Growing at a compounded annual growth rate (CAGR) of about 20 per cent, India’s total health insurance premium is likely to reach Rs 32,038 crore by 2016-17 from the level of about Rs 13,092 crore recorded as of 2011-12 owing to rising income levels together with growing health insurance premium, an ASSOCHAM study says.
The ASSOCHAM projection is based on average of the compounded annual growth rate (CAGR) of about 6.7 per cent for income levels of people during 2004-05 and 2011-12 together with 32.5 per cent CAGR of health insurance premium during 2006-07 and 2011-12.
“Over 65 per cent of people covered by health insurance sector in India come under the ambit of private companies, whereas the public insurance companies account for coverage of only 35 per cent people,†according to a study titled ‘Health Insurance in India-A review,’ conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
“While the public sector insurance companies garner maximum share of premium to the tune of about 61.5 per cent arising out of health insurance sector in India, the private health insurers account for just about 38.5 per cent of the premium,†highlighted the study prepared by the ASSOCHAM Economic Research Bureau (AERB).
“Individual agents bring in most business thereby accounting for about 73 per cent share, however, with a share of about 37 per cent, the direct business is the major contributor in terms of premium collected followed by individual agents (32 per cent share) and brokers (21 per cent share),†noted the ASSOCHAM study. “While referrals constitute a meager 0.1 percent in terms of both the number of policies sold as well as the medical insurance premium they collect.â€
“Increase in healthcare costs, rise in per-capita incomes, increasing burden of new diseases, health-related risks and high financial burden on poor eroding their incomes are certain key factors contributing towards the growth of health insurance market in India,†said Mr D.S. Rawat, secretary general of ASSOCHAM while releasing the chamber’s study.
“Considering that average rural and urban monthly per-capita medical expenditure increased by about 25 per cent in the past few years, it shows that surge in private final consumption expenditure on medical and healthcare services together with significant increase in average medical expenditure have encouraged individuals to purchase health insurance products so as to cover themselves for the anticipated expenditure,†said Mr Rawat.
With the health insurance assuming greater significance by the day, the ASSOCHAM through its study has suggested the Insurance Regulatory Development Authority (IRDA) to evolve a mechanism which shall ensure that private insurance companies do not skim the market by focusing on rich and upper class clients and in the process neglect a major section of India’s population.
The success and sustainability of health insurance sector in India would depend upon the development of a strong governance framework, efficient management and monitoring systems alongside introduction of cost containing and product improvement mechanisms, added the ASSOCHAM study.