facilitating entry of more players in insurance market leading to economic growth and employment generation, enhancing efficiencies of the insurance industry - operational as well as financial and enabling ease of doing business. The proposal also includes various measures such as opening of registration to various classes and types of insurers with specified capital requirements, enabling newer channels of distribution, providing for efficient use of capital and resources, etc.
We believe that the proposed measures in Insurance Act and IRDA Act will create the groundwork for a new era in the insurance sector with consumer-centric reforms, increased insurance accessibility and coverage, and ease of doing business. Additionally, we think that these proposed changes will strengthen the distribution model, promote innovation in the insurance industry, and increase the sector's investment appeal.
BT: What products are getting the most traction when it comes to health insurance?
Prasun Sikdar: The pandemic made people realize the need of having a comprehensive health insurance plan which just not covers hospitalization but also OPD expenses. The increase in medical inflation along with rising lifestyle diseases has put a burden on out-of-pocket expenses.
Thus, there is a need for a comprehensive health insurance product which offers better coverage, better control and better care. Customers are now demanding products with OPD coverage. Further, products that on board impaired lives such as customers suffering from Diabetes, Hypertension, Dyslipidaemia, Obesity, and Asthma are also on the rise since a significant part of the population is impacted by one or more of the above-mentioned conditions.
BT: What innovations can we see in health insurance products going forward?
Prasun Sikdar: Health insurance companies now offer specialized products focusing on chronic conditions such as Cancer, Cardiac, Diabetes, etc. with disease management programs. OPD products with a robust network to build a holistic ecosystem are another segment to cater to the large part of out-of-pocket expenses. We can see more health insurance products that will cater to the specialized needs of the customer going forward.
BT: How health insurance industry can be part of the Ayushman Bharat Digital Mission?
Prasun Sikdar: The Ayushman Bharat Digital Mission (ABDM) seeks to create a framework required to sustain the nation's integrated digital health infrastructure. Through digital highways, it would close the distance between the various healthcare ecosystem stakeholders.
The building blocks of ABDM are Health IDs, the Health Professionals Registry (HPR), the Health Facility Registry, and ABHA mobile app can be tapped by insurance companies to design an improved and efficient healthcare ecosystem for e.g. leveraging HPR to create a network of qualified medical professionals to boost cashless services and OPD or leveraging Health Facility Registry for an extensive database of all healthcare facilities of both private and public healthcare institutions across the nation.
BT: What are some of the challenges for the health insurance industry?
Prasun Sikdar: Historically in spite of health insurance being a living benefit product, it still continues to be somewhat a push product. Also, high Covid claims experience, is another big challenge that industry is facing and it’s impacting the overall loss ratio of insurers.
Thus, to make health insurance a pull product, the need of the hour is to make health insurance mandatory like motor insurance for everyone. Being insured is an essential part of attaining financial well-being and peace of mind. I strongly believe the level of education and the health of the people play an important role in shaping the future of our country and fuel economic growth.
Further, it is very important to organise the OPD segment and ensure that payers, providers, and patients have easy access to this network. India needs to connect the primary healthcare centres, pharmacies and diagnostic labs with the cashless insurance network in order to bring them into the digital economy.
Unfortunately, India’s healthcare system today is largely underfunded and is dependent on out-of-pocket expenses. Therefore, to help reduce the burden of out-of-pocket spending, recently we have launched Cashless OPD coverage under ManipalCigna ProHealth Prime that gives policy holders option of Rs 20,000, Rs 30,000 or Rs 50,000 per policy year, to cover for expenses they incur on outpatient expenses, including dental, vision, physical doctor consultation fees, prescribed medicines, etc.
Also read: How super rich can invest Rs 5 crore in 2023? Sundaram Alternate's Vikaas M Sachdeva explains
Also read: Where should you invest money in 2023? Radhika Gupta of Edelweiss AMC picks best bet