Global Insight Perspective | |
Significance | The proposals refer to enabling specialist subsidiaries focused on health insurance to be floated and, more interestingly, allowing agents to sell multiple health schemes from different companies. |
Implications | If implemented, the recommendations will widen the range of services helping to drive demand and choice for consumers. The influx of new schemes and products will mean firms will have to market their products aggressively, with agents permitted to sell multiple schemes. |
Outlook | Regulatory initiatives and LIC's interest in the industry highlight the rapid growth of health insurance, indicating greater investments from foreign firms. However, the industry is still considered a fledgling industry, and it is left to be seen how regulations will be streamlined and implemented to suit the growing needs of the market. |
Recommendation from the Panel
The Indian health insurance sector may soon witness some changes in the dispensation of health cover products if the recommendations of an advisory panel are taken into consideration. The Insurance Regulatory and Development Authority (IRDA) mooted a committee previously in an attempt to survey the available market conditions for health insurance cover for senior citizens. DNA reports on the recommendations made by this panel, highlighting two proposals that will be of interest to the industry. The panel has voted to allow health insurance agents to sell medical cover products of other general insurance companies opening up a wider market. The other proposal is to support the initiation of specialised health insurance subsidiaries by large insurance firms. The source noted that the aim is to recognise the unique requirements and demands of the health insurance market that will "require special skill-sets and also administration". The IRDA has already put in place regulations to cap the premium of renewals to senior citizen policies by 50%.
LIC's New Initiatives
One of India's largest public-sector institutions, Life Insurance Corporation (LIC), has thrown its hat into the ring amid increasing interest from global firms in the health insurance industry. The Economic Times reports that LIC plans to cover 10 million families in the first year of its new health insurance scheme's launch. Furthermore, the source reveals that the firm will introduce a senior citizens health policy, and is also contemplating a standalone health insurance firm to cater for the increasing potential of the industry. LIC has entered into agreements with re-insurer Munich Re to design the product, and has eight third-party administrators and pacts with three banks to settle claims. The new product may look at sharing the sum insured by the entire family as part of its floater plan. LIC is expected to file for regulatory approval of the product next week.
Outlook and Implications
The proposals will indeed create new dimensions for the fast-growing industry. The multiple-scheme-selling recommendation would potentially widen the reach of products by insurance firms. The uptake of health insurance in India is expected to increase from the current 1.08% cover. Hence, the IRDA is considering revamping the laws relating to the industry. Of particular interest will be access to a range of products particularly aimed at keeping a lid on a potential monopoly in any one segment. Additionally, the structure of health cover products for senior citizens and the poor will be under scrutiny as concerns have mounted over insurance firms putting high and often unaffordable premiums on senior citizen policies.
The industry itself is witnessing increasing focus from players both domestic and foreign. The main battle has remained in the urban areas where traditionally the uptake of private health insurance has better acceptance. However, insurance firms are also expected to tap the insurance schemes for the poor floated by the federal and state governments with incentives on marketing and distribution of the policies. Although LIC is still considered a late entrant into the market, its interest will spark response as the corporation has one million agents on its payroll. General insurance firms were the first to pick up on the trend of health insurance in the country, with ample participation from global majors like Allianz and Aviva. Hence, LIC, which will essentially playing catch-up in terms of the range of products, will be seen to be investing in creating a new structure for health insurance.
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