Indians are underinsured: 68% have health coverage under Rs 10 lakh
Healthcare InsurTech

Indians are underinsured: 68% have health coverage under Rs 10 lakh

By Priyobroto October 10, 2023 - 108 views

The Indian insurance sector may have found some cheer in reports which indicated how premiums went up for general insurance companies in August 2023 by 12.8%. They touched INR 19,290.70 crore in comparison to INR 17,101.72 crore in August 2022. Standalone health insurance companies also saw premiums increasing to INR 2,590.88 crore (growth of 25.65%) from INR 2,061.96 crore in the year-ago period. 

At the same time, an Economic Survey 2022-23 also highlighted India as one of the fastest-growing insurance markets of the next decade. The report also stated how the penetration of insurance across India had gone up from 2.7% around the dawn of the new millennium to 4.2% in 2020. In 2021, life insurance penetration also stood at 3.2% which was twice as high as several other emerging markets and also surpassed the worldwide average.

Insurance density in India, based on this survey, went up to $91 in 2021 from $11.1 in 2001. However, despite these favourable indicators, there are recent reports that have drawn attention to several other issues that deserve more focus among citizens, policymakers, and insurers. 

An ACKO survey highlights how a massive 68% of Indian policyholders have less than INR 10 lakh as their medical coverage. A hefty 27% also have coverage which is lower than even INR 5 lakh. Some other findings also reveal a starker picture, namely how 64% of people have not scaled up coverage from the last year and how 61% of prospective buyers are not looking at purchasing health coverage with the sum insured crossing INR 10 lakh. Also, 65% opined how coverage up to INR 10 lakh was sufficient. 

Some other aspects worth highlighting 

1000 respondents were surveyed for the report throughout six Indian metro cities, between 28 and 55 years of age. 60% also opined that they clearly understand their policy terms and conditions. However, the report also highlighted how just 53% had an awareness of cashless treatment, while only 45% and 50% were aware of the 100% bill payment and accident coverage features. 

Here are some other insights from the survey: 

  • 46% of policyholders feel that their policy will cover the whole hospitalization bill and consumables. 
  • 59% are actively seeking policies with 100% bill payment while 31% feel that they have coverage from day 1 of the policy. 
  • 27% feel that there are zero waiting periods for health insurance policies. 
  • 71% of policyholders and 72% of prospective customers opined that they would select a family floater plan since they could add their spouse, parents, and children to the policy without having to purchase separate policies. 
  • 43% of policyholders and potential customers have also stated that slow and tedious claim settlement is a deterrent for policies while 47% of policyholders and 56% of prospective buyers feel that the lack of 100% bill payment is another deterrent. 
  • 44% of potential customers and 41% of policyholders worry about the insurance company not possessing a proper hospital network. 
  • 46% also feel that a health insurance policy is a must after the pandemic, while 48% of policyholders opine that health insurance ensures quality and timely healthcare access. 43% state how it helps take care of increasing medical costs while 46% state that it is crucial since the pandemic affected health adversely. 
  • 48% feel that having a health policy is a must irrespective of medical conditions and 44% feel that it will enable quality medical care. 41% also believe that this will help address inflated costs of healthcare. 

 While purchasing policies, many potential customers and policyholders wish to purchase them directly from their insurers. 30% have already purchased health insurance directly from insurance companies. 52% of customers, however, purchased them from third parties. 36% feel that they will choose policies offered by aggregators while 33% prefer third parties for their insurance requirements. However, policyholders are not as aware of aspects like unlimited coverage availability, the capping of room rent, and consumables coverage.

The latter indicates financial coverage for medical aids or equipment that are listed as consumable, including protective equipment, gloves, masks, and so on. The coverage is now an add-on to many policies. Some of the preferred consumables in policies include administrative costs, housekeeping costs, surgical equipment expenses, room costs, and any other item provided in the product, and so on. Yet, the IRDA list is a guideline and insurance companies can exclude or include them as per their desires. The survey throws up several interesting findings.

It also highlights a pressing fact, i.e. how many policyholders in the country may be under-insured regarding health coverage. Scaling up health coverage gradually to keep up with rising inflation in medical costs is always recommended in order to stay financially insulated from sudden emergencies and hospitalization costs.

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