Over the past one year, the Indian health insurance industry has seen several changes in consumer behaviour and attitude towards insurance. Covid-19 has brought to light the fact that a significant part of India’s population depends on their savings to meet the rising medical costs.
The Indian Economic Survey recently pointed that 65 per cent of Indians support their medical costs through ‘out of pocket’ expenses. The pandemic has certainly emphasised the need to buy health insurance because of the growing financial burden, which is because of high healthcare costs versus a reduced income or loss of livelihood due to Covid.
Overall, the health insurance industry observed some new trends and shift in consumer perceptions after the pandemic.
Prior to the pandemic, consumers viewed health insurance covers as a sickness expense mitigation tool. Although this perception still exists, there has been an increased awareness about the need to buy health insurance. This is due to the high hospitalisation costs incurred by several individuals and families. This factor majorly influenced many to reconsider and buy health insurance. People also realised that their dependency on an employer-provided insurance policy was not sufficient. Therefore, buying Corona Kavach and Corona Rakshak policy seemed pertinent.
Some consumers also realised that buying a comprehensive cover is a better choice because it extends a holistic healthcare approach with wider coverage against diseases, pre-existing conditions or even future lifestyle conditions. Thus, many consumers have started viewing health insurance as an essential investment that brings in a wholesome health cover.
We have also seen a category of evolved customers, who are getting more health-conscious, and their motivation to stay fit has increased. Despite lockdowns and general stifling conditions, some customers have adopted digital forms of wellness such as following app-based fitness regimes, practising yoga over video, and even building a high-tech gym inside their home. As per E&Y’s recent study of ‘Life in a Pandemic’, more Indians are becoming health conscious – 80 per cent of the respondents are improving their eating habits and 33 per cent are doing some form of workouts at their home.
A lot of customers want to move from a basic health protection plan (such as traditional indemnity products or hospitalisation covers) to a comprehensive health cover with wellness benefits for self and family –this also gives financial incentives/rewards for leading a healthy lifestyle.
They want to see insurance companies play a more proactive role and actually help them maintain a healthy lifestyle. We see this trend as a win-win situation for both customers and insurers. If customers are healthy, the claims will inevitably go down over a period of time and large pay-outs by insurers will become less frequent. This will also enable insurance companies to offer more product add-ons to customers such as chronic care management programmes for customer with lifestyle conditions, wellness coach for customers with pre-existing conditions, and counsel based on digital health data of those who have just started their health journey. Prior to March 2020, millennials typically used to be quite reluctant to buy health insurance. Their averseness stemmed from the fact that they did not view themselves as sick or in need of protection from medical expenses. The pandemic shattered the perception of the youth being immune to sickness and related health risks. The ongoing second wave has underlined this further; Niti Ayog has estimated that 32 per cent of patients during the second wave have been below 30 years of age.
This ‘age no bar’ factor has pushed millennials to view insurance as a fundamental tool to protect from likely medical expenses. In recent weeks, we have already received and continue to get many queries from millennials. We also saw a surge in purchases of products that offer comprehensive benefits and health returns. If health insurers have transitioned to remote sales and service teams, customers, too, have become quite adept in availing digital services in every step of the typical health insurance process: from comparing policies, buying and consultations to filing for claims. Customers have now started extensively using their health insurers’ apps and website for accessing information and processing requests. We expect this rise in use of digital services to be a permanent fixture in the domestic insurance industry.
Due to the increase in digitalisation, the industry can now bring in several benefits such as telemedicine, accelerated use of technology and data exchange. Insurers can now create specific products for different categories of customers and also different categories of expenditure. So, we now see the increase in launch and sales of byte-sized contextual health insurance products on digital platforms for first time buyers so that they experience insurance without large commitment. The present scenario can be used as a great opportunity to expand the health insurance offering by making it more promotive and preventive.
But we have many more miles to go. We, as a country, still suffer from a huge lag in health insurance penetration. The Sigma report by Swiss Re indicated that the insurance penetration in India for FY20 stood at 3.78 per cent, which is significantly low compared to the global average of 7.23 per cent. Moreover, the non-life segment only constituted 0.97 per cent of the total Indian penetration.
(The writer is CEO, Aditya Birla Health Insurance Company Limited)