Insurance companies will have to come out with products that are more relevant to the younger population because that is where the larger segment of the population is. Damien Marmion, chief executive of Max Bupa Health Insurance, says in an interview to FE’s Saikat Neogi that for more health insurance penetration, supply of services, such as hospitals, doctors and nurses, must grow. Edited excerpts:
Despite changing demographics, why do you think there is such a low awareness level of health insurance? What should the industry do to cover more ground?
The demographic dividend of India in the age group of 15 to 25 is coming through to be more economically independent and is on the verge of taking health insurance. Usually, people take a health insurance after 30, a few years after their first job. Besides the younger age group, those above age 40, where most of the health occurrences are taking place, would need health insurance as well. However, the population of the top-end is not as big as that at the bottom.
The industry can increase penetration by having products that are more relevant to the younger population because that is where the large population is and, also, by developing products which are applicable to both rural and urban areas.
However, the key factor holding health insurance back is supply of services, such as hospitals, doctors, nurses. As you go to tier-II and tier-III cities and rural areas, you get lower quality of services and people pay in cash for treatment. But if they have to go to a tier-I city to get treatment, the cost is very high and that?s when one needs health insurance.
As health insurance is the fastest growing sector in non-life segment, how are insurers and regulators gearing up to the challenges?
A lot of innovation is going on at various levels for the retail, business and government customers. Most individuals want to see the face of the company in terms of a good brand, product offerings and security. For employers, the network of hospitals is important because they will have employees spread across various cities. So, the challenges differ from sector to sector. Our business tends to focus more on the individual customer and, then, the group customer and government. We do everything in-house and don?t have any third-party administrators. That is how we are able to maintain quality of services.
How do you think standardisation of critical illness definition, standard guidelines for treatment and standard billing procedures will help everyone in the long run?
Standardisation will help, but we need some level of innovation too. If there was only standardisation, every company will be the same. Customers have different needs and the products should not look the same even if from one company.
What are the initial responses that you are seeing in portability and what are the issues that are unresolved?
There?s definitely no stampede of customers happening. The reaction to portability has been cautious. We have to also look at how the guidelines coming out are helping customers. There are issues of portability on added value and how they be can carried forward or how loyalty points can be transferred. There are still some barriers to transfer, but these things will get sorted out in some time.
Is portability the main solution for policyholders? complaints like delay in claim payment?
We have to ask consumers on how they are exercising portability. There may be a population who might be complaining of quality of services, but are still porting their policy. There might be a portion of customers who weren?t complaining before, but are now transferring their policy and aren?t satisfied with their new insurer because of the poor quality of services and problems with claim settlement. We need to see for at least a year and Irda (the Insurance Regulatory and Development Authority) needs to analyse how many people ported and what is their satisfaction level.
Will portability reduce the premiums as competition increases?
No, portability will not reduce cost. I don?t think costs and portability are linked. It?s more about choice and, normally, choice comes with different costs and not necessarily lower costs.
Often, many insurers hold on to the premium for a few years and, then, increase it steeply. Should insurers revise their premium annually?
Health insurance is relatively young in India compared to other matured markets where there is an annual increase. Worldwide, studies have shown that medical inflation is 3-4% more than the consumer price index. Companies will have to raise premium to give quality service and it has to be done on an annual cycle and Irda will have to address the issue.
What are the new products that you are planning to offer?
We are building some products on fixed benefits whether it is critical illness or personal accident. We are looking at some revision in our core product ?Heart Beat ? and the revised product will come out later this year. We have some 13-14 products in the pipeline, which will be delivered in the next couple of years.
