Outlook 2022: The emerging trends in health insurance space

After a rather challenging 2020, everyone expected some relief in 2021. However, 2021 brought with itself an unprecedented devastation which caught everyone off guard. Just when we thought that COVID19 was waning away, it came back in the form of a second wave, causing unimaginable loss. Along with sickness, it brought financial distress for many families as they tried to navigate through the deadly wave. Unfortunately, about 63% of the medical expenses are still being paid out-of-pocket in India. In fact, a huge number of Indians get pushed under the poverty line owing to medical debt every year.

Since the advent of the pandemic, the perception towards health insurance has been evolving. More people are realizing that it’s a must-have to protect them and their loved ones. Addressing the rapidly evolving needs of customers in these challenging times, the health insurance sector has also evolved, while reflecting a greater sense of responsibility, innovation, inclusivity, and resilience. It goes without saying that the high number of claims has put a great stress on the sector, yet it has been standing tall against all the headwinds. During the pandemic, Niva Bupa has paid total claims worth INR 409 crores to around 30,000 customers, and we are proud of the fact that we have been able to stand by them in their moment of truth.

Health insurance has played a critical role in enabling people to tide through the pandemic. Here’s an overview of what acted as a barrier for the sector in the year that went by, and how we will see it evolve further this year.

Roadblocks in 2021

Standardization of treatment: The healthcare eco system will enormously benefit from standards - data standards, practice of evidence-based medicine & adherence to protocols, policy on drug prescription (especially antibiotic usage) etc. Customers will greatly benefit from this, and the claims experience will be significantly smoother. Greater transparency around pricing and adoption of technology will also go a long way in improving accountability of the sector.?

Low awareness & penetration: According to an agent survey by Niva Bupa in tier-2/3 markets, there is a substantial increase in the demand of health insurance post Covid-19. However, the study also highlights that lack of awareness and clarity is still limiting the purchase of health insurance products. The health insurance industry grew by 30% in 2020 whereas it is again witnessing a stagnant growth of 18% YTD October 2021. The spike in growth rate that was witnessed last year due to the pandemic seems to be slowing as life returns to normal. The sector is still perceived as complex and opaque by many. Many people aren’t renewing covid-specific policies that were purchased during the initial wave as the fear has somewhat subsided.

High taxation: The current 18% GST not only makes in-patient products expensive but is also a serious impediment in building out-patient products, which constitutes around 60-70% of healthcare spends. Lowering the GST rate will not only enhance health insurance penetration but will also help in greater tax collections from a broader customer base.

The 2022 outlook

Digitization: Health insurers have been aggressively creating digital capabilities across functions to serve their customers better. Going forward, we can witness a more aggressive usage of technologies like AI & ML that will help in reshaping product designs, claims process, underwriting, as well as distribution, creating a better connect with customers. At Niva Bupa, we have invested heavily on enhancing our digital capabilities across the entire value chain. We have digitized our underwriting and risk assessment processes along with enhancements in our digital self-serving capabilities. Currently, about 60% of our transactions are self-served. Moreover, about 80% of our renewals and 80% of the payments happened digitally this year.?

Product innovation: To further enhance health insurance penetration, product innovation will play a vital role as it helps serve the varied needs of customer segments. The GenZ might focus more on bite-sized products whereas other age groups are likely to opt for comprehensive products which gives them coverage against wide range of diseases. Moreover, people will opt for products that offer higher sum insured which is adequate bearing in mind the increasing cost of medical care. A plan like ReAssure with unlimited sum insured feature can go a long way in serving the customers’ needs at a time of severe illness or when multiple family members need hospitalization during same time. Also, the players who would simplify insurance for their customers are likely to grow more.

Refocus on distribution models: There’s been a high demand for health insurance from tier-2/3 markets, which calls for a realignment of distribution channels. The agent survey by Niva Bupa in tier-2/3 markets shows that while people are aware of the importance of health insurance, their understanding about the category is fairly low. Today, more women and millennials are taking a keen interest in purchase of financial tools like insurance. Hence, there’s a need to reimagine how insurers engage with the evolving set of buyers.

Customer Experience: CX will be a top priority for insurance providers and investing in digital capabilities will help insurers bring new products and services to the market faster, which will help improve the CX quotient.

What lies ahead

As we begin the new year with hope and positivity, we need to understand that epidemic such as COVID is here to stay. The sense of uncertainty still might linger at times, and hence, insurance players will continue to focus on business continuity, planning, and risk assessment to navigate through this dynamic situation. Building further on the resilience that health insurance sector has shown over the last two years, it will play a key role in empowering the people of the country in real terms, while enabling them to adapt to this new normal!