2011 was a positive start to what we believe to be the Health Insurance Decade (2010-2020). Health Insurance Portability and Bancassurance have been topics of general conversation.
The Union Budget provided the required sense of direction for higher trajectory growth. Increase of health allocation by 20% by the government and the Rashtriya Swasthya Bima Yojana's (RSBY) scope being widened, is a positive move and more opportunities for insurance penetration is expected as a vast majority of the Indians live below the poverty line.
The total health sector allocation was hiked to Rs. 26,760 crore as compared to Rs. 23,530 crore last year. Diagnostic tests and hospitals with 25 or more beds with facility of central air conditioning were proposed to be brought under the service tax regime in the Union Budget. This resulted in an additional burden for the consumers who opt for reimbursement claims under insurance plans and also hurt those going for medical treatment without cover. Because the general public could not afford this, this proposal was squashed later in the year.
In June, the health insurance sector and the general public awaited the Insurance Regulatory and Development Authority's (IRDA) guidelines on health insurance portability and its implementation. Due to operational issues, this was later implemented on October 1, 2011.
From October 1, 2011, health insurance policyholders were able to port their existing policies to another insurance company, without losing out on the benefits accrued. While people are still unsure of the portability process, many customers have come forward to port and are choosing insurance providers based on service quality standards and products and benefits. Portability brought with it increased levels of standards amongst insurance companies and allows for more cooperation in information sharing between the players.
The second half saw IRDA issuing draft regulations for the licensing of bancassurance agents, primarily to increase access to better healthcare. Today, the gap between the total cost of healthcare incurred by the population and the amount covered by health insurance is as high as $57 billion. Healthcare is an enterprise that is growing rapidly, and spends in this sector will soon touch $200-250 billion.
2011 also saw the entry of a few more players in this segment as well as some product introductions. All these have helped to increase awareness levels across the country, which allows a better informed customer to choose a health insurance policy, purely on his or her individual and family requirements, rather than a low premium.
2011 was a year where the health insurance segment leapfrogged over the past few quiet years. More players, more innovative products and increased positive regulations from the regulator are expected in order to ensure that gap between healthcare spending and total health insurance coverage reduces sooner, rather than later.