Looking back, looking ahead: Health Insurance – Navigating uncertainty with resilience

By Krishnan Ramachandran

After a rather challenging 2020 everyone hoped for some relief in 2021. However, 2021 brought unprecedented devastation which caught everyone off guard. Along with sickness, it brought financial distress for many families.

Since the advent of the pandemic, the perception towards health insurance has been evolving. More people are realising that it’s a must-have to protect them and their loved ones. It goes without saying that the high number of claims has put a great stress on the sector, yet it has been standing tall against all the headwinds.

Here’s an overview of what acted as a barrier for the sector in 2021, and how we will see it evolve further in the coming year.

Roadblocks in 2021 Standardisation of treatment
The healthcare ecosystem will enormously benefit from standards—data standards, practice of evidence-based medicine and adherence to protocols, policy on drug prescription (especially antibiotic usage) etc. Customers will greatly benefit from this, and the claims experience will be significantly smoother. Greater transparency around pricing and adoption of technology will also go a long way in improving accountability of the sector.

Low awareness & penetration
The health insurance industry grew by 30% in 2020 whereas it witnessed a stagnant growth of 18% YTD October 2021. The spike in growth rate that was witnessed last year due to the pandemic seems to be slowing as life returns to normal. The sector is still perceived as complex and opaque by many. Many people aren’t renewing Covid-specific policies that were purchased during the initial wave as the fear has somewhat subsided.

High taxation
The current 18% GST not only makes in-patient products expensive but is also a serious impediment in building out-patient products, which actually constitutes around 60-70% of healthcare spends. Lowering the GST rate will not only enhance health insurance penetration but will also help in greater tax collections from a broader customer base.

The 2022 outlook Digitisation
Going forward, we can witness a more aggressive usage of technologies like AI & ML that will help in reshaping product designs, claims process, underwriting, as well as distribution, creating a better connect with customers.

Product innovation
To further enhance health insurance penetration, product innovation will play a vital role as it helps serve the varied needs of customer segments. The GenZ might focus more on bite-sized products whereas other age groups are likely to opt for comprehensive products which give them coverage against a wide range of diseases. People will opt for products that offer higher sum insured, given the increasing cost of medical care. Also, the players who would simplify insurance for their customers are likely to grow more.

Refocus on distribution models
There’s been a high demand for health insurance from tier-2/3 markets, which calls for a realignment of distribution channels. Today, more women and millennials are taking a keen interest in purchasing financial tools like insurance. Hence, there’s a need to re-imagine how insurers engage with the evolving set of buyers.

Customer experience
Customer experience will be a top priority for insurance providers and investing in digital capabilities will help insurers bring new products and services to the market faster, which will help improve the customer experience quotient.

What lies ahead?
We need to understand that epidemics such as Covid are here to stay. The sense of uncertainty might linger, and hence, insurance players will continue to focus on business continuity, planning, and risk assessment to navigate through this dynamic situation. Building further on the resilience that the health insurance sector has shown over the last two years, it will play a key role in empowering people in real terms, while enabling them to adapt to this new normal!

The writer is MD & CEO, Niva Bupa Health Insurance