Saturday, November 04, 2006

Swiss Re set to restart health reinsurance biz - Times of India

" After exiting the health reinsurance business in 1998, Swiss Re is making a comeback. And it is betting big on India and China. Swiss Re decided to re-enter the business last year after it acquired GE Insurance Solutions (GEIS), which has a fairly substantial health reinsurance book. The reinsurer has already hired a number of professionals to build the business.
The company’s focus on the Indian health insurance market is not without reason. It estimates the market would expand from $400 million in 2005 to $3.5 billion in 2015.
“We see tremendous opportunity in both India and China. Swiss Re’s support will be in terms of capital, capacity as well as know-how in the risk management area, product design, pricing, underwriting and claims and risk management,’’ says Jean-Michel Chatagny, MD, strategic corporate development Asia, Swiss Re.
Medical insurance is expected to be one of the key growth drivers of the industry as health care costs in India rise at a rate of about 20-22% annually. General insurers are likely to shift their focus to other lines of business like health insurance once they get the freedom to set tariffs from January 1. Detariffing is expected to increase premiums to realistic levels as well as force companies to look at more comprehensive and innovative covers.
In this scenario, Swiss Re will be looking at supporting new products rather than existing ones with a history of losses. It is hoping to offer advisory services on product design and pricing, services to manage health care providers and patients. It would also establish provider networks and offer underwriting services. The reinsurer is, however, reluctant to talk about its budget.
“The idea will be to support the entire value chain from developing the product to the end customer, and claims management,’’ says Dhananjay Date, MD, Swiss Re Services India.
Rising health care costs mean retail consumers will be increasingly forced to buy covers against medical risks. At 75%, out-of-pocket expenditure on health care is the highest in India among Asian countries. In 2005, Indians purchased only $0.39 billion of health insurance. Compared to this, countries like China wrote premiums of $3.82 billion and Japan wrote $24.68 billion.
Swiss Re says unsustainability of state-run systems is a recurring theme in Asia and private insurance is needed. Since India is a developing market and extremely under-penetrated, there is an opportunity as players look for expertise to aid growth.
Last year, a working group on health insurance had recommended allowing stand-alone health insurance companies to be set up. Though only one company, Star Health and Allied Insurance, has set up shop, several others are waiting in the wings to make an entry as well. Anticipating the increased focus on health care and insurance, General Insurance Corporation last year created a dedicated health reinsurance department to support standalone health insurance companies and products."

Medical insurance is a "hot" area in India right now - and because patient education makes a lot of business sense for medical insurance companies ( many studies have proven that a dollar spent on patient education ends up saving the insurance companies over 10 dollars ( for example, by preventing unnecessary surgery), patient education is going to become increasingly important in the next few years.

Patient education is a powerful tool to promote health, manage chronic disease, prevent medical mistakes, achieve patient-centered care, improve health care system efficiencies, and improve the overall quality and experience of patient care. It's been neglected in India so far - but I am sure this dismal state of affairs will improve quickly ( money talks !)

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