Both the life and non-life insurers, along with the two standalone health insurance companies, have upped their ante to grab the growing health insurance market. Health insurance is poised to become a Rs 25,000-crore (Rs 250 billion) industry by 2010.
There are 36 life and non-life insurance companies in the country, including two standalone health insurers -- Chennai-based Star Health & Allied Insurance Company and Apollo DKV Insurance Company.
The insurable population in India has been assessed at more than 250 million. Even if six per cent (from the present three per cent) of the country's population goes in for health insurance in the next five years, it would mean a total premium of Rs 25,000 crore (Rs 250 billion). This estimate is based on an average of Rs 1,000 premium per person per year.
More than 80 per cent of the expenditure on healthcare comes from individual savings. Sources said that the increasingly affluent and strong middle class population of around 100 million was willing to pay for high quality healthcare, and they could afford health insurance.
While there is a huge potential market, there are challenges also. One of the key challenges lies in taking the products to rural areas, where medical infrastructure is poor, which is forcing rural people to come to urban areas for costly, and often, unaffordable medical care.
Even in urban areas, where services can be more readily accessed, the quality of after-sales service is an issue for insurers to resolve.
Further, distribution channels, especially direct agents, face a lot of difficulties in selling. For companies, it is a big task to motivate their agents to sell health products, since the commission paid to them is less for a health portfolio compared to other products, according to industry sources.
S S Gopala Rathnam, president-operations, Cholamandalam MS General Insurance, told Business Standard that if an agent sold a non-health policy for a premium of Rs 60,000, he received 25 per cent commission (around Rs 15,000.)
"But, if the same agent sells a Rs 1 lakh assured health policy for a premium of about Rs 1,500, he gets a 15 per cent commission (Rs 200) only. "Therefore, an agent will prefer selling the big ticket policy rather than a health product," he added.
Insurers should introduce more need-based health products to suit both urban and rural customers' needs, and pricing should be within the reach of the common man, Rathnam said. "When it comes to health, people look at the cost factor and they don't see it as a fee for the risk," he added.
Meanwhile, new business premium (NBP) of non-life insurers for health insurance rose 53 per cent to Rs 2,243 crore (Rs 22.43 billion) during April-September 2007 compared with Rs 1,460 crore (Rs 14.60 billion) during the same period a year ago.
The private sector grew by 76 per cent during the period with a NBP collection of Rs 909 crore (Rs 9.09 billion) from Rs 515 crore (Rs 5.15 billion) earlier. The public sector grew by 41 per cent to Rs 1,335 crore (Rs 13.35 billion) from Rs 945 crore (Rs 9.45 billion).
