According to IRDA Chairman Subhash Chandra Khuntia, the underwhelming growth of health insurance in India can be attributed to low-risk awareness, lack of affordability, and poor understanding about insurance products. He noted that this is the main reason why health insurance has not picked up in the country even though the higher income group in the country has witnessed significant growth.
In the last 4 to 5 years, the health insurance industry has witnessed an average growth of 16% per year on a cumulative basis. In general insurance companies, nearly 27% of their total premiums are earned from health insurance policies. However, the total number of people not covered under any health insurance plan is quite staggering in India.
The Economic Survey 2018 released in January noted that the overall insurance penetration in India is only 3.49% during the fiscal year 2016-17. However, this has increased significantly from 2.71% in the year 2001. Despite this increase, India still has a long way to go in terms of realising the full potential of insurance.
In a bid to turn around this situation, the government has proposed the Ayushman Bharat scheme (National Health Protection Mission). This ambitious program aims to provide coverage for over 50 crore individuals belonging to 10 crore families in the country. Each family enrolled in this scheme will get coverage worth Rs.5 lakh. IRDA Chief has asked the insurance firms enrolled under this scheme to provide simple products that are understandable to customers.
According to Indu Bhushan, the Chief Executive Officer of Ayushman Bharat, nearly 28 states have already signed up for the scheme. The remaining 8 states are yet to make a decision regarding the implementation of this scheme.
Bhushan also noted that this scheme will focus on bringing the whole country under one single scheme. However, states are given the flexibility to modify this scheme as per the capabilities and health care scheme behaviours.