Cigna Enters Indian Health Insurance Market

American insurer Cigna has announced its debut in India's underpenetrated health insurance sector, in a joint venture with south Indian conglomerate TTK Group, according to the Wall Street Journal.

The two partners have invested $22 million in the venture, which will start operations with six branches in major Indian cities, according to Sandeep Patel, chief executive officer of CignaTTK Health Insurance Co, the WSJ report added.

"India is an important market for us," Jason Sadler , Cigna's global head of individual insurance business, told The Wall Street Journal in a phone interview.

India spends only around 3.9% of its gross domestic product on health care, according to the World Health Organization. Also, only 14% of total private expenditure on health in India is covered by insurance, leaving a large gap that health insurance companies can fill.

However, India's insurance sector has been hard to crack.

India has allowed foreign companies to own stakes in insurance firms since 2000, but limited that investment to 26%. Several major global insurers have entered India in the last decade through joint ventures.

But many of these joint ventures are still unprofitable, because a slowing economy and changes in regulations have hurt the growth of insurance sales.

These ventures need additional capital to expand, which local partners have been reluctant or unable to provide and which the foreigners aren't allowed to give. A bill proposing to increase the foreign investment limit in insurance companies to 49% has been pending for years.

Vote on Account 2014: Health insurers to come up with innovative policies for the common man

The latest Obamacare ad pitches to get young adults to sign up for health insurance. So, it is not just India where insurance is a 'sell' product. Though there is a crucial difference. Awareness levels are much higher in the western world and it is more about affordability. In India, on the other hand, most of us still do not see the point in buying a health cover.

Data shows, almost 75% of medical spending in India is out-of-pocket and only 14% of the population has some form of health insurance. So, there is huge potential for deeper penetration of health insurance segment as our country as it is severely under insured.

The government is also taking health insurance seriously. Providing government-run health insurance to below poverty line (BPL) workers and their families through Rashtriya Swasthya Bima Yojana (RSBY) was a milestone achieved by the government a and the RSBY coverage has been expanding. Universal health coverage for at least 80% of the population by 2020 will also quickly emerge as a key Government priority.

But it is not just the poor in India that needs health insurance. Healthcare costs often burns a whole in the pocket of an average middle class family as well and the rising costs is one of the factors that have helped the fast growth of the health insurance industry in the past few years. However, the focus till now was more on product and distribution. More efforts need to be put in at the industry level to enhance customer awareness.

In 2013, health insurance industry witnessed transformation with the implementation of standardization guidelines which aim to simplify the complexities in the documentation for consumer's better understanding. In 2014, product innovation and focus on quality of service will be help insurers to strengthen reputation and grow as a business, believes Manasije Mishra, CEO Max Bupa health insurance .

"It is an exciting time to be in the health insurance industry--the regulatory sentiments are in the best interests of the industry and customers and will definitely propel the industry forward. In the last few years, the industry has spearheaded towards a positive change however we have only touched the tip of the iceberg and a lot yet remains to be achieved," he says.

We asked the important men of the insurance industry tell what will they do to change the scenario in the next few years to make the product reach every aam-aadmi.

ANTONY JACOB, CEO, APOLLO MUNICH HEALTH INSURANCE: Cashless card for a hassle free 'walk-in - walk out' claim experience.
In the past, lifestyle diseases have been associated with metropolitan cities. But this has changed. For instance, today diabetes afflicts over 65 million Indians and impacts a majority of individuals during their productive working years. All these facts and figures have to be analysed and understood while developing product for the customers' changing needs.

On the service delivery standards, we need to work towards a far more automated system with minimal human intervention. Since we are in the business to pay claims, we need to work for a far more efficient and transparent system that can take decision on a real time basis. At Apollo Munich, our immediate aim is to create a system where we can empower our customers and providers to be able to use the cashless card as any other credit or debit card where you can have a hassle free 'walk-in - walk out' claim experience.

BHARGAV DASGUPTA, MD & CEO ICICI LOMBARD: Evolve from being mere health risk financiers to adopting a more proactive approach of managing the customer's health.
We need to introduce health management services such as wellness solutions, knowledge dissemination tools etc. Another case in point is the current focus on In-patient hospitalisation (IPD) benefits. It is a well known fact that Outpatient treatment (OPD) accounts for the bulk of healthcare expenses. Insurers need to introduce specific OPD policies thus aligning their offerings to customer needs.

In case of motor insurance, we need to take over the responsibility of ensuring quality repair of the damaged vehicle through tie-ups with service stations instead of merely financing the repair expenses.

BHASKAR JYOTI SARMA, MD and CEO, SBI GENERAL INSURANCE: Standardised treatment, integrated financing and delivery of healthcare

So far the focus has been on in patient coverage. Very soon you will find a whole range of new coverages ranging from outpatient cover, wellness programmes, disease specific covers, expansion in number of day care procedures, etc., coming in.

Owing to major cost implications, there would be greater receptivity to standardised treatment guidelines and medical outcomes. It is just a question of time before the integrated financing and delivery of healthcare emerges.

AMARNATH ANANTHANARAYANAN, MD & CEO, BHARTI AXA GENERAL INSURANCE: Provide a wider choice to the customer and more active at tier-II and III city level.

In a market where most products appear the be similar to customers, product and service differentiation would be the pillars for not just company growth, but also to provide a wider choice to the customer and hence boost penetration.

Further, with the advent of the digital age, and online purchase of insurance, accessibility and reach of insurance to the underinsured segments and Tier II & III cities will be more wide-spread.

Life insurance in India has major growth potential

The Indian insurance industry has undergone transformational changes since 2000 when the industry was liberalised. With a one-player market to 24 in 13 years, the industry has witnessed phases of rapid growth along with extent of growth moderation and intensifying competition.

There have also been a number of product and operational innovations necessitated by consumer need and increased competition among the players. Changes in the regulatory environment also had a path-breaking impact on the development of the industry. While the insurance industry still struggles to move out of the shadows cast by the challenges posed by economic uncertainties of the last few years, the strong fundamentals of the industry augur well for a roadmap to be drawn for sustainable long-term growth.

The decade 2001-10 was characterised by a period of high growth (compound annual growth rate of 31 percent in new business premium) and a flat growth (CAGR of around two percent in new business premium between 2010-12), according to KPMG.

There was exponential growth in the first decade of insurance industry liberalization. Backed by innovative products and aggressive expansion of distribution, the life insurance industry grew at jet speed. However, this frenzied growth also brought in its wake issues related to product design, market conduct, complaints of management and the necessity to make course correction for the long term health of the industry.

Regulatory changes were introduced during the past two years and life insurance companies adopted many new customer-centric practices in this period. Product-related changes, first in ULIPs (Unit Linked Insurance Plans) in September 2011 and now in traditional products, will have the biggest impact on the industry.

New Product guidelines

The new guidelines for both linked and non-linked products will now come into force from the beginning of year 2014, an extension of three months from earlier specified date. This additional period will ensure that life insurers enter the crucial quarter of Jan-March with a full bouquet of products and the sellers are well trained in the nuances of all these new products.

These product guidelines are in line with the IRDA's regulatory theme of customer orientation and long-term nature of the life insurance business. The guidelines follow two overarching themes of providing Guarantee and enhancing Transparency. The major changes introduced include - Higher Death Benefit, Guaranteed Surrender Value and mandatory Benefit Illustration for all life insurance products.

The changes related to death benefit and surrender value may marginally reduce the customers' overall maturity benefit, i.e., policy IRR, especially at higher ages but will ensure that life insurance serves the purpose of providing life cover which no other financial instrument offers.

All ULIPs are currently sold mandatorily with a personalised Benefit Illustration. This requirement is now being extended to other product forms. The new guidelines have also provided for setting up a "With Profit Committee" at the board level.

While personalized benefit illustration will provide for greater transparency in the pre-sales discussion, the With Profit Committee is likely to lead to greater governance in the administration of Participating policies. Premium paying term linked distributors' commission will promote the long-term nature of insurance products.

Future looks good

India continues to be a country of savers though we have witnessed a decline in the household savings rate in the past couple of years. In India, the problem lies in household savings lying idle or getting invested in saving instruments that do not help them achieve their life stage goals. There is a worrying trend of larger portion of household savings getting into non-productive physical assets such as real estate and gold.

But even then, the future looks interesting for the life insurance industry with several changes in regulatory framework which will lead to further change in the way the industry conducts its business and engages with its customers. World over it has been observed that the life insurance industry does behave in a counter cyclical manner in many cases, e.g., in a situation where the economic growth is slowing down, due to other factors such as high current account and fiscal deficits, currency depreciation, high interest rates, savings rate will continue to be high, leading to higher demand for life insurance.

Life insurance is a big savings vehicle along with banking in such uncertain economic environment and so we expect the industry to fare reasonably well. Demographic factors such as growing middle class, young insurable population and growing awareness of the need for protection and retirement planning will also support the growth of Indian life insurance.

For life insurance, it is time to re-commit itself to customer-centric behaviour, product solutions based on consumer needs, ethical market conduct, transparency and governance. The growth will be the natural outcome for now and years to come.

Health Insurance TPA of India to begin business only by 2014-end

Health Insurance TPA of India, the common in-house Third Party Administrator (TPA) of the public sector general insurers will be fully operationalised only by November. Hence, the loss ratios in the health portfolio are expected to continue.

The common in-house TPA of public sector general insurers, named Health Insurance TPA of India was incorporated in August 2013 to handle health insurance claims of the state-owned insurers. However, it is yet to get the license from Insurance Regulatory and Development Authority (Irda). These claims are now handled by external TPAs.

This common TPA to process health claims has National Insurance Company, New India Assurance Company, United Insurance Company, Oriental Insurance Company and General Insurance Corporation of India as stakeholders. While the first four have 23.75 per cent stake each, GIC has five per cent.

Health Insurance TPA of India Ltd. was incorporated on August 14, 2013 and its key objective is to enhance customer experience and to bring in greater efficiency in health insurance claims management.

This Health Insurance TPA is headquartered in New Delhi and shall develop its footprints/branches in different cities in due course. Officials said that Health Insurance TPA has already applied to Irda for a TPA license and expects to get the approval in the next few weeks.

“We are in the process of putting all the software and IT systems in place. The TPA would begin doing business with public general insurers in the next six to nine months,” said a senior official from Health Insurance TPA of India.

Subject to regulatory approvals, Health Insurance TPA shall provide end-to-end ‘Health Services’. This would include member enrolment, call centre, customer service and grievance management, pre-authorisation and claims processing. Further, it would also be involved in provider network empanelment, verification and investigation, pre-policy health check-up and facilitate customer awareness and wellness programmes.  Health insurance loss ratios range from 95 to 100 per cent, depending on the size of the company. Loss ratios refer to the ratio between premiums collected and claims paid. However, with stiff competition in group health portfolio with aggressive discounts given to retain customers, the losses have been on the rise.

An external TPA handling claims will add to the costs, hence public general insurers went in for a common TPA. However, till it is operationalised, losses are expected to continue.

The company shall provide services to support all types of health insurance policies sold by insurance companies in India. This includes individual, family floater, group covers, mass schemes, indemnity, fixed benefit among others. The common TPA has been proposed to prohibit large-scale leakages while settling insurance claims in the health segment.

Those in the sector said this common TPA was expected to speed the claim-settlement process, as well as reduce the claims ratio of insurance companies. This move is expected to reduce costs for these insurance companies, which pay a commission of approximately six per cent of premiums to TPAs to settle claims.

P K Bhagat has been appointed the first managing director and chief executive officer of Health Insurance TPA (third-party administrator) of India for a period of two years or till the time he attains superannuation.

When the TPA comes into operation, the claims handling and processing from external agencies will gradually be transferred to the new entity. Health Insurance TPA of India has been formed with an authorised capital of Rs 300 crore and paid-up capital of Rs 10 crore.

LIC has Biggest Tax Demand of Rs 7,000 Crore in the Country

Life Insurance Corporation of India, the largest insurer of the country, has over Rs 7,000 crore in tax demand pending against it, the biggest across various categories.

The list of top ten pending tax demands in each category has been given by the Income Tax department to activist Subhash Agrawal in response to his RTI application seeking the list of top tax defaulters.

The tax demand raised by the department against LIC is of the assessment year 2010 which is pending "as on date", the response furnished on January 27, 2014 said.

In companies category, the top slot is given to LIC which also has biggest pending tax demand in all the other categories, according to the RTI reply.

The tax demand against LIC is Rs 7027 crore which is followed by Rs 2372 crore against Aditya Birla Telecom Limited, Rs 2038 crore against Vodafone Infrastructure Limited, Rs 1517 crore against Idea cellular and Rs 1494 crore against Bharat Petroleum Corporation Limited.

Other companies with pending tax demand in the country include Nerka Chemicals Private Limited with Rs 1354 crore, Tamil Nadu State Marketing Corporation with Rs 1234 crore, Andhra Pradesh Beverages Corporation Limited Rs 1228 crore, HDFC Bank Limited with Rs 1051 crore against and Indian Oil Corporation with Rs 874 crore, according to the reply.

In the individuals category, one Sanjay Singal leads the tally with pending tax demand of Rs 280 crore, followed by Sukesh Gupta with Rs 155 crore and former Jharkhand Chief Minister Madhu Kora with Rs 103 crore.