Shobhana Subramanian: Welcome to the second edition of Fe thinc where we’ll be talking about the state of India’s health insurance space. Unfortunately, it’s not a happy situation since claim ratios average upwards of 80% with both the frequency and severity of claims very high. Under-pricing appears to be rampant, particularly in the group-cover segment, where corporates have a lot of bargaining power. Consequently, most health insurers are bleeding even as hospitals continue to over-charge for their services. Clearly, we need to get to the bottom of this and find a way out so that all stakeholders benefit. We have today an eminent panel and I would like to start off by asking Mr. Srinivasan, since he’s been in the business for a long time, is it true that hospitals are overcharging us?
G Srinivasan: The answer is very obvious. The problem with health insurance is that for many years, the business is bleeding, and because it’s bleeding, insurers haven’t been able to develop the business and take it to people. Hardly 20% of Indians are covered, and of this, 12% is through government schemes, where the premium is subsidised. There is no regulation of hospitals, they can charge whatever they want—R100 or R10,000 for the same ailment. Sector regulator Irda doesn’t have control over providers; three years back public sector insurers came together to set up a preferred provider network, which created a furore, but it was the first time insurers and hospitals talked to one another.
Antony Jacob: It may be a fact that some hospitals are charging more than they should, but there are others that don’t. But there is a lot within the control of insurers — there is still 10% or 15% that we can get from the system and put on the table. We can be more efficient in managing our network of hospitals, our processing and underwriting. We need to note that costs for hospitals are also going up; medical equipment, for instance, has become more expensive with the rupee depreciating.
Subramanian: Mr. Malik, do you get the sense that there is a fair bit of under-pricing because corporates have too much bargaining power?
Rakesh Malik: Absolutely, that’s the sense that we get. There are too many companies chasing small business now, and we’ve been too used to the social way of pricing, and as commercial pricing happens, people are not ready to pay the real price