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Insurance faces the challenge of reach

Anthony Jacob, CEO, Apollo Munich Health Insurance shares his views on the insurance sector:

Mehul Dani: What are the major problems that private sector insurance companies face on the distribution front?

Anthony Jacob: Although the number of players in the health insurance segment has been steadily increasing, the increase in penetration is not gaining the same momentum. Merely, 12% of the Indian population is covered by some form of health insurance. We believe that a major hindrance to penetration has been the inability of insurance agents and brokers to reach across to all segments of population across the country. To increase awareness and then coverage across the country, a stronger distribution network is imperative in addition to the existing brokers and agents.

The need of the hour today is to increase penetration in tier 2&3 areas and have more people covered with health insurance to ensure they spend as little as possible from their own pockets for healthcare. Insurance companies are slowly but surely moving to tier 2&3 towns, but the results will take time.

The opening up of the bancassurance segment for banks to tie up with more than one health insurance provider has also aided in increasing awareness and number of lives covered over the past year. But of course, more work is required for a large increase. Banks and insurance companies must work hand in hand to clear perceptions and help people adopt health insurance.

A new avenue that could be considered would be tie-ups with NBFCs which cater to the rural segment. Health insurance could be bundled along with NBFC products to ensure people enjoy health insurance coverage. Another imperative is the need to develop customized products for various segments of the population, in keeping with the various ailments and diseases that are increasing in the country. Such products would help people counter long term effects and reduce burden of healthcare costs. We aim to build a cost efficient model of distribution which can help us to augment our reach into tier 2 and 3 cities apart from the major metros.

How do you view raising the limit of FDI for the insurance sector?

This has ensured that there is an inflow of expertise from international insurance companies in terms of processes and big data analysis. An enhanced flow of foreign capital and international expertise will result in accelerating overall development of the insurance industry through increased access to international insurance products, distribution channels and world-class business practices. Overall, this has impacted the segment positively as there is an evident boost in the overall growth of the sector and more so for the fast growing health insurance sector through increased levels of awareness and capital for infrastructure development. This infusion will also greatly aid in marketing, distribution and research that will take insurance providers on a higher growth path and aid in greater penetration across the country.

How do you view the prime minister’s insurance schemes? Will these help in the growth of the segment?

The government-funded healthcare insurance plan for all citizens is a welcome step. I believe robust IT projects would be required to make this proposal a success because of diversity in India’s demography, climate, scattered BPL families and infrastructure. Also, a great deal of transparency and cooperation among all the stakeholders – government bodies, health care providers and insurers – is paramount.

Do you feel that the current policies and programs are conducive to improve the savings and investment environment in India?

The sentiment among corporates and industry is quite positive, given the economic growth of the country this past year. The government has been pushing several initiatives such as Make in India, Digital India and Skill India which have attracted large investments across various sectors. The Indian economy is certainly a bright spark in the Asia Pacific region and we look forward to another positive year. The growth of the financial sector, especially banks and NBFCs, has also been rising and this is evident in the large numbers of people using savings financial instruments such as savings bonds, mutual funds and insurance schemes to hedge against inflationary pressures. Banks have brought about robust technological advances in infrastructure and have been able to aid in insurance penetration increase through the bancassurance model.

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