Standalone private health insurers in India continued their growth in gross underwritten premiums in August, according to the latest data.
In the recently reported August period, their gross underwritten premium surged by 26 percent year-on-year (YoY), reaching a total of Rs 2,591 crore, according to provisional data released by the General Insurance Council.
Sequentially, the numbers were low from the record high of Rs 2665 crore in July. This surge in premium collections can be attributed to several factors, including heightened awareness about health insurance following the pandemic. Despite this growth, experts believe that India still faces a significant underinsurance problem.
"A large part of the population, even the population that can afford health insurance, remains out of medical coverage in India," said an analyst who did not wish to be named, citing his firm's confidentiality policy.
Many insurers have also implemented price hikes in recent months, but this has not deterred customers. In fact, there has been simultaneous growth in both the volume of policies sold and the premiums, indicating robust market demand, according to analysts. Additionally, insurers are benefiting from higher policy renewal rates, further strengthening their financial stability.
Frequently Asked Questions
A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.
There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.
Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.
Data available up to July suggests that both retail and group health insurance segments are experiencing robust growth. Interestingly, policies related to COVID-19 that were sold prior to the previous year did not see significant renewals last year. This provided a favourable base for premium calculations in the current year. This suggests that the pandemic has reshaped the way individuals perceive and prioritise health insurance.
Addressing the issue of medical inflation in India, Sujal Kumar, Research Analyst at Phillip Capital India, highlighted the rising cost of surgeries and medical procedures. This inflationary trend has prompted health insurers to adjust their pricing strategies to maintain healthy profit margins.
The Average Revenue Per Occupied Bed (ARPOB) for listed hospital chains serves as a stark indicator of the rising healthcare costs. For instance, Apollo Hospitals reported an ARPOB of Rs 57,760 for the first quarter of FY2024, a substantial increase from the approximately Rs 37,400 registered for the year ending March 2020.
Also read: IRDAI proposal: Key health insurance features and clauses in a single, easy-to-decode document
Medical inflation in India is a concern, with reports from the National Health Systems Resource Centre indicating a rate of 14 percent in 2022. This is double the retail inflation rate in the country during that year. This discrepancy highlights the challenges faced by both individuals seeking affordable healthcare and insurers striving to provide comprehensive coverage while managing rising costs.
The health insurance sector in India is witnessing robust growth, driven by increased awareness, rising medical costs, and evolving consumer behaviour influenced by the pandemic. Analysts anticipate that this sector will continue to grow in the medium term, reflecting the rising importance of health insurance in India's evolving healthcare landscape.