Two-years in Pandemic: Overview of the health insurance industry in India by Ruchir Kanakia

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Reading Time: 9 minutes

Key Takeaways

  • In the literal sense, FinTech stands for financial technology. It means any and all technology that improves financial services.
  • It has multiple sub-sectors within it, from payments to lending, banking, infrastructure(API level solutions for KYC, infra, etc) and insurance as well.
  • InsurTech is the amalgamation of two words – insurance and technology. It often refers to using technology to improve customer experience, backed management and create further personalised products.

 

How different are they?

 

  • Different scope
  • Globally different, FinTech is dominant in India, while most InsurTechs are from the USA.
  • They solve for different things
  • Investments made in InsurTech vs FinTech
  • The road ahead

The last two years have changed the face of the insurance industry, not just domestically but worldwide.

 

Let us take a look at the situation in India; understand the impact on the insurers and the buyers. Let us also discuss where the insurance industry is headed.

 

The last two years have challenged the health insurance space on every front. Whether it is the complete collapse of health infrastructure or having to increase the premium pricing, professionals in this industry have seen it all in a compact time of two years.

 

To take a deeper look into the situation, we had a virtual interview with Ruchir Kanakia – CEO, OneAssure.

 

Ruchir is building a comprehensive health insurance distribution platform. Earlier, he was the Co-founder of GoPlanner, an AI-powered Insurance Sales Assistant.

 

Today Ruchir will share his insights into the industry and give us an inside view of what it is like to be in the health industry for the past two years.

 

This is a part of our series – #PeopleOfInsurance.

 

Here, we share insights, opinions and stories from the people of the insurance industry, whether they have years of experience in the space like today’s interviewee or have just joined the insurance industry.


How is the health insurance space currently doing?


Ruchir: The health insurance space has changed quite a bit since the onset of the pandemic. In March 2020, the Coronavirus pandemic hit us right for the first time. Before that, health insurance had to be pushed towards the customer to be bought. However, with the burden of hefty hospitalisation expenses, people realised the importance of health insurance.


So, you will see people voluntarily interested in enquiring and trying to get insurance for the first time. That is a major shift that has occurred.


However, as the first wave came to ease, people somewhat lost focus on de-risking their finances from medical emergencies.

Now, the second wave is itself helping people re-learn the importance of health insurance. People seem to have realised that private hospitalisation will be unaffordable, if not today, then 5-7 years down the line. The only solution is to buy sufficient health insurance and hope you don’t have to use it. That is what all of us want; it is like a fail-safe potential financial downside.


So, a significant change in the industry has happened.

We are at 3.5% today in terms of penetration across the country, one of the lowest in the world. So in the next 5-10 years, we will see this industry grow manifolds.


We can see much volatility in the industry; can you tell us why it is so?


Ruchir: There are two things about volatility.

Firstly, many insurance companies are becoming smarter. Many of them are coming up with stricter guidelines to underwrite policies because people falling sick is not good for insurance companies.


Let’s take a very simple example of what happens to people who have Covid. Can they apply for a new health insurance policy immediately after they turn negative? The answer is different for different companies, and that is what creates confusion and chaos. One insurer will say you can only apply after 45 days; the second insurer will say you can only after 90 days and others will insist on a negative report.


As per the doctor, you don’t need to take negative reports once your symptoms have gone. In the interest to prevent the number of tests because the testing infrastructure is also limited.


Thus, there is confusion and chaos. However, I am guessing all of this will get settled down over some time.

Moreover, there was a lot that happened for the first time in history. For the first time in the last 20 years, our health infrastructure, companies etc., were tested to their limits.


So, everyone has now realised that we need far more hospitals and better care; we should start investing in it today. This was a wake-up call. Such events can still occur in the future. We will hope that they do not, but we should be prepared at the end of the day.


So, from an industry perspective, we see people prioritising their health more and more from now on. There is a sense of hygiene; all of us have now started using sanitisers. I don’t think any of us in 2000 and 2019 cared about sanitising hands or wearing a mask. However, in the future, it will become a norm just out of cautiousness.

 

In the early part of 2020, we saw that health insurance overtook motor insurance. How do you think it will play out going ahead?


Eventually, health will go ahead and overtake motor insurance. As a product, motor insurance by design is mandatory. However, health insurance is a choice. There is no compulsion from anyone to buy. In the long term, it will overtake the motor, and it will continue to grow going forward.


Inherently you will see an increase in premiums because the increase in risk is going to happen. Many people who have suffered from covid or have recovered from it don’t know the long-term impact on their health. Over the next 5-10 years, is when we will be able to understand it.


Even the doctor’s don’t have answers to the long term effect that this virus will have on us. So is it going to increase the mortality rate for people who had Covid? Will it have a long-term effect on lung functions? Is there a way to combat that? There are too many unknowns right now. Most of us are just speculating; only time will tell; that is the honest answer.


In what ways has the industry changed in the last two years?


Let us understand the insurance company’s perspective first. As you rightly mentioned in the previous question that why health insurance overtook motor. Travel has come to a standstill; hence, many commercial and transportation logistics companies were not renewing their commercial insurance.


So I am not sure how that will change, but many general insurers then realised that they have to make up for that shortfall. This is where the push and focus came in.


The difference here is that health requires a dedicated approach and focus because it is by far one of the most complicated products in general insurance, in my opinion. It has over 40 features, and much simplification needs to happen. Here’s where the paradox comes in, you are trying to simplify a contract legally. A contract is as strong as many clauses it has.


Essentially insurance is nothing but a contract between a company and an individual.  , Ruchir Kanakia. Click To Tweet

Essentially insurance is nothing but a contract between a company and an individual. The contract is as strong as the number of clauses it has or the number of events or eventualities it covers.


So, while the industry wants to simplify it, it has its challenges. If tomorrow from a financial perspective from an insurance company they will want they will put clauses.


For example, today, they will already have clauses on Morden surgery. A lot of these clauses get added over a while. So, it is a chicken and an egg problem here. Balance has to be struck somewhere in the middle.


Furthermore, profitability is vital for the insurance company, but penetration is also significant to growth.

Every company understands their niche or their audience. They are trying to target and develop products and solutions for this audience and niche.

So, as a company today, we only focus on personal health insurance. One of the key reasons is that educating customers will significantly expand the penetration rate from 3.5% to 7% in the next 3-5 years.


That is where the emphasis should be. Suppose we can educate everyone about the claim, how they can claim, or something as simple as why something is covered or not covered. It will go a long way in building trust.


Secondly, from the customer’s perspective, it has been chaotic here.

Many people have lost their loved ones. Many people are looking at a massive debt because someone in the family suffered and was hospitalised. The billing ran into 10s of lakhs. Now they have to return that amount, either to a lender or some other format.

I have realised that people understand that they need to start insurance. They have begun to view insurance as an investment rather than an expense.


It will take time for people to get used to this in the case of health insurance. I believe it is getting there with more players in the industry, encouraging and educating for the industry.


We hope never to fall sick. Ideally, we hope that none of our loved ones has to visit a hospital. Maybe, a lot of people are going to start investing in it slowly. One thing which helps us expand this is by allowing people to pay monthly or quarterly. In this way, cultivate the habit to see this as a part of monthly expenses. Consider this as how you purchase groceries. You don’t think about it twice. Spending money on groceries is essential for you to eat and survive. Similarly, as we advance, getting access to good health care is also crucial.

There will be an understanding that you will have to spend some amount to help you when you need it. That is the way I think about it, and the change is already happening; I can already see that.


What would you say insurance companies have learnt during these two years and what has changed from that perspective?


Insurance companies have learnt quite a lot, but to a large extent launching some of the products and implementing some of these learnings will take time. It is not because they don’t want to do it. When you become a large company, most of these insurers are there in inertia and processes which delay the time to market and the timeliness.


So, I believe that they have gotten the message. A lot of them are working towards becoming more consumer-friendly. However, we’ll have to see how these learnings translate into actions over the next six to nine months.


What sort of plans do they come up with? How do they retain their existing customers? If you notice, health insurance premiums have gone up by a sufficient amount over the last 12 to 15 months. Some insurance companies have revised their premiums twice. However, is that going to be adequate?


In the first quarter of this year, there has been an enormous outflow of claims in the second wave. Will that require a hike in rates again? Now, will this break the customer’s trust? Many customers don’t understand why the premiums should be hiked so frequently.

So, I guess we have to wait and let time tell us how the entire scenario unfolds. Probably over the next 6-9 months.


What are some of the positive trends or changes that we have seen in the industry?


Quite a few interesting things have happened over the past few years. Many people would insist that you need to send in the original documents to the head office and everything when you want to process your claims.


Now many insurers are comfortable in working with digital and scanned copies. There has been much adoption that insurance companies have done, thanks to the pandemic.


People are working from home, and yet the work is happening. The systems are getting digitised, and remote work is now being accepted.


For example, we were in the second wave because we have already experienced some of these changes in the first wave. The operations were not as affected as they were in the first wave. That was when all of us had to adapt to a lot of new things. Still, this time, at least the support was there. The work did not come to a standstill. The alternate avenues were already available, where digital systems could ensure that the claim amount and the disposal are happening on time.


Lastly, as the founder of OneAssure, can you introduce it to us and tell us how you help your customers?


OneAssure helps you select a personal health insurance plan and does everything end to end. Meaning, it helps you from selection to claims. Whether you need to reevaluate your plans or increase or reduce coverage, we will help you do this.


That is important because insurance is nothing but a promise on the policy sold. It is claimed or consumed for two or three years down the line. Then, we must also help you get that claim amount right into your bank account. That is our responsibility towards customers.


We are also trying to verify the kind of partners we onboard on the platform and go through the stringing process. Meaning the partners who typically end up selling are trained and tested and only the right partner is allowed to sell.

Otherwise, this industry is plagued with misselling. So we have all the checks and balances in place to avoid or minimise misselling to a large extent.


This is what OneAssure is all about. It is your personal health insurance provider.

Interestingly, you can port health insurance from one provider to another that has more benefits. This is unlike life insurance. And I hope that the regulator relooks it.


So, if there is a better plan out there, an advisor can guide the person for the move. The reasons are transparent to the investor. We help them through that too.


Conclusion


It is fascinating to see its growth and face challenges in future. The coming years are filled with opportunities and hurdles alike. We are excited to view it from within.


Thank you, Ruchir, for taking the time to share your insights with us. It has helped us understand the situation better. We are sure it has made it easier for the audience to understand it.


To protect yourself and your loved ones, go check out OneAssure.

 

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