Health covers are not a last-resort offering

The year 2020 will be remembered as one in which India and the world grappled with the Covid pandemic. Covid-19 has forced the health insurance eco-system to innovate as it strived to meet the needs of consumers. For the first time, health premiums moved past motor insurance, thereby making health insurance the largest non-life insurance category in the country. This is a very encouraging development as we move off the current low levels of health insurance penetration.

A significant part of the increase in the customers’ willingness to buy health insurance can of course be attributed to the fact that Covid-19 and the prohibitive costs of treatment for it in private hospitals put the category and the protection it offers firmly in the limelight. However, credit is due to the Insurance Regulatory and Development Authority of India (Irdai), which was very proactive and ahead of the curve as the pandemic struck. They first clarified that Corona would be covered by all existing policies and then they designed and mandated the introduction of two simple and affordable off-the-shelf protection policies — ‘Corona Kavach’ and ‘Corona Rakshak’. Over three million specialised Corona policies have been bought by consumers, which has given them protection and peace of mind at a time when health concerns are most pressing.

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Irdai also brought in sweeping digitisation of the industry by allowing policies to be issued and claims to be settled digitally. Health and general insurers have rallied around these changes to enhance product design and allow for smooth onboarding of consumers. Medical tests are now largely conducted on phone or over video calls, allowing consumers to buy policies from the comfort and safety of their homes. As Victor Hugo said: “There is no power on earth who can stop the idea whose time has come.”

From our vantage point, we believe that Covid will undoubtedly change the health insurance industry permanently. The perception of consumers towards insurance has moved from mere compliance or tax-saving towards a protection standpoint. This over time will lead to health insurance transforming from a traditionally “push” product to being a “pull” product, one that consumers understand and want to buy for its core purpose. Further, the specialised Corona policies have prompted many first-time customers to enter the category. They will go on to form a larger base for upgrading to comprehensive policies as they sample and understand the value of health insurance.

The pandemic has accelerated the pace of the irreversible process of digitisation for the insurance industry. We now need sustained and concerted efforts to build even more seamless and customised digital experiences. Customers need to move to a more robust online purchase decision process and supplement it with frictionless and digitised fulfilment. That would mean collaboration to mine the rich data available to develop a robust underwriting process, which will mitigate the risk of fraudulent transactions without inconveniencing genuine customers.

We believe that one of the challenges that the industry faces today is that health insurance is largely perceived as a last resort to cover hospitalisation expenses. Global experience has demonstrated that younger customers tend to gravitate towards more holistic health and wellness solutions. We see a future where newer types of comprehensive products and services will be introduced. These will not only serve to pay for treatment costs but will put greater emphasis on prevention, disease management and lifestyle choices.

In the post-Covid world, consumers will want their health insurance policies to work harder for them. The insurance eco-system will be expected to focus on customised and delightful wellness experiences and not just build basic protection products.

The writer is CEO of Policybazaar.com

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