Health Insurance: A growing market

Health Insurance penetration in India is only 3% in India as compared to 10%+ in countries such as US, Korea, UK etc. Insurance per capita in India is an abysmal USD 1 whereas in the US , it is more than USD 2000. It is estimated that only about 3% of Indians are covered by any private insurance plan.

The current market for health insurance in India is about Rs 8000 crores and it is expected to increase at a CAGR of 20-25% over next 10 years. Some of the key drivers for the growth of this industry is as follows:

1. Increased healthcare costs in India, forcing people to take up health insurance
2. Rising affluence of the Indian middle class and thus being able to afford health insurance
3. Increasing trend of lifestyle related diseases such as diabetes, heart ailments forcing
4. Rise in number of people visiting India for medical treatment
5. Continued tax benefits for health insurance related premiums
6. Government initiatives to increase health insurance awareness
7. Specialised health insurance companies entering and growing the market

Over the next few years, we expect some hardening of rates for health insurance premiums as the current claims ratios (especially of the public general insurance companies) is way too high and they are making underwriting losses. We also expect the processes to get streamlined with captive TPAs being set up, standardization of rates for different procedures carried out by the hospitals and a greater degree of co-pay.