Budget 2018: Health insurance sector is set to grow further in 2018

Apr 30, 2018 | 7 months ago | Read Time: 3 minutes | By iKnowledge Team

Health insurance has started to come of age, finally! The year 2018 looks all set to become a landmark for the insurance industry. Product customisation and increased customer awareness are now beginning to pay handsome dividends. The premium income is set to grow by at least 20% and top the Rs 31,000-crore mark it achieved last year. Barring any nasty surprises, the industry should do well this year.

So, what went right for the industry last year?

Consumer awareness and new products worked wonders for the industry last year. The Insurance Regulatory and Development Authority of India (IRDAI) worked overtime to spread awareness about health insurance. The industry players chipped in by offering products better suited to their customers. The results were there for everyone to see. The industry has become much more transparent than before. And customers are buying health products with newfound confidence.   

Emergence of combo products

The health insurance sector achieved a breakthrough with combo products. As the name suggests, these are a mix of health and life insurance plans. These plans are ideal for those who feel the need for the two covers and prefer them under a single plan.

Combo plans have become popular because of their simplicity. For a customer, it saves the hassles of picking up two different policies. They are also easy to maintain, which is what the customers appreciate. Last year, several insurance companies launched a raft of combo plans. These plans had certain variations, which have gone down well with customers.

What else contributed to the growth?

  • Sales channels like bancassurance: Bancassurance helps companies sell insurance products to bank customers. This mode of sales has worked well for the industry.
  • Digitisation: Digital channels are fast emerging as sales avenues. Insurance companies have put a lot of stress on online/direct channel development. These online bancassurance distribution models are fast adapting to consumer preferences and needs.

What’s still not good enough?

e-insurance uptake

This helps policyholders buy and keep insurance policies in an electronic form. But, the service has not taken off yet.

Product innovation

Initiatives like combo products have done well. But, there is ample room left for further innovation of health insurance products.

A major hurdle is the number of exclusions that a typical mediclaim policy has. Consumers want more clarity on them before buying such policies. Not enough is being done to address the grievances of customers.

There is a need for further product innovation in the bancassurance space too. Customers should have the liberty to self-select the buying channel. Furthermore, the products should be tailored to the characteristics of each channel’s customers.

The industry should also come up with more cancer insurance products. Currently, there are policies for critical illnesses, which also cover cancer. But there are only a few products that cater solely to cancer. Since around 10 lakh people are diagnosed with cancer in India every year, dedicated policies can give the industry a boost.

Consumer research

There should be more consumer research for a better understanding of what they want. Insurers rely on distribution feedback for product development. There should be more insights into the consumer’s mind.

Alignment

Banks and insurers need to work more in tandem to create high-value leads. Customer data and analytics should be used to enable customer segmentation. This would engage customers at the right time to meet their financial and protection needs. The basis of segmentation can be income, age, occupation, gender and other variables.

The last word

The health insurance sector made solid progress last year. There are enough indications that the good work can be carried forward to 2018. By all conservative estimates, the industry looks set to clock 20% growth in 2018. But, this can be even bettered with more customer research and innovations. Insurance companies should also work more closely with banks, giving customers more options.

Advt. no.: IA/Apr 2018/3890


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