At a time when the health insurance sector is seeing a significant change in products and services, a new health insurer has entered the market. Religare Health Insurance is the newest player in the market aiming to cater to both the rural and urban segments. Anuj Gulati, MD & CEO, Religare Health Insurance talks to M Saraswathy about the future strategies of the company. Excerpts:
What will be the focus of the company in the first year of operation?
On a global setting, healthcare is either funded by the government or by insurance companies. If you take the National Health Service in UK and similar schemes in Canada, healthcare is free of cost. The individual goes to a hospital and gets the treatment done and the money is paid by the government. Other model is the one by United States where the health costs are borne by the insurance company.
India is a unique case where 75% of healthcare spend is out of our pocket. About 20% comes from government schemes such for ESIC programme. Here, only five% healthcare spend is from health insurance. That is the biggest opportunity for us in India.
Further, health insurance has been growing dramatically. In 2000, it was a Rs 300 crore business. In 2003, it was about Rs 1000 crore, now it almost Rs 15000 crore business. Business has been genuinely growing at 35% year on year. There are three segments that we would be catering to-group, individual and rural health insurance. There is opportunity in each of this segment as we are entering the market.
Health insurance is a service intensive product. Depending on the age-bands that are covered, at higher age bands out of 100 people buying insurance, out of 15 to 20 come back to claim it. In younger age-band, it would be between 5 to 10% people claiming it. So, it is a claim intensive and a service intensive product. For this purpose, we have invested in technology, laying down operating process, pan-India hospital network of 1800 hospitals. We handle claims in-house ourselves, so that we service customers appropriately and have better control over the entire value chain.
We have 30 branches in 28 cities and 300 people on ground for retail customers. In these months, more than of 50,000 lives have been insured and we have sold polices to corporates for their employees as well.
What is happening on financial inclusion front? Would you be looking at micro-insurance products as well since it may not be financially viable?
We have an in-house team working on financial inclusion and we are reviewing various programmes that are already prevalent within the country. We are also in discussions with distributors on the rural side and we will be active on that front as well.
It is given that we have a vast population. If you want to draw a pyramid, there is a segment that is extremely forward looking and wants the best-in class and is even willing to move to urban areas for treatment. There is also a segment where affordability is an issue even today. For them, price and affordability is the most important element.
Our biggest fear is anti-selection. If we were to insure only the sick people, no insurance company would survive. But, when an entire pool is available, even a low pricing can be made to work. We just have to keep an expense to service these segments. If that is taken into account, it is viable.
What are the new products on the anvil?
Though ‘Care’ is a comprehensive product both for the rural segment and urban segment, there exits a low income segment both in rural and urban areas. For these low income segments it is not viable to distribute individual products as there is not much margin for distributor for it. For these segments, through organised distribution like bank networks or networks like MFI, government, we will sell our products.
‘Care’ is a one of the most effective, well-loaded product. We also have one recharge built for the policy. In family floater policies, it has been seen that if one person falls ill, the whole sum assured is used for that individual increasing risks of future diseases of others that may not be covered.
So, we have a recharge option wherein a customer who has fallen ill, for the rest of the year, other family members and this individual for other conditions would still enjoy comprehensive coverage for the entire year. Further, individuals going abroad for medical treatment will also be reimbursed policies with sum assured more than Rs 50 lakhs.
However, for lower income segments we will be introducing new products. New products will also be introduced for areas like personal accident, critical illness, and overseas travel medical insurance for students. As volumes build up, we will be able to build an international network of hospitals for our policy-holders.
What are your plans on the personnel and capital front?
We have a strong 350 people team and a capital of Rs 175 crore. These numbers will expand as the business grows. We aim to break-even in the next three to five years.
With the insurance regulator bringing out guidelines on health insurance, do you see a rise in premiums?
The guidelines are customer-centric. It helps build credibility of the product and help the product overcome trust deficit. Due to guaranteed renewability, customer is assured of coverage for the rest of his/her life.
But looking at the other side, health inflation is significant. This is due to increase in land prices to set up hospitals, new technology costs, decrease in salaries and other expenses up. To keep in line with health inflation, premiums will have to rise.
It is to be noted that internationally healthcare inflation is about two times the normal inflation. But the amount of rise in premiums will depend on the individual experience of the insurance companies.
What is your view on the recent announcements by the finance ministry on insurance?
I believe that the existing company portfolio will increase and new companies will come up over the next decade, since the capital requirements is proposed to be decreased to Rs 50 crore from Rs 100 crore for health insurance. The new guidelines and initiatives including the Insurance Bill by the finance ministry will only lure potential investors to put in more capital and set up shop here.
Will you be looking for a partner at this point?
We have the most complete ecosystem. We have partners like Fortis. SRL Diagnostics, Religare pharmacy. We are currently focussed on executing our services and building a high quality business. Therefore, presently we are not actively looking for any partners.
