Health insurance as a category has tremendous potential and there is great opportunity for health insurance as a standalone business. When we started as a pure health insurance company there were many sceptics. We have the first-mover advantage with a specialist health insurer tag and we are here to dispel the myth that health as a business is loss-making and customerunfriendly. Group health insurance policies was the first step towards making people realise the gains of having a health cover. From the business angle this was not profitable. But the presence of third-party administrators to settle and facilitate insurance claims helped draw a large public participation in health insurance. Having proved that it pays to insure health the next step is to offer products to suit customer needs.
Unlike motor insurance, which is mandatory, there is no compulsion to insure health. So, either there has to be an incentive to insure one's health or we need a policy that demonstrates value to the buyer. Currently there are many gaps between the existing products and what a customer wishes for. We have data to demonstrates that providing health insurance to men up to the age of 45 and women up to the age of 40 is good business. After this age, claims increase and so does the business risk.
What a customer looks for is a insurance that ensures he doesn’t have to dip into financial reserves in case of
a health emergency, offsetting family fortunes in many instances. But, the perception is that health insurance does not pay when one needs it most is not true. This confidence can come only with repeated demonstration of good claims settlement records. For this to happen, the wide disparity of medical care costs across the country has to reduce.
Just like lower entry cost has driven the mobile telephony market, health insurance will have to make the entry cost affordable yet offer basic value. This will increase the risk pool and get many people under the health-care gambit. At the next level, there has to be product sophistication to address specific needs that customers will have with health care and address it to them. This way, targeted products will emerge to address the needs of individuals.
As a first step we started with a product that insures people to the age of 80, and we also have a product that covers for pre-existing diseases. This is just the beginning. With more health-care institutions working with insurers, the customer in the future can look forward to out-patient care offered by insurers. The sophistication will evolve as the customer demand rises.
Although customers today have a wider choice than they had a few years ago, they need to understand well the benefits of the policies they take to be able to make the most of it. The insurance industry has begun to offer health-care insurance across the spectrum of the population and the endeavour is to create a policy for every class of people.
(By V. Jagannathan, Chairman & MD of Star Health & Allied insurance)
