The opportunities for private investment in healthcare facilities and services are ever increasing. Because the Government has opened the insurance sector to private companies, the availability of private health insurance is expected to increase access to private healthcare facilities for millions of families. Max Healthcare and Apollo Hospitals are examples of providers already offering services in each of the primary, secondary and tertiary sectors.

Health insurance is grossly underdeveloped in India. According to some estimates, only 3% of India’s population is covered under some form of voluntary health insurance. Thus, it presents a huge opportunity with some estimates suggesting that the potential health insurance market could be worth as much as 600 billion Rupees by year 2007.

The Insurance Regulatory and Development Authority (IRDA)

Any insurance company intending to enter the life or non-life insurance markets in India is required to have a minimum paid-up capital of 1 billion Rupees (approximately US$20.5 million). While there have been suggestions that the minimum capital requirement for specialist health players might be reduced, this has not happened yet. Foreign equity participation is also capped at 26%.

As a pre-condition for granting a license, each new insurer is required to write some health insurance business. Recently, the Insurance Regulatory and Development Authority (IRDA) have also issued regulations recognizing the third-party administrators (TPAs) in insurance business. TPAs are required to have a minimum working capital of 10 million Rupees and its senior officers are required to meet certain minimum training requirements from a recognized institution.

Providers and products

Most of the new life insurance entrants are providing health insurance benefits as riders to their base products. ICICI-Prudential Life offers surgical assistance benefit rider, whereas Allianz Bajaj Life offers hospital cash benefit rider, which is an indemnity type rider that provides reimbursement of medical hospitalizations facility. To date, many insurance companies have only offered limited benefits, primarily due to lack of data and experience of the local market and the relatively underdeveloped nature of the healthcare infrastructure in the country.

Opportunities and challenges

Given the potential size, India is one of the most promising countries in South East Asia for the development of its health insurance market.

There is a limited network of health/social security schemes such as the Employee State Insurance Scheme (ESIS), the Central Government Health Scheme (CGHS) and some community-based schemes and employer-based schemes. However even here, access and availability of health services is likely to be less than satisfactory. When combined with the relatively small proportion of people with voluntary health insurance, the number of lives covered represents at best 100 million people, about 10% of the population.

The support of the IRDA will be crucial. It is keen to see health insurance coverage grow rapidly in the country and is likely to encourage insurers and service providers in their efforts to develop the market. The challenges should however not be underestimated. Delivering healthcare to the rural Indian population where the medical infrastructure is minimal will be a significant task in itself. Even in urban areas where services can be more readily established little or no data for pricing products would remain an issue for insurers to resolve. And finally, the continuation of some less than ethical practices by some healthcare practitioners may cause concerns for the orderly development of the sector.

However despite these challenges, with around 90% of the population reliant on state hospitals or self-finance, the potential prize is great for the insurers that can capture the interest and provide relevant products and services for the Indian consumer.

Indian economy is now growing impressively. One of the areas of Indian economy that will have very fast growth is Insurance. Right now, the size of Indian insurance sector is just $10 billion and by 2010, it may become a $60 billion industry. Until now, Indian insurance sector did not see too much use of technology. However, it is going to change. Now, 3i Infotech has launched Premia Insurance Broking eXchange (IBX)which is ‘a first of its kind subscription-based internet solution for the Indian insurance industry.’

This product will help insurance companies a lot. It will save time for both the insurance company and the insurance agents. To know about it more, you can read the report of Moneycontrol.com.

The launch of Premia IBX will empower the insurance industry at large and thus provide the much needed impetus to the insurance market. 3i Infotech’s technology edge will power the insurance industry’s quest of being an interconnected and agile business community across the Insurance value chain” .