Health Insurance in India – The Need for Public Awareness

Since the past few years, India has been witnessing a staggering growth in the health insurance sector. The number of people getting insured every year is rising steadily. However, still, only 15% of the population is protected by medical care insurance coverage. And worse than that, less than 5% of the population buy a plan voluntarily of their own accord. This figure suggests that the Indian insurance industry has still a long way to go to make it to the hearts of masses. The key reasons behind such low acceptability are not the affordability factor, but the lack of awareness and unwillingness on the part of the potential buyers.

Medical insurance is the fastest growing segment in the general insurance sector. With the help of the data derived from IRDA report 2011-12, we tried to delineate where we stand as a country in terms of insurance penetration and insurance density. These are two effective parameters that signify insurance consumption and awareness in a particular geographical area.

1). Insurance Penetration

Put simply, it is the percentage of insurance premium to GDP. Standing at just 0.7%, India is counted among the countries with the lowest insurance penetration. The US and UK boast a 5 times higher penetration at 4.5% and 3.1% respectively. State-wise analysis reveals that insurance penetration is highest in Delhi (1.09%) and West Bengal (1.07%) and lowest in Haryana (0.4%) and Meghalaya (0.36%).

2). Insurance Density

It is defined as the ratio of premium to the population. There's a huge difference in India and countries like the US and UK in terms of insurance density. Switzerland, US and UK boast of the topmost insurance density at $3591, $2130 and $1188 respectively. India, on the other hand, stands merely at $10.0. State wise, insurance density is highest in Chandigarh (Rs 4529.8) closely lead by Goa (Rs 2163.8) and Delhi (Rs 2048.4) and is lowest in Bihar (Rs 214.4) and Meghalaya (Rs 213.6).

A closer look reveals that insurance penetration and density are somewhat proportional to the literacy rate in the concerned area. For instance, India, counted among the countries with the lowest general insurance penetration and density, has a comparatively lower literacy rate (73%) compared to that of US (99.0%) and UK (99.0%). The same thing is noted in state wise analysis. Delhi, boasting of the highest penetration, has one of the highest literacy rates in India (86.34), while Bihar with the lowest insurance density bears the lowest literacy rate in India (63.40).

This signifies that the educated population is well aware of the needs and benefits of healthcare insurance. And that the need for proper education and awareness programmes about medical insurance goes down to the remotest villages and suburban areas. Such programmes should be focused on achieving a two-way objective; to tell people how imperative is it to get health care insurance and to build the trust and credibility of insurers among them. Some of the possible axioms of such awareness programmes can be as follows:

• Getting optimal coverage in a healthcare insurance plan acts as a much needed financial cushion in case of a medical eventuality and thus saves the insured from getting stuck in a financing
• The medical costs will keep on rising and the only way to outrun it is to get covered under a health insurance plan.
• In today's world, our life has become more prone to health risks and thus getting coverage has become imperative.
• Health care insurance is a subject matter of discretion that is not to be taken blindly. Only after asking questions and clarifying your doubts from the insurance agent, you should go ahead and buy a plan.
• Equipping the potential buyers with terminologies and parameters that could help them to distinguish between various players. That would include factors such as claim settlement ratio, solvency ratio and so forth.
• Probing potential buyers to know not just the general inclusions in a plan but also its riders, benefits and exclusions.
• Rooting away the ill habit of people to overlook the fine print, while buying a plan.

A key point to understand here is that health insurance is not just the responsibility of health insurance companies or IRDA. The bodies and authorities revolving around the insurance industry should join hands and make a synchronized effort to initiate the much-needed change. The need of the hour is a 360-degree effort made by a combined effort of health insurance companies, IRDA, TPAs, healthcare providers, insurance aggregators, a network of hospitals, distribution channels, government, health welfare organizations and media.

There's no denying to the fact that the socio-economic development of the country depends largely on the overall health of the community. Considering this, spreading awareness about medical care insurance will eventually lead to the overall betterment of the nation as a whole.