That's a huge medical bill, have you considered buying health insurance?

Yes, this is the conversation one may have to get used to whenever one visits pharmacy or a diagnostic lab in India. Why? Because IRDAI wants to allow medical diagnostic centres and pharmacies to sell health insurance. For India, with one of the biggest health protection gaps in Asia ($369 billion), this is fantastic news, because this move has the potential to increase the accessibility and awareness of health insurance by multifold.

The health protection gap is defined as the amount of insurance coverage needed to avoid the financial stress arising from unforeseen direct medical expenses. According to the report "Asia’s Health Protection Gap: Insights for building greater resilience" issued by global reinsurer Swiss Re, India also has the highest share of out -of -pocket health expenses (65%)- which is much higher than that of mature markets globally at 10-14%, putting medical care out of reach for many. According to the Economic survey 2018, the health insurance penetration in India is in single digits compared to as high as 75 -80% in some developed economies.

What does this mean for health insurance industry in India? Simply put, the opportunity is huge with dramatic growth provided there are enough distribution channels.

This is where IRDAI's move can be a game changer as this will create an 'affinity' distribution channel having a nook and corner presence in India. Why affinity? Because in India, especially in tier 3- tier 4 cities, a pharmacist is a pseudo- doctor. We go to the pharmacy and ask for medical advice or medicine for any ailments. Now, the argument can be, this is equivalent to self medication and can be dangerous and one needs to go to doctor, blah blah. But that is not my point, the point is that the pharmacist or a lab assistant are trusted by the customer. Some of the pharmacies are in the community for generations, as kids they would have gone to school together. So, one is like a family member.

Just look at the sheer strength of this distribution channel, according to the Indian Retail Druggists and Chemists Association, today, the number of pharmacies is about 550,000. As per Mr. A Velumani, chairman and MD, Thyrocare Technologies, there are around 100,000 diagnostic laboratories in India. Can you see, why this is worth the excitement?

Whilst this new distribution channel offers huge potential for uplift for health insurance in India, there are challenges. What I could gather from the article in Asia insurance review and the discussion with my fellow insurance colleagues is that, there is a risk of mis-selling. One of my colleagues went on to add, this is 'dangerous'.

Yes, there is a risk of mis -selling. But is it going to be because of bad intent or poor product knowledge? Most of the pharmacies in India are run by individuals as a primary business. They are the business owners. Some are running it for generations within the community. Will someone ruin years of relationship and his primary source of income for something which is secondary source? Some may, many would not. Yet, I agree there is a chance of mis- selling due to bad intent especially if there is a bad employee.

On the point of mis- selling due to poor product knowledge. This is highly possible. All these can be mitigated by having in place a robust training architecture and a proper sales management support. In addition to this, a good product design. Keep it simple.

Another risk I could think of is, will this lead to higher healthcare cost thereby leading to higher claim amount which further leads to increase in health insurance premiums and affects the customer? Will this lead to increase in sale of higher priced medicines or services by some pharmacies and laboratories because they are aware of what is covered in customer's insurance? Again, something which needs a plan to mitigate.

I may not be a health insurance expert as I have been brought up in life insurance, but this move excites me:

• As a product manager, because it gives me an opportunity to innovate and come up with diverse product designs
• As a sales management professional, because it opens up a new distribution channel and increases my span
• As a regulator, because it helps increase penetration
• As a health insurance company, because it is an opportunity to increase numbers.
• As an Indian, because it increases the accessibility for my fellow Indians and thereby helps to reduce the out of pocket health expenses and use the savings to improve their standard of living

Any new initiative has risks and if there is belief in the opportunity, one should have a plan to mitigate the risks . Meanwhile, the industry waits for the consultation paper. Let’s wait and watch, how this will change the health insurance distribution landscape in India.

Reference 1:Asia:Region's huge health protection gap driven by China and India

India:IRDAI seeks feedback on allowing pharmacies to sell health insurance

Disclaimer: The ideas, views and opinions expressed here represent my own views and not those of any of my current or previous employers or LinkedIn