Relevance of Health Insurance

In my previous blogs, I discussed the fundamental reasons behind India's significant protection gap, focusing first on Awareness. Now, let's highlight the second essential factor: Relevance.

While awareness around health and insurance has increased in recent years, this hasn't translated into a substantial rise in health insurance penetration. Retail health insurance penetration in India is still below 4%, with only 5.3 crore lives covered through retail policies in FY23—a mere 2.5% increase from FY22, according to IRDAI data.

Many who understand the benefits of health insurance struggle to see its relevance to their specific needs, leading to several challenges:

• Younger individuals often see health insurance as primarily covering hospitalization.
•  Some defer purchasing insurance until later in life, encountering difficulties due to health conditions, particularly for senior citizens.
• Middle-aged and senior individuals may refrain from buying insurance due to inadequate coverage options, such as limited coverage for women.

How do we address this?

Role of Health Insurers: As consumers increasingly seek greater value from their health insurance, it's evident that health insurance must extend beyond merely funding sickness. The principle of "health first, insurance later" underscores this global evolution in the industry. Leading this charge, at ABHI, we pioneered a proactive approach that goes beyond traditional models. We prioritize proactive healthcare for our customers, recognizing the significance of partnering with individuals throughout their health journey. This philosophy holds particular relevance in today's healthcare landscape, marked by soaring medical costs and inadequate insurance coverage. Hence, health insurers should step into the role of trusted partners in their consumers' health journeys.

Making Health Insurance More Holistic and Relevant: Current health insurance primarily covers hospitalization, leaving a gap in promotive and preventive care. Expanding coverage to include these areas can make health insurance more relevant.

• Promote primary care through OPD benefits: Out-of-pocket expenses (OPD) comprise roughly 60% of medical costs, yet existing health insurance plans offer limited or no coverage for outpatient care. Developing comprehensive solutions that prioritize OPD coverage is essential.
• Allow Health Saver Accounts: Health saver accounts as part of insurance products can incentivize preventive care, increasing awareness and relevance, especially for younger demographics.

Comprehensive Coverage and Healthcare Ecosystem: Tailoring policies to cater to diverse demographics is essential to enhance relevance. This includes comprehensive healthcare solutions for all cohorts, including senior citizens and people with chronic conditions. This could include:

• Incentives for leading a healthy life
• Motivating customers to improve their health through self-monitoring
• Promotive and preventive care initiatives beyond hospitalization.

Attracting the Young Population: Young segment of population do not find hospitalization based health insurance offerings attractive.  Encouraging young individuals to purchase health insurance is vital for creating a stable risk pool and ensuring adequate coverage throughout their lives. Making health insurance offerings more appealing to this segment is key to increasing overall penetration.

Affordability and Value: According to a recent government report, over 90 million Indians allocate more than 10% of their household income to healthcare, with 31 million spending over a quarter. Cost remains a significant factor for consumers. Ensuring the availability of affordable products, sachet insurance with EMI functionality, and simplified products based on PMJAY network rates can enhance the value proposition of health insurance and make it more relevant to a wider audience.

Addressing these aspects will bridge the relevance gap and contribute to a more inclusive and sustainable healthcare ecosystem in India.

In my next blog, I will discuss the crucial issue of affordability.

#HealthInsuranceAwareness #BuildingHealthierIndia