Future of Health Insurance


The year 2020 will go down in history as the year that brought the 8-billionstrong human race to a standstill. Right since COVID-19 started spreading across continents, heath became the primary area of focus people around the globe. With face masks, hand sanitizers, and social distancing becoming the new normal and our immunity being the only line of defence against the virus, the world started realizing the importance of the true wealth – health.Insurance companies have also experienced a surge in inquiries on health insurance policies as people seek financial protection in their fight against COVID-19. In fact, many insurershave reported up to 40% increase in the number of inquiries.

In India, while the government is bearing the cost of COVID-19 testing, the hospitalization costs need to be borne by the patients themselves. This pandemic unearthed a harsh reality of the modern world – we are not equipped to manage so many patients together. There is a huge strain on the scarce hospital resources leading to an increase in hospitalization costs for coronavirus treatment. Many leading insurers like Tata AIG have created special coronavirus covers to manage this increased load.

Governmental focus on health insurance

The government has taken several steps to ensure that a maximum number of Indians have a health insurance policy to take care of the hospitalization costs in case of getting infected with COVID-19. The Insurance Regulatory and Development Authority of India (IRDAI) made it mandatory for all health insurance companies to include COVID-19 in the list of ailments covered by regular health insurance policies.

Earlier in March, the National Health Authority – the nodal agency behind the Ayushman Bharat Health Insurance scheme for the poor – started preparing health insurance packages in case the country entered the third phase (community transmission) of the pandemic. Recently, the IRDAI has asked the General Insurance Council (the apex body of general insurance companies) to create a standardized cost structure for COVID-19.

Adoption of health insurance in India

According to a report by IndiaSpend, in the low-to-middle income group of 50 nations,Indians were the sixth-largest out-of-pocket health spenders in 2014. However, this spending has pushed millions of Indians below the poverty line.

Further, in 2017/18, the Government of India conducted a survey that revealed the following numbers with regards to the number of people covered by some form of health insurance:

Sector % of people not covered by any health insurance Percentage of people covered by
Govt. sponsored insurance scheme Govt./PSUs as employers Non-PSU/Govt. as employers offering health insurance Private insurers Others Total
Rural 85.9 12.9 0.6 0.3 0.2 0.1 100.0
Urban 80.9 8.9 3.3 2.9 3.8 0.2 100.0

As you can see, the vast majority of Indians do not have any form of health insurance cover. In fact, before the central government launched the Pradhan Mantri Jan Arogya Yojana (PMJAY, Prime Minister’s Health Protection Scheme) in 2017-18, these numbers were much lower. By December 2019, around 67 million Indians were given e-cards that qualified them for free treatment.

Also, with the health insurance sector gaining roots in the country, we can expect these numbers to improve further in the coming years.

How is technology aiding health insurance?

Digitization has disrupted businesses across all sectors. The internet revolution, followed by the smartphone boom,is changing the way we purchase and renew insurance policies too. According to a study, around 30 percent of people in the age group of 25-34 years bought their health insurance policies online. They either visited the insurance company’s website or an online aggregator’s site for the purchase. As we are moving towards an economy that prefers online purchases to their offline counterparts, we can expect this percentage to increase.

Insurers are also leveraging analytical tools to keep frauds at bay and gain some critical insights. These tools are also helping insurers understand consumer behaviour and create customized products.

Additionally, many insurance companies are using technology to offer value-added services and benefits to their customers.

Summing Up

India has a low penetration of health insurance. However, with the government taking different measures to ensure that majority of Indians have a medical cover,we expect to see a surge in the number of people opting for a health insurance policy.Many people have started realizing the importance of a comprehensive health insurance policy due to the current pandemic. With the average treatment costs for COVID-19 averaging at₹5-6 lakhs, a health insurance policy that covers the ailment can save a lot of money and unnecessary financial stress.

Health insurance offers financial protection against costs arising from diseases and ailments and also helps you stay healthy. With most insurers offering an option to purchase the policy online, you can compare plans, look for add-ons that make the policy perfect for you and purchase or renew one in a hassle-free manner.