Fast changing health insurance sector calls for a more strategic approach to contain spiralling insurance premiums
Marsh India, a leading insurance broker and risk advisor, today released a study titled ‘India Employee Benefits Survey 2010’. The survey findings reveal that Indian corporates will need to concentrate on combination of short, medium and long term measures to contain spiraling health insurance costs.
The Marsh India Employee Benefits Annual Survey has been in existence since 2005. This survey provides valuable insights to corporates on the employee benefits landscape and economic developments affecting the corporate health insurance industry. The respondents include all major industry segments with employee strength ranging between 25 and 15,000 above. The 2010 report surveyed over 100 corporates and for the first time this year, the survey includes the views of Insurers & Third Party Administrators (TPA) to offer broader and deeper insights.
The 2010 survey highlights that group medical expenses among corporates in India are escalating at a fast pace, 65 per cent of the organizations have claims experience in excess for 100 per cent that has resulted in increase of 20 per cent to 30 per cent in their medical insurance premiums.
Speaking at the survey launch, Mr. Sanjay Kedia, Country Head & CEO, Marsh India said. “This year, the survey shows a double digit increase in group medical premiums and this can be attributed to couple of key aspects - increase in treatment cost and shift in insurer approach towards experience based underwriting. As the market correction continues, organizations will have to make their employees smart consumers and incorporate wellness programs to avoid these spiraling costs”
The escalating costs are pressurizing company margins and organizations in turn are resorting to short term measures, states the survey. Data analysed in 2009 – 10 shows that 50 per organizations are re-evaluating the benefits offered while 35 per cent are on focused on changing their current parental coverage by introducing cost sharing and 29 per cent are introducing an overall cost sharing measure with employees.
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Some organizations have built-in policy restrictions and understand the importance of employee wellness; 57 per cent have implemented room rent restrictions, 42 per cent organizations have introduced preventive care by way of regular health check ups, wellness programmes and workshops. The survey also reveals that 82% HR managers believe health & wellness programs are effective way of controlling costs and increasing productivity.
The survey recommends that engaging employees in driving positive health culture and curbing the illness at the root by investing in well designed wellness initiatives as part of their business strategy, organizations will achieve both health and productivity gains “We recommend that more organizations should aim to make appropriate plan design changes like cost sharing, room rent restrictions; review delivery effectiveness like introducing Preferred Partner Network (PPN) and create a culture of Health through behavior change. Companies will do well to understand the underlying reasons for these increasing costs through a planned process of Health Risk Assessment” concludes Mr. Kedia
Survey highlights
- 65% of organisations surveyed have claims experience in excess for 100% which has resulted in increase of 20% to 30% in their Medical insurance premiums
- 59% respondents claim to be directly impacted by the global economic downturn. Employers are reprioritizing their benefit objectives and their approach towards containing escalating costs in response to downturn
- 73% of benefit managers are likely to make at least one plan change in next 3 years as a way to contain costs. Policy restrictions are among favourites
- 82% HR managers believe health & wellness programs are effective way of controlling costs and increasing productivity
- 61% employers & 40% insurers anticipate that benefits broker / consultant role will increase as the market hardens and need to for customization increases
- Increased prevalence of Personal Accident & Life insurance to employees reiterates that employers recognize growing health risks & their commitment to provide adequate financial support to family
About Marsh
Marsh, the world's leading insurance broker and risk adviser, has over 23,000 employees and provides advice and transactional capabilities to clients in over 100 countries. Marsh is a unit of Marsh & McLennan Companies (MMC), a global professional services firm with approximately 52,000 employees and annual revenue exceeding $10 billion. MMC is also the parent company of Guy Carpenter, the risk and reinsurance specialist; Kroll, the risk consulting firm; Mercer, the provider of HR and related financial advice and services; and Oliver Wyman, the management consultancy. MMC’s stock (ticker symbol: MMC) is listed on the New York, Chicago and London stock exchanges. MMC’s Web site is www.mmc.com Marsh’s Web site is www.marsh.com .
About Marsh India
Marsh India Insurance Brokers Pvt. Ltd. is an affiliate of Marsh Inc. Marsh India is the first foreign broker to obtain a composite insurance broking license undertaking both direct insurance and reinsurance broking businesses in India with a focus to provide end to end risk and insurance solutions starting from risk identification and assessment, to claims assistance. Marsh India services companies across various sectors including IT, ITeS, Pharma and BFSI to name a few.
Marsh India launched its operation in the year 2003 and has established a full service team comprising insurance professionals replete with relevant industry expertise and hands-on experience.
For information regarding Market Intelligence publications, please contact: healthandbenefits.india@marsh.com