Reimagining Indian health insurance (HI) - a thread on the HI landscape and opportunities Down pointing backhand index #insuretech #healthcare #insurance
Full blog can be found here - stellarisvp.com/reimagining-he…
@banglani @Stellaris_VP
Full blog can be found here - stellarisvp.com/reimagining-he…
@banglani @Stellaris_VP
(1/n) Indian healthcare spend is $120bn with $90bn coming out of the pocket of consumers. Many people get pushed into poverty each year due to healthcare expenses. Financial products around healthcare financing, including Health Insurance (HI), are severely underdeveloped
(2/n) HI is a $6.4bn market in India growing at 22% CAGR. With aggregate net incurred claims ratio at 90%-100%, HI pays for less than 5% of the healthcare spend in the country - which brings us to low penetration of HI in India
(3/n) Looking at volumes - The life coverage ratio for Indian population is 34% against ~90% in USA / ~95% in China; 75% of this coverage is driven by Government schemes. This number has grown over the last few years esp with government initiatives like Ayushman Bharat
(4/n) Looking at value,, we remain severely under-insured (a) Our per capita premium value is at $4.7 vs ~$3k in US (b) premium paid / GDP is at 0.2% vs ~5% in US (c) Avg premium paid per life covered is at $13.5 which goes as low as $1.5 under Government schemes vs ~$3.5k in US
(5/n) Identification of key challenges across stakeholders – Patient, Hospital/Provider & HI Company/Payer is necessary to understand low HI penetration. While the issue is multifaceted, it boils down to this - HI as it exists today does not have product-market fit
(6/n) [Product challenges] a) Despite efforts of IRDAI, Indian HI lacks an all-incl product, making it complicated to buy & use b) Uncertainty on coverage leads to loss of trust - lack of clarity on the claims process & 80% of cashless customers report delays in discharge & ..
(7/n) ..[Product challenges] c) Low customer engagement, makes selling hard & pushes up distribution costs d) broken/outdated tech infra leading to long payment cycles, overbilling & fraud - making claims processing a hassle for all stakeholders
(8/n) [Market challenges] a) HI needs customers to assess risk-reward against a low probability future event, making retail GTM hard b) Govt/ corp. as primary sales channel has led to margin pressure - group & govt has >100% claims ratio v/s ~72% of retail..
(9/n)..[Market challenges] c) Lack of product differentiation reduces bargaining power with buyers d) Low penetration limits influence of HIs over hospitals leading to unchecked HC costs & need for steerage (patients directed to specific providers) slowing cashless network growth
(10/n) Despite challenges & increased comp, given the CF+ nature of industry & operating losses being offset by inv income → HI continues to be a push product sold by armies of agents. This creates opportunities for tech to bring in disruption & create value. Some hypotheses-
(11/n) [Opportunities] a) New products which serve different needs across price v/s care bands & offer better engagement e.g. Copay & deductibles products; Integrated care model for Indian context; Cashless OPD products focused on preventive care..
(12/n) ..[Opportunities] b) Insurance policy digitization/ simplification & D2C HI brand for better customer experience & reduced distribution costs c) Digital TPA or better tech interface for coordination between hospitals, consumers & insurance companies
(13/n) That’s the end of summary, you can read full blog at stellarisvp.com/reimagining-he…. I believe there is a great opportunity to build companies in Indian HI. For the experts out there, would love to hear your thoughts; if you are an entrepreneur in the space, would love to connect
