Can second Covid-19 wave lead to increased penetration of health insurance in India?

Insurers should use more data analytics and artificial intelligence for claims management.

If 2020 was worse, ongoing 2021 looks like a nightmare. Health infrastructure not only in urban areas but even in semi-urban and rural areas has crumbled. The sheer pace of rising in the second wave of Covid-19 cases has impacted everyone in the country—in some way or the other.

We have been highlighting for many years regarding the under penetration of life as well as health insurance in India. But steps taken by the government and Insurance Regulatory and Development Authority of India (IRDAI) will improve the reach of insurance products in the coming years.

The way claims have been coming in for the health insurance players and burden on the insurance companies—health insurance needs some overhaul. Once this ongoing crisis diminishes one needs to look at how to secure health insurance for the family as well as how the insurance companies write the risks.

General health insurance companies have seen a surge in claims and as of May, non-life insurance companies have received 14.8 lakh claims amounting to around Rs 23,000 crore. Since the start of the current financial year only, general insurance companies have received claims amounting to around Rs 8,400 crore.

The non-life insurance industry is increasingly in fear that their balance sheet might get impacted due to the novel Coronavirus. The blow could be worse for the specialized health insurance players in India.

Insurance players have long been fought prices wars to increase the premiums. The kind of claims public sector companies have seen in retail health, as well as corporate plans, are a cause of concern. Insurance companies should go for a mix of offensive and defensive actions to accelerate long term recovery efforts.

Insurers should use more data analytics and artificial intelligence for claims management. At the same time increase automation for tight underwriting standard. In India, even now most of the general insurance companies are making and underwriting losses, which broadly means higher claims compared to the premiums they have received.

For example, a Chinese insurance company named, Ping An Life launched an underwriting risk model on its smart underwriting platform, with an accuracy rate of 90.8% in risk identification. In 2019, the platform served over 18 million policyholders and approved 96% of policies through automatic underwriting.

The underwriting turnaround time per case was shortened from 3.8 days of manual underwriting to ten minutes, optimizing customer experiences. Why can’t someone in India adopt some kind of tech models from the globe and implement them in India for its underwriting purposes?

Health insurance contributes 20% to the non-life insurance business, making it the second-largest portfolio in the industry. Indian population covered under health insurance has been relatively insignificant, but things have been improving as a number of people have been opting for health insurance over time.

The PM-JAY launched by the government as part of the Ayushman Bharat initiative could increase the penetration of health insurance in India from 34% to 50%. The insurance regulator has announced various standard schemes in health insurance like Arogya Sanjeevani, Corona Kavach and Corona Rakshak.

In the second wave, we have seen that medical bills have been piling up, impacting the middle-class the most. Out of pocket expenses for Indians is one of the highest in the world. Now it’s up to the policyholders to buy the health policy and not just depend on the corporate plans and for insurance companies to grow from hereon they need to adopt technology at much quicker pace.

(By Rakesh Goyal, Director, Probus Insurance)

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