The ongoing pandemic, which is far from over, continues to teach us key lessons, causing changes both big and incremental, for businesses and individuals alike, in our responses to stimuli and the environment. Over the past two years, we have experienced new ways of interacting with friends, family and colleagues, conducting business, schooling and learning, entertaining and dining, travelling, and more. The way we consume education and movies today is illustrative. Underlying all this, is the need and appreciation for prioritising an individual’s health and their healthcare ecosystem — and that includes hygiene, fitness, nutrition, health monitoring and medical check-ups, and of course, health insurance.
No sector is immune to the devastation caused by a black swan event of the magnitude of the pandemic. The health insurance sector is no exception. However, despite the fact that the first and second waves of Covid-19 were financially devastating to the health insurance providers because of a massive spike in claims, the segment saw accelerated growth, with providers vying to match the customer demand with ever more attractive propositions. And now, even with the emergence of the Omicron variant, the outlook for the healthcare and insurance sector continues to look positive, with providers willing to risk short to medium term pressures on profitability. The health care ecosystem is bullish on the long-term growth of the industry, with the sector expected to reach $372 billion in 2022, registering a compounded annual growth rate (CAGR) of around 22% since 2016. Here are a few key trends to watch out for in the coming year.
Surge in demand for health insurance
There has been a steady increase in demand for health insurance — a direct consequence of the increase in awareness about the seriousness of Covid-19-related complications as well the importance of taking steps to mitigate the risk of other illnesses, in general. Adding to this is the fact that India has already made large strides towards universal health coverage with Ayushman Bharat, covering nearly 40% of India’s population at the bottom of the pyramid. That leaves another 30% of the population (40 crore people) without access to any financial protection for health issues — Niti Aayog’s October 2021 report calls this “the missing middle”. In 2022, along with the government, insurance companies will focus on enabling this “missing middle” with equitable and affordable health insurance options.
Demand will drive innovation
In keeping with the demand, there has already been a multitudinous rise in sales, product, and service augmentation in the health insurance segment. Most health insurers have recalibrated their pre-existing covers in a way that actively addresses the health impact of the virus. The regulator, IRDAI, has been driving greater inclusion — HIV, mental illness, for example, are now covered under all standard health policies. The regulatory body has also introduced products like Arogya Sanjeevani, with standard coverage across all insurers, thus ensuring extensive coverage at competitive and affordable rates.
With people now greatly aware of their insurance requirements, enhanced products with better covers and services like shorter waiting periods, and no sub-limit policies, instalment facilities for premium payments, smoother and faster cashless claim settlement facilities have all become a part of the new norm in health insurance. Innovative ideas and products are constantly being introduced, such as coverage for mental illness that even covers OPD consultations, products that offer home healthcare services, and insurance plans and wellness products targeted at newer demographic such as millennials. 2022 will see the launch of even more innovative products as well as products customized and tailored to meet the specific demands of the consumers.
From digitisation to customisation
That the pandemic has forced an accelerated move towards digitisation across sectors is well known. With initial hiccups being tackled, and insurance companies easing into fully digitised processes and digital platforms, the coming year will see smoother documentation and claims processes, enhanced access, and superior customer experience, all of which will drive penetration and inclusion. Thanks to the greater use of digital technology in the healthcare as well as health insurance process, insurance companies will be able to customise and address challenges in new ways to reach a larger audience — from using social media to create awareness to using chatbots and tools to disseminate information and even prospect clients, to selling insurance online to empowering each customer through the claims process and beyond.
More transparency means more trust
While adopting technology and fully digitised processes, insurance companies need to demonstrate greater transparency, put more information in the hands of the customer, provide data privacy and security – essentially focus on improving the overall experience of the customer by providing a combination of automated services and customised personal service when the need arises. The industry will do well to create an enabling environment to increase the size of the pie through superior market conduct, rather than enhance their share of the pie.
Despite the strong growth in the recent past, and a promising future, India still has woefully inadequate physical health infrastructure, lacks sufficient number of doctors and healthcare professionals, and a huge percentage of the population is currently vulnerable to catastrophic out-of-pocket spending, at times serviced by loans from family and friends. Covid-19 has pushed an estimated 200 crore Indians below poverty line. Even the relatively better off have seen a shrinkage in their income by over 25%. One can only imagine the financial impact on families afflicted by Covid-19, especially if the one affected is the primary bread winner. Officially, at the time of writing of this article, we had nearly 3.5 crore Covid-19 cases, and close to half a million deaths. We need to ensure that we are able of provide care to all afflicted, and health insurance will pay a key role in securing the well-being of our society.