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Mega healthcare plan to boost India's insurance sector: S&P report

We believe the proposal has potential to be game changer for the health industry based on its sheer coverage size and scope: S&P

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Novartis is addressing the pricing question with a new type of agreement: For patients whose care is covered by the US govt programmes, the company will only get paid if patients show signs that the treatment is working within a month | Photo: istock
Press Trust of India New Delhi
Last Updated : Feb 12 2018 | 5:46 PM IST
The healthcare scheme announced in the Budget will be a "game changer" for India's health industry and generate substantial growth in insurers' premiums, S&P Global Ratings said on Monday.

The insurance sector is slated to get a boost once the NHPS scheme is implemented as it reflects the government's intent to expand the country's protection umbrella, and could have far-reaching implications for the domestic insurance sector, it said.

"We believe the proposal has the potential to be a game changer for the health industry based on its sheer coverage size and scope," S&P said.

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"An effectively executed National Health Protection Scheme (NHPS) will bring coverage to 40 per cent of the population and generate substantial growth in health insurers' premiums and increased cross-selling opportunities," it added.

The scheme, which would be the world's largest government healthcare programme, was announced earlier this month in the Union Budget 2018-19 for providing medical cover of up to Rs 5 lakh to over 10 crore poor and vulnerable families, constituting 40 per cent of India's total population.

"We expect insurers to introduce a range of new products with healthier coverage to capitalise on increased tax incentives amid rising medical inflation," it added.

Besides, the government's Budget proposal to merge three public-sector insurance companies should reduce competition and facilitate improved underwriting discipline in the domestic market.

The 3 insurers -- United India Insurance, National Insurance and the Oriental Insurance -- together contribute around 30 per cent of market share of the non-life-insurance market in India, with a premium book of more than Rs 40,000 crore.

"A merger of three big public insurers in India will improve the sector's overall profitability by reducing competition. In our view, less competition will facilitate improved underwriting discipline, enhanced risk retention, and better managed solvency levels in the Indian insurance market," S&P Global Ratings credit analyst Trupti Kulkarni said.

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First Published: Feb 12 2018 | 5:46 PM IST

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