Industry Insight

INDIAN HEALTH
INSURANCE

September 2007

4th & 5th Floors, Astral Heights, Road No. 1, Banjara Hills, Hyderabad-500034, India
Tel: +91-40-23430303-05, Fax: +91-40-23430201, E-mail: [email protected]
Website: www.cygnusindia.com
Disclaimer: All information contained in this report has been obtained from sources believed to be accurate by Cygnus Business Consulting &
Research (Cygnus). While reasonable care has been taken in its preparation, Cygnus makes no representation or warranty, express or implied, as to
the accuracy, timeliness or completeness of any such information. The information contained herein may be changed without notice. All information
should be considered solely as statements of opinion and Cygnus will not be liable for any loss incurred by users from any use of the publication or
contents
 SYNOPSIS
According to Cygnus estimates, the health insurance market in FY2007 is estimated
to be USD659.1m registering a growth of 30% compared with FY2006. In FY2006,
the life insurance market occupied the major pie constituting 83.82% of the insurance
market. The non-life segment is still in its growing phase with the market occupancy
of 16.18%. In FY2006 health insurance covered only 1% of the population of the
country and accounted for 1.2% of the total healthcare expenditure. However health
insurance is growing very fast and according to Cygnus estimates health insurance
premiums are expected to reach USD856.83m in 2007-08. The growth will be
supported by stand alone health insurance companies and new players entering
healthcare market with improved healthcare infrastructure across the country
motivating a larger section of population for better healthcare services through
various healthcare insurance policies. Currently State owned health insurance
companies constitute about 70% of the market and the rest is occupied by private
companies. However private companies are growing fast and aims to occupy a larger
Industry Insight – Indian Health Insurance–September 2007

share in the health insurance market in near future.

This report has attempted to discuss the vital scenario in healthcare and health
insurance market in India. A brief about global insurance industry in 2006, Indian
insurance industry and health insurance industry overview are discussed. Growth
drivers and issues of the industry are also covered. Major public and private players
are covered in terms of their performance, products and outlook. Future outlook of
the industry is also discussed.

The report will be useful for insurance companies (both Indian and global), other
intermediaries associated with the industry, industry analysts, companies aspiring to
be TPAs and students in the field of insurance.

The report (107 pages) has total 11 chapters, 4 annexure, 26 tables and 9 figures.

2 © Cygnus Business Consulting & Research 2007

 CONTENTS

1. EXECUTIVE SUMMARY .......................................................................................... 8

2. HIGHLIGHTS......................................................................................................... 11
3. GLOBAL INSURANCE INDUSTRY ......................................................................... 14
4. INDIAN HEALTHCARE INDUSTRY ....................................................................... 17
4.1 Market Size and Growth ................................................................................. 17
5. INDIAN HEALTH INSURANCE INDUSTRY ............................................................. 22
5.1 Introduction ...................................................................................................... 22
5.2 Industry structure & Overview........................................................................ 22
5.2.1 Regulatory body ....................................................................................... 24
5.3 Micro insurance ............................................................................................... 25
5.3.1 Regulations ................................................................................................ 26
5.3.2 Agents......................................................................................................... 26
5.3.3 Remuneration/commission ..................................................................... 27
Industry Insight – Indian Health Insurance–September 2007

5.3.4 Micro health insurance ............................................................................ 27

5.4 Health insurance industry segments............................................................. 28
5.4.1 Social health insurance schemes........................................................... 28
5.4.2 Community health insurance schemes................................................. 28
5.4.2.1 Community health insurance-based family protection plan (CHIFHP) ......... 32
5.4.3 Employer-provided insurance schemes................................................ 34
5.4.4 Market-based schemes ........................................................................... 34
5.4.4.1 Government products .............................................................................. 34
5.4.4.2 Private products ....................................................................................... 34
5.5 Types in Health Insurance............................................................................... 35
5.5.1 Critical Illness.............................................................................................. 35
5.5.2 Indemnity ................................................................................................... 36
5.5.3 Managed Care ......................................................................................... 37
5.5.4 Overseas Travel ......................................................................................... 38
5.6 Growth of Health Insurance........................................................................... 39
5.7 Trends ................................................................................................................ 40
5.8 Opportunities.................................................................................................... 42
6. HEALTH INSURANCE VALUE CHAIN ................................................................... 43

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 6.1 Identifying the players across the value chain........................................... 44
7. MAJOR PLAYERS................................................................................................. 45
7.1 Introduction ...................................................................................................... 45
7.2 Public Sector Non-Life Insurers ....................................................................... 45
7.2.1 New India Assurance Company Limited .............................................. 46
7.2.1.1 Products offered ...................................................................................... 46
7.2.1.2 Health insurance policies .......................................................................... 47
7.2.1.3 Financial performance............................................................................... 49
7.2.2 Oriental Insurance Company Limited....................................................... 49
7.2.2.1 Products offered ...................................................................................... 49
7.2.2.2 Health policies.......................................................................................... 49
7.2.2.3 Financial performance............................................................................... 51
7.2.3 National Insurance Company Limited...................................................... 52
7.2.3.1 Products offered ...................................................................................... 52
7.2.3.2 Health products ....................................................................................... 52
7.2.3.3 Financial performance............................................................................... 53
7.2.4 United India Insurance Company Limited................................................ 54
7.2.4.1 Products offered ...................................................................................... 54
Industry Insight – Indian Health Insurance–September 2007

7.2.4.2 Health products ....................................................................................... 54

7.2.4.3 Financial performance............................................................................... 55
7.3 Private Sector Non-Life Insurers ..................................................................... 56
7.3.1 Bajaj Allianz General Insurance Company Limited............................. 56
7.3.1.1 Products offered ...................................................................................... 57
7.3.1.2 Health insurance policies .......................................................................... 57
7.3.1.3 Financial performance............................................................................... 58
7.3.2 Royal Sundaram Alliance Insurance...................................................... 59
7.3.2.1 Products offered ...................................................................................... 59
7.3.2.2 Financial performance............................................................................... 61
7.3.3 IFFCO TOKIO .............................................................................................. 61
7.3.3.1 Products offered ...................................................................................... 61
7.3.3.2 Health insurance policies .......................................................................... 61
7.3.3.3 Financial performance............................................................................... 62
7.3.4 ICICI Lombard General Insurance Company Limited ........................ 63
7.3.4.1 Products offered ...................................................................................... 63
7.3.4.2 Health insurance policies .......................................................................... 63
7.3.4.3 Financial performance............................................................................... 64
7.3.5 HDFC Chubb General Insurance Company Limited .......................... 65
7.3.5.1 Products offered ...................................................................................... 65
7.3.5.2 Health insurance policies .......................................................................... 65
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 7.3.5.3 Financial performance............................................................................... 66
7.3.6 Cholamandalam MS General Insurance Limited................................ 66
7.3.6.1 Products offered ...................................................................................... 66
7.3.6.2 Health insurance policies .......................................................................... 67
7.3.7 TATA-AIG General Insurance Company Limited ................................. 67
7.3.7.1 Products offered ...................................................................................... 67
7.3.7.2 Health insurance policies .......................................................................... 67
7.3.7.3 Financial performance............................................................................... 68
7.3.8 Reliance General Insurance ................................................................... 69
7.3.8.1 Products offered ...................................................................................... 69
7.3.8.2 Health insurance products ........................................................................ 69
7.3.8.3 Financial performance............................................................................... 70
7.4 Specialized institutions .................................................................................... 70
7.4.1 Star Health and Allied Insurance Company Limited........................... 70
7.4.1.1 Health products ....................................................................................... 70
7.5 Other Intermediaries ....................................................................................... 74
7.5.1 Third Party Administrators (TPA) .............................................................. 74
7.5.2 Insurance agents ...................................................................................... 77
7.5.3 Insurance surveyors and Loss Assessors ................................................. 78
Industry Insight – Indian Health Insurance–September 2007

8. REGULATIONS ..................................................................................................... 82
8.1 Tax Regulations ................................................................................................ 82
8.2 Fixing health insurance premium according to region ............................. 82
8.3 Floor Rates for Rural Insurance ...................................................................... 82
9. GROWTH DRIVERS............................................................................................... 83
9.1 Demographic................................................................................................... 83
9.2 Life-Style ............................................................................................................ 84
10. ISSUES AND CONCERNS................................................................................... 85
10.1 Awareness ...................................................................................................... 85
10.2 Frivolous claims .............................................................................................. 86
10.3 Processing Time and Administration........................................................... 86
10.4 Cross selling activities by banks................................................................... 87
10.5 Issues related to stakeholders...................................................................... 87
10.5.1 Hospital related issues ............................................................................ 87
10.5.2 Insurance policies’ related.................................................................... 87
10.5.3 Policy holders........................................................................................... 88

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 10.5.4 Related to insurance company ........................................................... 88
10.5.5 Government related .............................................................................. 88
10.5.6 TPAs ........................................................................................................... 89
10.5.7 General factors ....................................................................................... 89
10.6 Measures for Overcoming Challenges ...................................................... 89
10.6.1 Hospitals ................................................................................................... 89
10.6.2 TPAs ........................................................................................................... 89
10.6.3 Policy conditions ..................................................................................... 90
10.6.4 Insurance companies ............................................................................ 90
10.6.5 Government ............................................................................................ 90
10.6.6 General factors ....................................................................................... 90
10.6.7 Recent initiatives by IRDA...................................................................... 91
10.6.8 Health insurance working group (HIWG) ............................................ 91
11. OUTLOOK .......................................................................................................... 92
ANNEXURE 1-BIBLIOGRAPHY................................................................................. 95
ANNEXURE 2-LIST OF ABBREVIATIONS .................................................................. 97
ANNEXURE 3-COMMUNITY HEALTH INSURANCE NETWORK ................................ 99
Industry Insight – Indian Health Insurance–September 2007

ANNEXURE 4-LIST OF LICENSED TPAS IN INDIA................................................... 104

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 List of Tables

Table 3.1: Insurance premiums (USDbn)

Table 3.2: Real premiums growth in 2006 (In %)
Table 3.3: Premiums as percent of GDP in 2006
Table 4.1: Public healthcare physical infrastructure
Table 4.2: Major epidemics
Table 4.3: New entrants (FY2006 -FY2007)
Table 5.1: Commission paid to micro insurance agents
Table 5.2: Types of CHI schemes in India
Table 5.3: Premium structure
Table 7.1: Mediclaim policies sold and claims settled (FY2001-FY2005)
Table 7.2: Kisan card holder’s policies sales during FY2002-FY2005 and the claims reported
Table 7.3: Universal health policies sales (FY2004-FY2005)
Figure 7.4: Gramin policies sales (FY2002-FY2006) and claims ratio
Figure 7.5: Janata policies sold and claims reported (FY2002-FY2006)
Figure 7.6: Coverage of Universal policy and claims reported (FY2004-FY2006)
Figure 7.7: Coverage of Mediclaim policy and claims (FY2002-FY2006)
Figure 7.8: Coverage of Mediclaim policy and claims reported (FY2002-FY2006)
Figure 7.9: Coverage of Uni-Medicare policy and claims settled (FY2004-FY2006)
Table 7.10: Rating for family packs under Medi Classic Policy
Table 7.11: Rating of groups under Medi Classic Policy
Table 7.12: Rating of groups under Medi Premier Benefits
Table 7.13: Premiums paid under the sum insured
Table 7.14: Premiums paid under the sum insured and age group (Diabetes Policy)
Industry Insight – Indian Health Insurance–September 2007

Table 7.15: TPA (infrastructure) – FY 2005 and FY 2006

Table 7.16: TPA claims data (FY 2005 – FY 2006)
Table 7.17: Fee structure of surveyor and loss assessor

List of Figures

Figure 4.1: Indian Healthcare Market Size

Figure 4.2: Pattern of Healthcare Expenditure
Figure 5.1: Health Insurance Market Size and Growth Rate (FY2004-FY2007)
Figure 6.1: Value chain of health insurance
Figure 9.1: Indian Population according to their Age Group
Figure 9.2: Indian per Capita Income
Figure 9.3: Growth in diseases related to life style (2006)
Figure 9.4: Population involved in accidents
Figure 10.1: Awareness about types of insurance (2006)

7 © Cygnus Business Consulting & Research 2007