The health insurance industry has seen many changes post COVID-19. While the regulator has introduced several new regulations in a bid to increase insurance penetration, the industry is also focusing on innovative products to meet different customer demands. In an interaction with Business Today, Prasun Sikdar, MD and CEO, ManipalCigna Health Insurance explains how the health insurance industry is shaping up after the pandemic.
BT: IRDAI has now authorized banks and the IMF to sell 9 and 6 insurance policies respectively. What is your opinion on that? Will the banks opt for these numerous mergers?
Prasun Sikdar: The IRDAI circular allowing corporate officers to associate with nine insurers (three initially) will allow for an open architecture framework. This is a big boost for the insurance industry and insurance penetration and it is a big step towards the goal of “insurance for all by 2047”. It will allow 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, thereby increasing the large-scale penetration across India. Banks have better accessibility across geographies. By allowing banks to partner with 9 insurers, customers in these geographies will have the ability to choose affordable health insurance products to access quality healthcare and provide them with long-term financial security.
Customers have confidence when buying insurance policies from banks. Insurance companies should be aggressive on this channel to leverage customers, network and infra to drive insurance. This reform will benefit banks and increase their network of current customers as they will be able to sell them for other financial products. The challenge for banks would be to upgrade their digital and technological infrastructure to integrate the new three to nine insurers into the system. With strong technological capabilities, banks can leverage their large customer segments and help distribute insurance across India.
BT: Is more private equity funding expected in the industry now? How have the rules changed as private equity also invested earlier?
Prasun Sikdar: Yes, investments from private equity funds are expected to attract more foreign investment to the country. Private equity investment will improve access to capital and stimulate investment in the insurance industry.
Previously, the PE investment guidelines prohibited direct investment of PE funds in Indian insurance companies and only allowed investment through a special purpose vehicle up to a specified proportion of the paid-up share capital of insurers. Now, under regulations to be notified soon, the above restrictions will be relaxed, with increased investment limits for private equity funds in insurance companies. This is intended to allow investment flexibility and pave the way for the “Insurance for All” goal that IRDAI has set for 2047.
BT: What are some of the important amendments proposed in the Insurance Bill. What are your views?
Prasun Sikdar: The proposed amendments to the insurance law are mainly aimed at strengthening the financial security of policyholders, facilitating the entry of a greater number of players into the insurance market, which will promote economic growth and the creation jobs, improve the efficiency of the insurance industry – operationally and financially, and make it easier to do business. The proposal also includes various measures such as opening registration to various categories and types of insurers with specific capital requirements, allowing new distribution channels, providing for efficient use of capital and resources, etc.
We believe that the measures proposed in the Insurance Act and the IRDA Act will create the foundation for a new era in the insurance industry with consumer-centric reforms, increased insurance accessibility and coverage, and ease to do business. Additionally, we believe these proposed changes will strengthen the distribution model, foster innovation in the insurance industry and increase the industry’s attractiveness for investment.
BT: Which products are getting the most success in health insurance?
Prasun Sikdar: The pandemic has made people aware of the need to have a comprehensive health insurance plan that does not cover hospitalization but also OPD expenses. Rising medical inflation as well as an increase in lifestyle-related illnesses weighed on personal spending.
Thus, there is a need for a comprehensive health insurance product that provides better coverage, better control and better support. Customers are now demanding products with OPD coverage. In addition, on-board products that are detrimental to life, such as customers with diabetes, hypertension, dyslipidemia, obesity and asthma, are also on the rise, as a significant portion of the population is affected by one or more of the above conditions.
BT: What innovations can we see in health insurance products in the future?
Prasun Sikdar: Health insurance companies now offer specialized products focusing on chronic diseases such as cancer, heart disease, diabetes, etc. with disease management programs. OPD products with a robust network to build a holistic ecosystem is another segment to meet the large part of out-of-pocket spending. We may see more health insurance products that will meet specialized customer needs in the future.
BT: How can the health insurance industry be part of the Ayushman Bharat digital mission?
Prasun Sikdar: The Ayushman Bharat Digital Mission (ABDM) aims to create a necessary framework to support the country’s integrated digital health infrastructure. Thanks to digital highways, it would reduce the distance between the different players in the health ecosystem.
The building blocks of ABDM are Health IDs, Healthcare Professional Registry (HPR), Healthcare Facility Registry and ABHA Mobile App can be leveraged by insurance companies to design an ecosystem of improved and efficient healthcare, for example by leveraging the HPR to create a network of skilled people. health professionals to boost cashless services and OPDs or leverage the health facility registry for a comprehensive database of all health facilities from private and public health facilities across the country.
BT: What are some of the challenges for the health insurance industry?
Prasun Sikdar: Historically, although health insurance has been a living benefit product, it continues to be a bit of a push product. Additionally, the high Covid claims experience is another big challenge facing the industry and this is impacting the overall claims ratio of insurers.
Thus, to make health insurance a product of attraction, the need of the hour is to make health insurance compulsory like car insurance for all. Being insured is an essential part of achieving financial well-being and peace of mind. I firmly believe that the level of education and the health of the population play an important role in shaping the future of our country and fueling economic growth.
Furthermore, it is very important to organize the OPD segment and ensure that payers, providers and patients have easy access to this network. India needs to connect primary healthcare centers, pharmacies and diagnostic labs to the cashless insurance network to bring them into the digital economy.
Unfortunately, India’s healthcare system today is grossly underfunded and dependent on out-of-pocket spending. Therefore, to help reduce the burden of out-of-pocket expenses, we have recently launched a cashless OPD cover under ManipalCigna ProHealth Prime which offers policyholders an option of Rs 20,000, Rs 30,000 or Rs 50,000 per year of insurance, to cover expenses they incur on outpatient expenses, including dental, vision, physical doctor consultation fees, prescribed medications, etc.