When it comes to health insurance in India, most of us end up relying on the services provided by our employers. But, with medical inflation increasing each year, along with rising cases of health-related issues in the country, health insurance in today's fast-paced life has become even more important for an individual as well as for a family. Firstpost’s Bindisha Sarang spoke to Sandeep Patel- MD & CEO, Cigna TTK Health Insurance, on various aspects of health insurance. Edited excerpts:
What’s the scenario in the health insurance space in India currently?
If you look at the overall insurance industry, health insurance is becoming the star product. It’s growing fast. It’s growing at the rate of 25 percent over the last ten years, and it continues to grow at that rate. It’s a product which will continue to grow at 25-30 percent a year. Interestingly, the stand alone health insurance companies are even growing faster than the general insurance companies. So, people are recognising the importance of specialty and specialty insurance companies, as these bring product innovations, service innovations to the table, from a consumer view point. The penetration is quite low and sitting still for retail at 7 percent and overall penetration in 20 percent range. This means you have a massive population which is still not covered.
Hence, it is importance that awareness in created. IRDA is working very closely with insurance companies on how to drive more awareness from a health insurance perspective. I have been here for seven years, and when I first got here in India health insurance was a push product. But today, it’s actually become a pull product, as people are beginning to see the need for health insurance.
Cigna TTK Health Insurance has filed an application with the insurance regulator to increase Cigna’s stake from 26 percent to 49 percent. Could you throw some light on this development?
When the regulations changed, Cigna was allowed to increase the stake to 49 percent. One of the thing we wanted to do was to align ourselves to Indian control regulation. Once the law changed, we worked with IRDA over the last one-and-a-half year or so to drive the Indian control regulation. We got the approval. We wanted to make sure that IRDA was comfortable with our agreements from the Indian control side which we closed out. Post which the board approved the move forward with a 49 percent increase. The approach that we are taking is that Cigna is diluting stake in TTK, so we are not purchasing shares. The dilution is positive as it brings capital in the company.
So, we will bring Rs 113 crore or so in the company. That money is going to be expended in three different ways. First, digitization and technology. We were one of the few companies to have entered the market in India, and spent quite a bit of money to build full stack of technology. We are enhancing digitization to see how we make ourselves more efficient from an operations perspective that improves customer experience. And, efficiency from a cost efficiency viewpoint, which will keep our premiums under control. Second is to continue to drive product innovations, like end-to-end solutions which is something that we are known for. And, third is expansion. Today we operate in 41 cities with 16 branches and customers that we serve in 6,000 locations via partnership with banks such as Andhra Bank, Bank of Maharashtra etc. What this move does is that it brings capital in the company, and allows us to expand as well as develop the business.
What’s the importance of bancassurance for a company like Cigna TTK?
Bancassurance represents 38 percent of our new business premiums, while 10 percent of our business comes from digital, and another 20 plus percent comes from broking. And, agency and bancassurance are equal. So bancassurance is driving a significant percentage of our business. From a distribution point of view, we are derisked, as we have multiple channels. As far as bancassurance, along with banks we have done much better than expected. We took Cigna’s bancassurance model when we came here and down with banks to first understand their customers.
Banks have customers across all segments, and we decided what kind of products we need to put in place depending upon those segments. How do we make it simple from a bank branch perspective? After all a bank branch personnel has a lot going on, so from a technology perspective we integrated with their system. If they propose a product, they can bring in data from other systems into their core systems, so there is less work involved. It’s simplified from a process view point. Right products are aligned to consumer or customers from affordability point of view. All of those things have helped us to in penetrating better than we expected. We want to continue that model. When we stared there was a lot of skepticism in the market as to what works elsewhere doesn’t necessarily works in India. We learnt that if you adjusted the right way, it does work.
A recent report says that the Indian insurance sector lags in digitization. Your views.
To an extent yes, however digitization stands across multiple sides. The most mature in the financial side is banking. Banking has done a pretty good job when it comes to digitization. I do think when it comes to insurance space, health insurance companies are very keen on it because we are a high-touch product, both from a sales view point as well as service view point. So it’s not like life insurance where claim will come sometime in the future, we are more like motor insurance in that way. But more importantly, in health insurance, you want to make sure that when someone needs you, you are there. Be it for hospitalisation or medical emergency. So, digitalisation is extremely important for health insurance companies in general. We have been investing in digitisation for quite a while, 50 percent of our policies (distribution side) never touch paper. We have worked across channels to make it so. If you go and look into the Aadhaar integration, digital payment options, automated cheque collections, this will even further lift the digitization aspect. The only reason why we say insurance lags in digitisation is because most consumers compare us to an amazon or Flipkart experience. Now that experience is very real, we need to somewhat emulate that experience within financial services. If we do that consumers will interact with us, if we don't then they will actually see us as substandard.
Which are the latest product innovations that you have launched recently?
We have launched a product called Pro Health Select. The products has three features, which we really wanted to introduced. First one is around medical inflation. We read a lot about medical insurance, we talk about it. However, today if you buy a Rs 5 lakh cover, assuming that this cover is what is needed in Mumbai today. One year from now that cover is not enough, the year after that it’s even worse because medical inflation keeps going up. So your Rs 5.5 lakh cover is diminishing in value. With “Inflation Shield” what we have done is basically take the burden off the policy buyers. We say every year the sum insured will increase at 10 percent, no matter you claim, or don’t claim, it doesn’t really matter. It keeps increasing year after year. So, what it does is that it protects you from inflation and you don’t have to worry. So, if you buy the right cover today, it will be enough for you tomorow, and the year after will have enough coverage because the medical inflation is aligned. That was an important feature we wanted to incorporate.
Second thing we looked into was the low health insurance penetration in the mass and lower segment, especially, when you get into tire 2 and tier 3 cities. There are places financial burden on families are much higher as compared to other places. Say, if you buy health insurance today and get any critical illness or meet with an accident that causes disability and so forth. The financial burden on you could be much than what the insurance is going to cover. And what it can potentially do is you don’t have money to pay premiums for next year. Now, you may still need insurance for next year or year after, and yet you can’t pay premium leading to policy lapse. What Reassurance Benefits does is in case of hospitalisation bill exceeding your coverage is it will actually pay the premium over the next two years.
And the third thing we did was include AYUSH in the cover. Indians like to take medical care from both allopathic as well as AYUSH practioners. We not only include AYUSH but also cover it up to the sum insured.
Updated Date: Jan 12, 2018 14:02 PM