How insurance technologies Are bridging the health insurance gap in India - Times of India

Health Insurance is a highly underpenetrated market in India despite the pandemic. More than half the population still lives without the security of a health coverage. And among those who are covered, almost 60% are covered under government sponsored schemes, wherein medical treatments may not be the best. However, what’s interesting is that even among the people who are covered under private groups and individuals, group insurance is far ahead and covers almost 2x the number of people compared to individuals.

Why Group Health Insurance could be key to bridging the Health Insurance Gap

There are many factors underlying the low penetration of individual insurance. Unaffordability would be the primary reason followed by inadequate awareness on the importance of a health coverage. Group insurance to a certain extent is affordable and for certain groups like employer-employees, the members don’t directly need to spend and get covered automatically.

A group of at least seven people can subscribe to group Insurance. Whether it is a corporation, a cooperative society, or a religious organization, any organization can form a group to avail insurance.

Its evident that group insurance could be a solution to solve the massive under penetration gap in the market. The low cost of group insurance is a big value proposition for individuals to get health coverage. A group insurance could cost as low as 50% of the same insurance coverage on an individual plan.

There are additional benefits that group insurance provides that includes maternity coverage, day 1 coverage of all diseases. These not only make it a comprehensive cover for the groups, but the claims process is also frictionless as theoretically there is no contention by insurance companies to stop any claims for any PEDs.

The challenges before group health insurance

The biggest challenge for group health insurance is the identification of legitimate groups. There have been instances of misuse in group health insurance wherein the only purpose of forming a group had been to avail group insurance. This is done mainly to get an insurance coverage when members were refused insurance due to underwriting risks. As a result, insurance companies have been hesitant to completely open group insurance products.

Another challenge is the serviceability levels. This includes quote negotiation, member addition and deletions, claims settlement and policy education. Generally, an intermediary like a broker or an agent is expected to support the groups on these services. However, the market is highly price sensitive, and the margins earned by intermediaries in group health insurance are low and the serviceability suffers as a result. With an even smaller ticket size for MSMEs, this market is not lucrative for distribution. It hardly makes any business sense to service a group health insurance to a 10-member organization as the premium cost would be around Rs 20,000 and the intermediary revenue would be around Rs 1,500 only.

How Insurtech is making group insurance easy

Insurtechs are bringing technology to solve these problems of catering to these markets and ensuring high level of serviceability through economies of scale. Tools like whatsapp and digital cards are used for a fast claim service. Dedicated portals are used for frictionless member management. There are also fullstack of healthcare services integrated in their platforms to provide comprehensive healthcare not limited to health insurance. These platforms thus have enough data points to help with newer underwriting models and possibly bring down the cost of health insurance further. These insurtechs have seen good amount of venture capital interest over the last couple of years.

How will tech-powered insurance products solve the problems of India’s underpenetrated health insurance market?

The Indian insurance sector is experiencing strong headwinds of tech disruption. Apart from group focused insurtechs, other innovations and reforms are also helping solve India’s underpenetrating problem. The sandbox framework by the regulator allows good level of freedom for tech first companies to experiment with innovative products and distribution strategies. There are bite sized insurance products that care of certain niches, in the case of healthcare, hospital cash insurance being one. Health ID that has been introduced by the Indian government can be a catalyst to bring big changes to health insurance underwriting. IOT health devices are collecting large data and can also help with better underwriting models.

The way forward

Insurtech is bringing positive change to the entire insurance ecosystem. However, unless the ecosystem supports transformational changes and adopts open technologies, it will still be a difficult to see efficiencies.

On the part of insurance companies, there must be a liberal approach towards underwriting group products. While there are risks involved, these can be mitigated through newer underwriting models that rely on information beyond demographics. With the introduction of Health IDs by the government, this might become easier.

TPAs have a big scope to implement technology in their processes. There is considerable manual effort involved in verifying claims and bills for servicing claims. Bringing in the right set of technologies like AI/ML tools to manage claims can go a long way to make TPAs more efficient. The regulator needs to relook at the margins for intermediaries in the market to bring up the service levels as well as interest from intermediaries to service the market. It will be very difficult to have deeper penetration of group insurance without the support of insurance intermediaries. There are more than 100 million private organizations in India and MSMEs constitute the largest chunk. Promoting group health insurance among organizations will go a long way to have the larger population covered under social health security.

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