Health Insurance Business in India: Progress, Issues and Way Forward

Abstract

India’s healthcare system is witnessing increased medical inflation, which is outpacing per capita Gross Domestic Product growth. With increased lifestyle diseases and, most recently, a pandemic caused by COVID-19, the cost of financing healthcare has become a huge issue, especially when government spending on healthcare is so low. In light of this, this article emphasises the significance of privately purchased, that is voluntary health insurance in addition to the government-sponsored health insurance programme for the vast uninsured population. Starting with the history of health insurance in India, this article examines premium growth, underwriting profit, investment income, net profit, incurred claims ratio and other metrics. Following that, the difficulties in the health insurance industry and their breadth are examined through a review of literature and recent newspaper reporting. The key issues resulting in negative underwriting experience are the inefficient risk pooling and unregulated private health care costs. A risk-sharing mechanism with an indemnification model must be implemented for better cost management to eliminate value fragmentation. Finally, ideas are given for resolving the challenges and increasing the market share of the health insurance company, with a focus on long-term business models such as managed care.