Saturday, July 01, 2006

Why is health insurance in India so untapped ?

Why is health insurance in India so untapped ?: "Health insurance is a segment, which is grossly untapped? How are you trying to take advantage of this opportunity?

One of the biggest challenges to the General Insurance Company’s in India has been the penetration of individual health insurance product. Figures quoted by various sources reveal that only 2-5% of the population buys a health insurance product. The figure is incongruent in today’s context where concerns regarding health care are dominant across various segments of the population. There is a growing distress among all sets of individuals regarding rising health care costs.
Inspite of this concern, health insurance has failed to penetrate in India. We have done a consumer research through Quantum Market Research, India’s leading qualitative Market Research agency on this issue. The research revealed that consumers are reluctant to accept health insurance because of the complex procedures that need to be followed for buying a health insurance product. The premium to be paid for health insurance for the entire family is also perceived to be very high especially when the consumer is buying something, which he believes could be unlikely, or an unforeseen situation.

The issue is further compounded by the fact that the insurance agent does not find it lucrative enough to sell health Insurance as the commission amount does not commensurate with the effort that it takes to convince a potential customer to go through a complex procedure and buy a health insurance product.

Aiming to address the above concerns, we intend to bring in quite a few initiatives in our individual health product portfolio. Direct marketing to the vast untapped middle income groups is one of our priorities. We would be giving various price point options for the customer to choose and offer premium payment options through installments to eliminate the entry barriers."

The other reason is that health insurance in India was a monopoly, and health insurance cover was provided only by government insurance agencies. This was seen to be a social service; and this segment always incurred major losses, which is why it was neglected. Once health insurance gets de-tariffed, many more private players will enter; and along with competition will come a lot more innovative efforts to provide cost-effective health insurance cover.

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