special feature
SHINING
Armour One of the fastest growing segments in the non-life insurance industry, health insurance offers hope for a healthy living By Divya Chawla
T
he healthcare expenses in India are financed through general tax revenue, community financing, out-of-pocket payment and social and private health insurance schemes. Out of pocket expenses, however, contribute for the major chunk of healthcare expenses made. Protecting households from high out-of-pocket expenses for healthcare is a key issue that needs to be addressed to protect households from being pushed into poverty and be made vulnerable to catastrophic health expenditures. As per a recent study, the analysis of nationally representative data from India shows that 3.5 percent of the population falls below the poverty line and 5 percent of households suffer catastrophic health expenditures. The
poverty deepening impact of out-of-pocket expenses was at a maximum in people below the poverty line in comparison with those above. Owing to shrinking public healthcare budgets, escalating healthcare costs coupled with demand for healthcare services, and lack of easy access of people from the low income group to quality healthcare, health insurance is emerging as an alternative mechanism for healthcare financing. Health insurance was introduced in India in 1912, when the first insurance act was passed and witnessed little change until 1972, when the insurance industry was nationalised and 107 insurance companies were brought under the umbrella of the General Insurance Corporation (GIC). Further, in 1999 the enactment of Insurance Regulatory Development Act (IRDA) took place, which
“Insurance and healthcare are the mantra for a healthy India” Surgeon Rear Admiral (Retd) VK Singh Director – Healthcare Asia Simpler
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> www.ehealthonline.org > May 2011
allowed private and foreign entrepreneurs to enter the insurance market in the country. The bill also facilitated establishment of an authority to protect interest of the insurance holders by regulating, promoting and ensuring orderly growth of the insurance industry. According to the bill, foreign promoters are expected to hold paid up capital of up to 26 percent in an Indian company and requires them to have a capital of INR 100 crore along with a business plan to begin operations.
Indian scenario In India, health insurance has been the fastest growing segments in the non-life insurance space. The sector is now, also emerging as a significant line of business for the life insurance companies and all the major life insurance companies are now rolling out health insurance products into the market. Healthcare insurance in India may be categorised under: • Voluntary or private-for-profit schemes • Employer-based schemes • NGOs/community-based schemes • Mandatory/government-run health insurance schemes According to data published by the Insurance Regulatory Development Authority (IRDA), the gross premium underwritten by non-life insurers in the health insurance space, for the period April – September