Tracing the evolution of the health insurance sector in India

Dec 01, 2018 | 8 months ago | Read Time: 4 minutes | By iKnowledge Team

For an industry that has its hands in economic development and public health of a nation all at once, the insurance sector in India is only a few decades old with a lot of room for improvement.


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First launched in 1986, healthcare insurance has been a recent development in India. But three decades later, it has not caught on with the same gusto one would expect or has come to witness in developed countries around the world. With a lot of room for improvement, healthcare covers are often treated as additional expenses, especially as the struggle to apportion savings becomes evident among lower income households. The notion that only the privileged few can afford to avail private health insurance even today and consequently gain affordable access to state-of-the-art medical care in times of emergencies has seen a shift. The importance of purchasing health insurance that overlooks a person’s financial status is gradually coming to the forefront.

A look back at the evolution of health insurance in India will reveal fundamental flaws in the perception of health insurance and its role in a family’s financial portfolio.

Here’s where it started

Health insurance began in India as a medical cover for individual citizens and their families, before proceeding to include reimbursement of hospital bills as well. But that came with individual ceilings on every single item listed in the policy.

With the “Liberalization, Privatization and Globalization” (LPG) model in the early nineties, private hospitals and demand for world-standard healthcare experience also played their respective roles in making healthcare insurance a must-have if you wanted to avail immediate and adequate treatment. Soon the insurance sector also started to evolve and all caps, ceilings and sub-limits were removed in the late nineties. The increase in the number of private hospitals and improved life expectancy also encouraged more people to buy health insurance policies.

Crucial watershed moments

Originally, the only two forms of insurance policies available were the Central Government Health Insurance Scheme for government employees and the Employees State Insurance Scheme for employees in the private sector.

It was in 1986 that the first insurance product “Mediclaim” entered the country, hoping to stir things up. Since then, the number of private sector insurance companies have increased manifold, and the policies offered by them are diverse and designed specifically for your needs. While Mediclaim used to offer a minimum coverage of Rs.15,000 at one point, today the minimum sum is Rs. 50,000 for the government sector and 1 lac for private corporations. This has a lot to do with the exponentially rising healthcare costs in India. With advancements in cures and treatments, new procedures get factored into your healthcare plan, thus raising the premium floor.

An important milestone was the advent of a third-party administrator to mediate between the hospitals and the companies. The Insurance Regulatory and Development Authority (IRDA) was introduced in 2001, thus allowing the insurance companies to offer cashless claims on their products. Another crucial role was played by the booming IT sector which contributed to the popularity of group insurance.

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Looking ahead

Studies have revealed that medical inflation in India stands at 18%. This has helped potential customers in understanding the importance of health insurance and has resulted in the number of health insurance policies sold in India to double over the past ten years.

Online health insurance providers today need to be able to provide customers with more efficient solutions to their budgetary woes, and a nuanced consumer experience that includes catering to their needs at the time of illness and even going beyond settling their claims to helping them take better care of their health through financial incentives.

Aegon Life’s online services are impeccable in providing the perfect health coverage you need for you and your family. With the iCancer plan, you will have a contingency to fall back on should the need for it arise. The critical illness plan offers all-round protection from the exorbitant costs of cancer treatment including radiation therapy, observation and convalescence expenses and doles out the premium in several phases. If diagnosed with major stage cancer, you are liable to get a 100% of the sum assured, and a 50% bonus if it’s detected at a critical stage. This is a great example of a forward-thinking and comprehensive healthcare plan that the health insurance sector should ideally strive for.

With globalization, a wide range of health insurance products may be readily available but have not reached a large part of the population. With digitalization and the Internet of Things (IoT), these products are now up for offer on insurance provider websites. Aegon Life has a host of medical coverage policies listed and detailed on their website, which can even be purchased online. Comprehensive and affirmative steps need to be taken to properly integrate the power of data and technology with the health insurance prospects, to give more power to the uninsured population.

II/Oct 2018/4488


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