Karuna Trust, Karnataka - ZEF

Good and Bad Practices in MicroinsuranceKaruna Trust, IndiaBox 1.1 Hindrances in the Development of the Health Insurance MarketHealth insurance is insufficiently served. Total health premiums in the year 2002-2003 have beenestimated at Rs.12.8 billion ($290 million). It is poised to become a Rs. 250 billion ($5.7 billion)industry by 2009 and treble itself in the next ten years. Though this sector has the potential to grow,there are major obstacles to growth according to a FICCI survey of formal insurers.According to 65% of respondents, the lack of development of health insurance is due to the absenceof database from which insurers can design health products (the IRDA has since taken theresponsibility to build such a database). Sixty-one percent identified a lack of product variety—healthinsurance is not just Mediclaim. Infrastructure problems were also endorsed by 52% of FICCI surveyrespondents. The lack of standardisation of healthcare provision was seen as a deterrent to growth for30% of the respondents, who are interested in seeing better coordination between various agencies,such as the Ministry of Health and the healthcare professional association. Twenty-two percent of therespondents were of the view that capital norms need to be reviewed, as this was also a barrier togrowth. (Note: Respondents have indicated more than one choice; the results are therefore notmutually exclusive.)Though health insurance falls under non-life insurance, there is a view that it will be more effective ifhealth was a part of the life sector, as the two are more related. This view was endorsed by 52% of therespondents. As it is, life companies are making innovative products with health covers as riders,which shows their keenness to enter this sector.To promote the growth of this sector, TPAs were established. Third party administrators assistinsurers in rendering an effective service based on their specialized knowledge and expertise in thissector. Earlier, TPAs had some teething problems, but 52% of the survey respondents were of theview that a TPA network has finally been established in India. However, 39% of the respondents wereof the view that TPAs have not helped in improving the Mediclaim expense ratios.Some of the suggestions of the insurance companies to create an appropriate health insuranceframework in the country were:• Create a platform for sharing information• Find the niche markets and have the right product mix through add-on benefits and riders• Introduce independent health insurance regulation separate from life and non-life. Hospitalsshould be empanelled with single regulator with fixed pricing• Make health insurance mandatory up to sum assured of Rs. 100,000 ($2,273) for all citizens• Develop a health care cost index for the country.• Promote group health insurance schemes for Below Poverty Line (BPL) and rural populationswith government subsidies and service tax waivers.• Conduct awareness seminars on health insurance• Allow specialized health insurance company• Introduce family coverageAdapted from FICCI Survey 2004As an alternative to the acquisition of private insurance, many employers try to protect theiremployees from high health care expenditures through their own health insurance approachesor health care service providers (Ellis/Alam/Gupta 2000). As shown in Table 1.4, theseemployer-based systems, offered by the postal service or railway for example, are estimatedto insure 20 to 30 million persons.9