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Given below is the disclaimer to be used in the Issue Documents.
“CRISIL Research, a division of CRISIL Limited (CRISIL) has taken due care and caution in preparing this report
(Report) and Material based on the Information obtained by CRISIL from sources which it considers reliable (Data).
However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report/Material and is
not responsible for any errors or omissions or for the results obtained from the use of Data / Report/Material. This
Report is not a recommendation to invest / disinvest in any entity covered in the Report and no part of this Report
should be construed as an expert advice or investment advice or any form of investment banking within the
meaning of any law or regulation. CRISIL especially states that it has no liability whatsoever to the subscribers /
users / transmitters/ distributors of this Report. Without limiting the generality of the foregoing, nothing in the
Report is to be construed as CRISIL providing or intending to provide any services in jurisdictions where CRISIL does
not have the necessary permission and/or registration to carry out its business activities in this regard. Star Health
and Allied Insurance Company Limited will be responsible for ensuring compliances and consequences of non-
compliances for use of the Report or part thereof outside India. CRISIL Research operates independently of, and
does not have access to information obtained by CRISIL’s Ratings Limited / CRISIL Risk and Infrastructure Solutions
Ltd (CRIS), which may, in their regular operations, obtain information of a confidential nature. The views expressed
in this Report/Material are that of CRISIL Research and not of CRISIL’s Ratings Limited / CRIS. No part of this Report
may be published/reproduced in any form without CRISIL’s prior written approval.”
We also give our consent to include this consent letter and the Report in the section titled “Material Contracts and Documents for Inspection” in the Offer Documents, which will be available to the public for inspection. All information contained in the Material has been obtained by CRISIL from publicly available sources which we consider as reliable and after exercise of reasonable care and diligence by us and we have not used or relied on any data by infringing on contractual or legal rights of any person. We also authorise you to deliver this letter to SEBI, the Stock Exchanges and the RoC pursuant to sections 26 and 32 of the Companies Act, 2013 and the rules thereunder, each as amended, or any other legal, governmental or regulatory authority as may be required in relation to the Offer. This letter may be shared by the Company, with the Book Running Lead Manager(s) and advisers concerned in relation to the Offer and can be relied upon by the Company, the Book Running Lead Managers and their respective legal advisors. We confirm that we are an independent agency and are not in any matter related to the Company, its promoters, directors or key managerial personnel or the Book Running Lead Manager(s) appointed in relation to the Offer. This letter does not impose any obligation on the Company or the Book Running Lead Manager(s) to include in the Offer Documents all or any part of the Material.
3
We agree to keep strictly confidential, the non- public information relating to the Issue until such time that: (A) such
disclosure by us is approved by the Company; or (B) such disclosure is required by law or regulation, in which case
prior intimation shall be given to the Company, if legally permitted; or (C) such information is already in public
domain or comes into public domain through no fault of ours.
For CRISIL Limited
__________________________
Prasad Koparkar
Senior Director – CRISIL Research
5
Analysis of Health Insurance
Industry in India
November 2021
1
Contents
Macroeconomic scenario ........................................................................................................................... 3
Covid-19 pandemic impacts world and Indian economy; bounce back expected in fiscal 2022 ...................................... 3
Contribution of various sectors to GDP .............................................................................................................. 9
Key growth drivers ........................................................................................................................................................................................... 13
Measures to counter the pandemic’s onslaught on growth............................................................................................................ 17
Key structural reforms: Long-term positives for the Indian economy ......................................................................................... 26
Health insurance industry ........................................................................................................................ 38
Global health insurance industry overview ........................................................................................................................................... 38
Impact of covid-19 pandemic on health insurance industry ........................................................................................................... 39
Healthcare spends in India and comparison to other global markets ........................................................................................ 40
Growing health insurance penetration to propel demand ............................................................................................................... 46
Key challenges of healthcare delivery industry .................................................................................... 50
Overview on Indian non-life insurance industry .................................................................................... 52
Indian Health Insurance Industry ............................................................................................................ 55
Evolution of health insurance industry .................................................................................................................................................... 55
Gross direct premium has grown at 19% CAGR in last five years ending FY21 .................................................................. 59
Standalone health insurers’ growth much faster than the overall industry .............................................................................. 62
Top five states contribute more than half of the industry premium ............................................................................................. 63
Impact of covid-19 pandemic on Health Insurance Industry.......................................................................................................... 65
Investment income supporting profitability ............................................................................................................................................ 67
Gross direct premium to be close to Rs 1,150 billion by fiscal 2025.......................................................................................... 69
Key growth drivers .................................................................................................................................... 72
Government policies to improve healthcare coverage ..................................................................................................................... 72
With life expectancy improving and changing demographic profile, healthcare services are a must .......................... 81
Rising income levels to make quality healthcare services more affordable ............................................................................ 82
Increasing hospital network ......................................................................................................................................................................... 84
Advancements in medical diagnosis and treatments ....................................................................................................................... 85
Increasing product portfolio with innovative products ....................................................................................................................... 87
Digitisation to be at the core of industry transformation .................................................................................................................. 89
Key factors shaping customer behaviour and adoption of insurance ........................................................................................ 92
Key trends in health insurance industry in India ................................................................................... 97
Low penetration indicates significant growth potential ..................................................................................................................... 97
Percentage of household covered by a health scheme/health insurance increasing in rural area ............................... 99
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Out-of-pocket expenses trend .................................................................................................................................................................. 100
Player-group wise analysis .................................................................................................................... 102
Health insurance industry classification .............................................................................................. 111
Distribution trends and impact of digital channels ............................................................................. 120
Claims handled and settled by TPAs v/s Insurers ............................................................................... 128
Retail health insurance business segment .......................................................................................... 132
Personal accident insurance and Travel insurance ............................................................................ 138
Reserving in health insurance business .............................................................................................. 140
Corporate Governance Guidelines for Insurance Companies ........................................................... 143
Industry regulations ................................................................................................................................ 145
IRDAI is statutory regulator for health insurance industry in India ............................................................. 146
Health insurance industry went through plethora of developments in 2020 ............................................. 147
Key regulation in insurance industry ............................................................................................................... 153
Key regulations pertaining to customers ........................................................................................................ 157
Peer Benchmarking ................................................................................................................................. 160
3
Macroeconomic scenario
Covid-19 pandemic impacts world and Indian economy; bounce back
expected in fiscal 2022
According to the provisional estimates released by the NSO, India’s real GDP growth in fiscal 2021 stood at -7.3%
versus the earlier estimate of -8.0%. After sluggish growth in first half of the fiscal owing to rising Covid-19 cases,
gross domestic product (GDP) growth has moved into positive territory in the second half of the year reflecting a
pickup in economic activity.
Fiscal 2020 was volatile for the global economy. The first three quarters were ensnared in trade protectionist policies
and disputes among major trading partners, volatile commodity and energy prices, and economic uncertainties
arising from Brexit. Hopes of broad-based recovery in the fourth quarter were dashed by the COVID-19 pandemic,
which has infected more than 245 million people in 224 countries as of October 28, 2021 (Source: WHO Covid-19
Dashboard), leading to considerable human suffering and economic disruption.
The Covid-19 pandemic sharply slowed the Indian economy in Q1 of fiscal 2021, but the huge economic costs that
it extracted, forced the economy to open up and get back on its feet in Q2. What also helped was a sharp cutback in
operating costs for corporates due to job and salary cuts, employees exercising work from home options, low input
costs due to benign interest rates, crude and commodity prices.
The fierce second wave of Covid-19 pandemic took the healthcare ecosystem to the brink and beyond in Q1 of fiscal
2022, but it did not hit economic activity as hard as the first wave did. The main reason for this would be decentralised
and less-stringent lockdowns, which reflect the ‘learning to live with the virus attitude’ that authorities adopted. Many
states also permitted construction and manufacturing activities to continue during the lockdown.
The pandemic came at the most inopportune time since India was showing signs of recovery following a slew of
fiscal/monetary measures as nominal GDP grew by 8.8% on year in Q4 of fiscal 2021 as compared to 4.7% in Q4 of
fiscal 2020. Having said that, we foresee growth rebounding in fiscal 2022, on the back of a very weak base, a
counter-cyclical Union Budget for fiscal 2022 pushing investments and some benefit from a rising-global-tide-lifting-
all-boats effect. The gradual increase in vaccinations against Covid-19 is also expected to boost confidence and
support stronger recovery. Even after the strong rebound, fiscal 2022 real GDP is expected to be only slightly higher
than that in fiscal 2020.
The budget’s focus on pushing capital expenditure (capex) despite walking a fiscal tightrope provides optimism and
creates a platform for higher growth. Given that the focus of the budget was on investment rather than consumption
push, the full impact of these spends will be seen in the near term via multiplier effects, and over time, through
enhancement of productive capacity. To that extent, the budgetary provisions help raise the medium-term prospects
for the economy. This budget not only focussed on pushing central capex but also attempted to nudge state
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government capex. A Reserve Bank of India (RBI) study points that an increase in capex by the central and state
governments by one rupee each induces an increase in output by Rupees 3.25 and Rupees 2.0, respectively (Source:
RBI Bulletin – April 2019).
Budgetary support and vaccines expected to boost economic growth
Note: P - Projected
Source: National Statistics Office (NSO), CRISIL Research estimates
Trend in Nominal GDP
Note: P - Projected
Source: National Statistics Office (NSO), CRISIL Research
The possibility of a third Covid wave post the festive season does pose a downside risk to economic growth in fiscal
2022. In the aftermath of the second wave witnessed in the first quarter of the fiscal, many states had implemented
localised restrictions in the form of weekend lockdowns, restricting non-essential businesses from operating and/or
114 123 132 140 146 135 148 159 169 179
8.0% 8.3%7.0% 6.3% 4.0%
-7.3%
9.5% 7.8%5.7%
6.5%
-10%
-5%
0%
5%
10%
15%
0
50
100
150
200
FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 P FY 23 P FY 24 P FY 25 P
Real GDP Growth (Y-o-Y)
(Rs trillion)
138 154 171 189 204 197 225 247 272 299
10%12% 11% 11%
8%
-3%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
0
50
100
150
200
250
300
350
FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22P FY 23P FY 24P FY 25P
Nominal GDP (Rs trillion) Growth (Y-o-Y)
FY16 to FY 20 CAGR: 10.3%
Rs Tr.
5
night curfews to prevent the spread of the infection. Although the Covid cases during 2nd wave have declined to below
25,000 since October 2021 from over 4 lakh cases in 5th May 2021, there is still the looming fear of a third wave.
CRISIL Research forecasts India’s GDP for fiscal 2022 to grow by around 9.5%, assuming that 70% of the adult
population will be vaccinated by December 2021 and a third Covid wave does not impact materially as Covid-19
vaccinations have also started gaining pace in India. While close to 76% of India’s adult population (723 million
people) has received the first dose of the Covid-19 vaccine (as of October 27, 2021), 33% of India’s adult population
(317 million people) has also taken the second dose and are fully vaccinated.
In fiscal 2023, CRISIL Research expects growth to remain strong at 7.8% and become more broad-based, as a
sufficient proportion of population gets vaccinated by then. This will particularly strengthen growth for contact-based
services, which have been most badly hurt by the pandemic. Beyond that, growth is expected to moderate.
Prior to the onset of the pandemic, India’s GDP growth slowed on account of existing vulnerabilities such as a weak
financial sector and subdued private investment. However, in light of production-linked incentive (PLI) scheme,
reduction in corporate tax rate, labour law reforms together with healthy demographics and a more favourable
corporate tax regime, India is expected to witness strong GDP growth when the global economy eventually recovers,
supported by prudent fiscal and monetary policy.
Due to higher liquidity push, inflation moved out of target band; expected to decline in fiscal 2022
Note: P - Projected
Source: National Statistics Office (NSO) and CRISIL Research
CPI Inflation was out of RBI’s target band of 2-6% from April 2020 to November 2020; however, it remained within
RBI’s target band from December 2020 to April 2021. In May 2021 and June 2021, the inflation levels observed slight
elevation and were out of RBIs target band; however, in July 2021, August 2021 and September 2021, CPI inflation
declined to 5.6%, 5.3% and 4.3%, respectively.
Inflation continues to face pressure from high international commodity prices, including edible oils and metals, which
are at decadal highs and crude oil prices which remain beyond the comfort zone at over ~$70 per barrel. Recent data
4.9%4.5%
3.6%3.4%
4.8%
6.2%
5.3%
2%
3%
3%
4%
4%
5%
5%
6%
6%
7%
FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 PCPI (Inflation)
6
has indicated firms passing on rising input costs to consumers despite weak demand conditions. We expect the pass-
through to gain more steam as domestic demand strengthens in the second half of this fiscal.
The lid on overall inflation will be kept by food, as it benefits from the high base of last year. However, the progress
of monsoon and impact of rising global food prices will remain a key monitorable. CRISIL pegs fiscal 2022 average
CPI inflation at 5.3% for fiscal 2022.
Macroeconomic outlook for fiscal 2022
Macro
variables FY20 FY21 FY22P Rationale for outlook
GDP (y-o-y) 4.2% -7.3% 9.5%*
The second wave and the resultant localised lockdowns has impeded
the path to economic recovery, leading us to revise down our growth
forecast for this fiscal to 9.5%, from 11.0% earlier. That said, expected
pick-up in economic activity post-vaccination and support from global
growth would act as positive
Consumer price
index (CPI)
inflation ( y-o-y)
4.8% 6.2% 5.3%
Upside risks on inflation are growing from surging international
commodity prices. While producers are bearing a greater burden of
rising input costs for now, these could get passed to retail prices once
demand recovers. Food inflation could also face pressure from
disruptions to rural economy due to the pandemic’s spread, and rising
global prices
10-year
government
security yield
(March-end)
6.2% 6.2% 6.5%
The RBI’s unconventional policy measures have been instrumental in
keeping G-sec yields at decadal lows, at a time when the bond market
is facing an unprecedented rise in government borrowing. Supply
pressures could have a bearing on yields once the RBI starts
normalising liquidity. Adverse global developments such as premature
withdrawal of monetary easing by US Federal Reserve could further
add pressure
CAD (Current
account
deficit)/GDP
(%)
-0.9% 0.9% -1.2%
The trajectory of Covid-19 infections, pace of the vaccination drive, and
duration of state lockdowns will have an important bearing on domestic
demand and, consequently, import growth. Increased prices of
commodities, especially crude oil – India’s largest import item – will
drive imports. External demand will support exports, backed by strong
economic recovery among India’s major trading partners in the US,
Europe, and Asia
Rs/$ (March
average) 74.4 72.8 75.0
With the second wave adversely impacting India’s economic recovery,
and amid inflationary pressures, the rupee may weaken against the
dollar. The current account balance turning into deficit (from a surplus
last fiscal), will exert further downside pressure on the rupee. Some
support may be seen due to the RBI’s interventions to mitigate volatility.
Record high forex reserves, and foreign investor inflows owing to
interest rate differential between India and global economies, will also
prop up the rupee
*Downward bias
Note: P – Projected
Source: Reserve Bank of India (RBI), National Statistics Office (NSO), CRISIL Research
7
GDP to bounce back over the medium term
After clawing back in fiscal 2022, CRISIL Research forecasts India’s GDP to grow at 6.0-7.0% per annum between
fiscals 2023 and 2025. This growth will be supported by the following factors:
Focus on investments and consumption push enhancing the productive capacity of the economy.
The production linked incentive (PLI) scheme which aims to incentivise local manufacturing by giving volume-
linked incentives to manufacturers in specified sectors
Raft of reform measures by the government along with a more expansionary stance of monetary policy leading
to a steady pick-up in consumption demand
Policies aimed towards greater formalisation of the economy are bound to lead to an acceleration in per capita
income growth
Risks to growth
Below par monsoons: Domestically, one major risk could be sub-normal monsoon this calendar year. The past
two years have seen good rains and chances that they are normal this year too are uncertain because only once
in the past 20 years has India seen more than two consecutive normal monsoon years. The trend in monsoons
also indicate that the rains have been around 10% lower than the long-period average as on end-August 2021.
Lower than normal monsoon can directly shave up to ~50 basis points (bps) off from the fiscal 2022 GDP growth
forecast.
Covid-19 cases increasing, a third wave this fiscal: The second Covid-19 wave has thrown cold water over
the Indian economy that was beginning to warm up after the most severe contraction since Independence. The
rash of afflictions that followed forced states to lock down, hurting consumer and business confidence yet again.
If there is a third Covid wave, it can have a debilitating impact on economic activity and thereby growth.
Elevated inflation: Significant cost-push pressures on account of surging international commodity prices and
supply disruptions has raised cost of production for manufacturing firms. Pass-through to consumer prices could
further pose as a headwind to recovery in demand.
Premature tightening of global monetary policies: Resurgence of inflation globally could lead major central
banks to unwind their extraordinary easy monetary policies sooner than expected. This could hit sentiment,
possibly leading to capital outflows from the Indian economy and some tightening in domestic financial conditions.
Geopolitical developments: External developments, most importantly the US-China trade war, have proved to
significantly impact global GDP growth as well as export earnings and capital flows to emerging markets such as
India. While there is some respite with the signing of Phase 1 of the US-China trade deal, several issues remain
unresolved. Any re-escalation of tensions could again work adversely. Geopolitical developments in the Middle
East could also disrupt crude oil supply and prices, likely hurting a wide range of domestic macroeconomic
parameters, including current account deficit, inflation and GDP growth.
Persistent stress in financial sector: This has been one of the major drags on GDP growth. Liquidity issues
faced by NBFCs and risk aversion hampered credit growth as well as transmission of monetary policy easing.
Easing of constraints in the financial system – a key monitorable – is critical for pick-up in growth.
8
India’s GDP to recover sharply
India was one of the fastest growing economies in the world pre-Covid, with annual growth of around 6.7% over 2014
to 2019. Over the past few years prior to the onset of the pandemic, India’s macroeconomic situation had gradually
improved with the twin deficits (current account and fiscal) narrowing and the growth-inflation mix improving and
durably so. The government adopted an inflation-targeting framework that provides an institutional mechanism for
inflation control, while modernising central banking.
While economic growth in 2020 has been dented due to Covid-19, we expect the economy to rebound and India to
regain its tag of one of the fastest growing economies globally in the medium-term.
Going forward, rapid urbanisation, rising consumer aspiration and increasing digitisation coupled with government
support in the form of reforms and policies is expected to support growth. For example, the government has recently
announced production-linked incentives across identified sectors with an aim to propel the growth of India as a
manufacturing destination. At a macro level, digitalization has led to various benefits like linkage to Aadhaar identity
cards, direct benefit transfer and various other government benefits.
The IMF forecasts India’s GDP to grow by 9.5% in calendar year 2021 due to the lower base of calendar year 2020
and approved vaccines and policy measures. At this pace of growth, India is forecasted to be the fastest growing
economy in the world in 2021. Going forward as well, IMF forecasts India’s GDP to grow at a faster pace than other
economies.
India is one of the fastest-growing major economy (GDP growth, % year-on-year)
2014 2015 2016 2017 2018 2019 2020 2021 2022 P 2023 P 2024 P 2025 P
India 7.4 8.0 8.3 7.0 6.1 4.2 -8.0 9.5 8.5 6.6 6.3 6.2
China 7.3 6.9 6.8 6.9 6.7 6.0 2.3 8.0 5.6 5.3 5.2 5.1
Japan 0.4 1.2 0.5 2.2 0.3 0.3 -4.8 2.4 3.2 1.4 0.8 0.6
United states 2.5 3.1 1.7 2.3 3.0 2.2 -3.5 6.0 5.2 2.2 1.7 1.7
United kingdom 2.6 2.4 1.9 1.9 1.3 1.5 -9.9 6.8 5.0 1.9 1.6 1.5
Brazil 0.5 -3.5 -3.3 1.3 1.3 1.4 -4.1 5.2 1.5 2.0 2.1 2.1
Russia 0.7 -2.0 0.5 1.8 2.8 2.0 -3.1 4.7 2.9 2.0 1.8 1.7
South Africa 1.8 1.2 0.4 1.4 0.8 0.2 -7.0 5.0 2.2 1.4 1.3 1.3
Malaysia 6.0 5.0 4.5 5.8 4.8 4.4 -5.6 3.5 6.0 5.7 5.3 5.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
9
Note: GDP growth is based on constant prices, Data represented is for calendar years, P: Projected
Source: IMF (World Economic Outlook – October 2021 update)
Along with being one of the fastest growing economy in the world, India ranks fifth in the world in terms of nominal
GDP in 2020. In terms of purchasing power parity, India is the third largest economy in the world, next only to China
and the United States.
GDP Ranking of key economies across the world (2020)
Country GDP Rank % share (World GDP) PPP Rank % share (World GDP,PPP)
United States 1 24.7% 2 15.8%
China 2 17.4% 1 18.3%
Germany 3 4.5% 4 3.4%
United Kingdom 4 3.2% 9 2.3%
India 5 3.1% 3 6.7%
France 6 3.1% 8 2.3%
Italy 7 2.2% 10 1.9%
Canada 8 1.9% 14 1.4%
Korea 9 1.9% 13 1.7%
Russia 10 1.8% 5 3.1%
Note: Japan is not considered in the key economies as data for 2020 is not available
Source: World Bank, CRISIL Research
Contribution of various sectors to GDP
As compared to various developed economies, which witnessed a good contribution from manufacturing and industry
first and subsequently in services, the Indian transformation story has been different. A notable feature of Indian
economy has been the services sector’s rising contribution to the overall output of the economy. Over the last three
fiscal years ending fiscal 2020, the service sector has grown at a rate of ~7%, thereby taking the contribution of
services sector to 62.9% in terms of Gross Value Added (GVA) at constant prices. In fiscal 2021, overall GVA
contracted by ~6.5% with industry and services sector contracting by ~7.4% and ~8.4% respectively.
Share of sector in GVA at constant prices
10
Note: E – Estimated, P – Projected
Source: RBI; CRISIL Research
Industry and services sector can be further classified into sub-sectors. In industry, majority of the contribution comes
from manufacturing sector which contracted by ~5% and in the services sectors, highest contribution comes from
financial, real estate and professional services segment which witnessed a muted growth of ~1%. Within services
sector - Trade, Hotels, Transport, Communication and Services related to broadcasting were severely hit as they
witnessed a contraction of ~15% followed by construction which contracted by ~6% in fiscal 2021.
Share of sub-sectors in GVA by Industry (FY21) Share of sub-sectors in GVA by Services (FY21)
Source: RBI, CRISIL Research
16.5% 15.4% 15.2% 15.3% 14.8% 14.8% 16.4% 15.5%
22.5% 23.3% 23.4% 21.1% 20.8% 19.5% 19.3% 19.7%
61.0% 61.3% 61.4% 63.6% 64.3% 65.6% 64.3% 64.7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 P
(%)
Agriculture Industry Services
Manufacturing, 77%
Mining and Quarrying, 9%
Electricity, Gas, Water Supply & Other Utility
Services, 14%Financial, Real
Estate & Professional
Services, 36%
Trade, Hotels, Transport,
Communication & Broadcasting related
services, 27%
Public Administration, Defence and
Other Services, 25%
Construction, 12%
11
Budget turns expansionary with an eye on medium term
India’s first union budget after a once-in-a-century global pandemic -- and only the fourth to follow a contraction in its
independent history – voted for an infrastructure-led, counter-cyclical fiscal stimulus to mend the broken economy.
The idea clearly, was to push the growth multiplier rather than stoke consumption through steroids, even if that meant
stretching the glide path of fiscal deficit. If there is an overarching picture, it is that this budget sets the tone for much-
needed infrastructure growth for the next 3-4 years. That will help both, sustain development and create jobs. But
implementation, which is all-crucial, remains the elephant in the room.
Broadly, the budget had five key highlights:
Growth-focused, expansionary
Significantly, it chose to push the pedal on investment at this juncture. Studies highlight how the positive spillover
effects of public investment only amplify during periods of uncertainty. For the Indian economy specifically, capital
expenditure (capex) typically has higher multiplier effect than revenue spending, by crowding in private investment.
This budget not only focused on pushing central capex but also attempted to nudge state government capex. A
Reserve Bank of India (RBI) study points that an increase in capex by the central and state governments by one
rupee each induces an increase in output by Rs 3.25 and Rs 2.0, respectively.
Improved spending quality
While maintaining focus on capex, the budget also allowed for some normalisation of extraordinary spending that
took place in response to the pandemic. That said, it also attempts to improve quality of spends (compared with the
pre-pandemic trend). Thus, government has not only chosen to re-orient expenditure but also has tried to improve
the expenditure mix to make way for more capex.
Enhanced transparency
Deficit numbers have shot up. But one reason for this is enhanced transparency in the budget, which lends to their
credibility. The budget relies less on off-budget items for funding investments and more on capex allocations. It also
puts an end to the practice of funding Food Corporation of India’s shortfall through borrowings from National Small
Savings Fund (NSSF) and replaces it with budgetary allocation. As per CRISIL estimates, excluding the impact of
inclusion of NSSF funds for FCI and government fully serviced bonds, fiscal deficit would have been lower about 0.5-
1% of gross domestic product (GDP) in fiscal 2021 and about 0.6% lower in fiscal 2022
An eye on medium term
It tries to lift the medium-term growth potential through a capex push and sharper focus on financial sector reforms
such as:
12
o Recapitalising public sector banks (PSBs) so they can support economic recovery: The pandemic
landed a double whammy on a financial sector that was already weighed down by non-performing assets
(NPAs) and slack credit demand. Frontloading of capital infusion for banks (Rs. 200 billion has been
provided for fiscal 2022) to withstand possible asset quality deterioration was an imperative.
o Cleaning up bank books: By creating asset management and reconstruction companies, the intention
is to consolidate, manage and dispose of stressed assets of PSBs.
o Disinvestment: In another progressive step for the financial sector, the government, in the budget, also
announced its intention to privatise two public sector banks (PSBs) and one general insurance company.
The disinvestment process of Air India, BPCL, and Life Insurance Corporation of India (LIC) have been
moved to fiscal 2022.
o Reforming the beleaguered manufacturing sector: Manufacturing was in doldrums even before the
pandemic struck, and was worst-affected in fiscal 2021 after services. The budget announced more
measures to address that in continuation with the Atmanirbhar Bharat package and production-linked
incentive scheme, such as customs duty rationalisation, with particular focus on micro, small and medium
enterprises (MSMEs).
o Roadmap for public sector investment: The budget bats for a massive push to infrastructure creation;
it intends to augment funds for the flagship National Infrastructure Pipeline and lays down a roadmap to
do so by increasing capex, monetising assets and developing instruments for infrastructure financing.
That should, as earlier mentioned, have a high multiplier effect on growth and employment.
o Asset monetisation: The budget also announced the launch of the National Monetisation Pipeline to
leverage operating public infrastructure, the first of its kind in India. The government envisages
monetization of roads, railways, airports, and oil and gas pipelines under this initiative. The funding of
the National Infrastructure Pipeline will critically hinge on the success of these efforts to monetise existing
assets.
Growth-led approach to heal pandemic-induced scars: Post-pandemic recovery has been sharply uneven.
Manufacturing is recovering faster led by policy support, pent up demand and some shift away from services.
Services (especially contact-based ones like trade, hotels, transport and communication) continue to bear the
brunt. Smaller firms and micro enterprises have been more severely hit than larger ones. And the rural poor
received more support to incomes and jobs than the urban, which were also significantly affected. The budget
attempts to correct some of these anomalies. It premises that infrastructure spending would create jobs for the
unskilled and semi-skilled workforce.
All in all, the economy is recovering faster than expected. Consistently good agriculture performance, successful
flattening of the Covid-19 curve and a pick-up in government spending in recent months has reduced the downside
to the current fiscal’s de-growth and led to upward revision in next fiscal’s growth prospects.
13
Key growth drivers
India has world’s second largest population
As per Census 2011, India’s population was ~1.2 billion, and comprised nearly 246 million households. The
population, which grew nearly 1.8% CAGR between 2001 and 2011, is expected to have increased at 1.5% CAGR
between 2011 and 2021, thereby touching 1.4 billion by 2021. The population is expected to reach 1.5 billion by
2031. With its size, India provides an enormous business potential as consumption has been the driving force of
India’s growth.
India’s population growth trajectory
Note: P: Projected
Source: United Nations Department of Economic and Social affairs, CRISIL Research
Number of households in India
Note: P: Projected
Source: Census India, CRISIL Research
0.360.44
0.550.68
0.85
1.03
1.21
1.401.54
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
1951 1961 1971 1981 1991 2001 2011 2021P 2031P
(In bn)
100119
148
187
245
319
376
0
50
100
150
200
250
300
350
400
1971 1981 1991 2001 2011 2021P 2031P
(In mn)
14
Favorable demographics
As of 2020, India has one of the largest young populations in the world, with a median age of 28 years. About 90%
of Indians will still be below the age of 60 by calendar year 2021. CRISIL Research estimates that 63% of them will
be between 15 and 59 years. In comparison, in 2020, the United States (US), China and Brazil had 74%, 62% and
78%, respectively, of their population below the age of 60.
India’s demographic dividend
Note: P: Projected
Source: United Nations Department of Economic and Social affairs, CRISIL Research
Urbanisation
Urbanisation is one of India’s most important economic growth drivers as it will drive substantial investments in
infrastructure development, which, in turn, is expected to lead to job creation, development of modern consumer
services and increased ability to mobilise savings. The country’s urban population has been rising consistently over
the decades. In 1950, it was 17% of total population. As per the 2018 revision of World Urbanization prospects, it
was estimated at 34% for India. This is expected to reach 37% by 2025.
35% 31% 27% 24%
27%28%
26%24%
30% 33%37%
40%
7% 9% 10% 13%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2001 2011 2021 P 2031 P
0-14 15-29 30-59 60+
15
Urban population as a percentage of total population (%)
Note: P – projected E - Estimated
Source: Census 2011, World Urbanization Prospects: The 2018 Revision (UN)
Increasing per capita GDP
Per capita income is estimated to have contracted by 8% in fiscal 2021 compared with a growth of ~2.9% in the
preceding fiscal. CRISIL forecasts that the per capita income will gradually improve with a pick-up in GDP growth
and sustained low inflation. This will be an enabler for domestic consumption. As per IMF estimates, India’s per
capita income (at constant prices) is expected to grow at 6.2% compound annual growth rate (CAGR) from Fiscals
2021-25.
Per capita income
Per
capita
income
Level in FY21 (INR
thousands)
Growth at constant prices (%)
Current
prices
Constant
prices
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 E FY25P
146 100 3.3 4.6 6.2 6.7 6.8 5.7 5.8 2.9 -8.0 6.2*
Note – E: Estimated, (*) - 4-year CAGR growth (FY21-FY25), As per IMF estimates of April 2021
Source – Ministry of Statistics and Program Implementation (MOSPI), International Monetary Fund (IMF), CRISIL
ResearchTrend in Nominal GDP per capita
17.0 17.919.8
23.125.5
27.7
30.9
34.937.4
0
5
10
15
20
25
30
35
40
1950 1960 1970 1980 1990 2000 2010 2020E 2025P
16
Note: P: Projected
Source: MOSPI, World Bank, CRISIL Research
Financial penetration to rise with increase in awareness of financial products
With increasing financial literacy, mobile penetration, awareness and the Prime Minister’s Jan Dhan Yojana bank
accounts (scheme aimed at bringing the unbanked under the formal banking system), there has been a rise in the
participation of individuals from non-metro cities in banking. With more people attached to formal banking sector, the
demand for financial products in smaller cities has seen a major uptick in recent years. Going forward, CRISIL
Research expects financial penetration to increase on account of increasing financial literacy.
Digitisation aided by technology to play pivotal role in growth of economy
Technology is expected to play an important role by progressively reducing the cost of reaching out to smaller
markets. India has seen a tremendous rise in fintech adoption in the past few years and has the highest fintech
adoption rate globally of 87% which is significantly higher than the global average rate of 64% (Source: InvestIndia).
Among many initiatives by the government, the Unified Payments Interface (UPI) is playing a pivotal role towards
financial inclusion. It provides a single-click digital interface across all system for smartphones linked to bank
accounts and facilitates easy transactions using a simple authentication method. The volume of digital transactions
has also seen a surge in the past few years, driven by increased adoption of UPI. Apart from financial services
industry, digitisation in other industries like retail will also play an important role in growth of economy.
UPI usage data statistics
As of No of banks
live on UPI Volume of transactions (million) Amount of transactions (Rs billion)
YoY growth in
transactions (%)
March 2017 49 9 28 NA
March 2018 91 178 242 764%
March 2019 142 800 1335 452%
March 2020 148 1247 2065 55%
72 81 90 98 107 118130
143 152 146165
180196
213
0
50
100
150
200
250
FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22P FY 23P FY 24P FY 25P
(In Rs thousands)
Nominal GDP per capita
17
March 2021 216 2732 5049 145%
Source: National Payments Corporation of India (NPCI)
Rural economy is becoming structurally far more resilient
At a time when the Indian economy has been severely impacted by the COVID-19 pandemic, the rural economy,
which accounts for almost half of India’s GDP, has been a harbinger of hope. Rural India emerged relatively
unscathed from the first Covid-19 wave due to lower spread of the pandemic in these areas, agricultural activity
continuing unhindered, additional support offered by the government by increasing allocation under the Mahatma
Gandhi National Rural Employment Guarantee Act (MNREGA) and disbursing funds under the PM-Kisan scheme,
and the relatively lower contribution of services, most badly hurt due to the pandemic, in the rural GDP. Further,
higher Government procurement of food grains to support the Pradhan Mantri Garib Kalyan Anna Yojana, also
spurred higher production.
The second wave of Covid-19 has had some impact in rural India, thereby hurting household balance sheets. This,
along with the progress of the monsoons and sowing activity in respect of kharif crops, would influence rural incomes
in the near-term.
Nevertheless, CRISIL Research believes that the rural economy is far more resilient today due to two consecutive
years of good monsoon, increased spends under MNREGA and irrigation programmes, direct benefit transfer (DBT),
the PM-Kisan scheme, PM Ujwala Yojana for cooking gas, PM Awas Yojana for housing, and Ayushman Bharat
scheme for healthcare. To supplement this, there has been a continuous improvement in rural infrastructure such as
electricity and roads. These Government initiatives have led to lesser leakages and higher incomes in the hands of
the rural populace, thereby enhancing their ability and willingness to spend on discretionary products and services.
Through Direct Benefit Transfer, the government has transferred more than Rs 5.5 trillion in fiscal 2021 under 318
schemes. In the coming years as well, CRISIL Research expects DBT transfers to continue to increase at a healthy
pace, as the government tightens focus on making subsidies available directly in the account of the intended
beneficiaries.
The structural changes, combined with a positive macro environment, will improve rural business prospects, provide
business opportunities for the banking and financial services sector and drive the long-term growth of the economy.
Measures to counter the pandemic’s onslaught on growth
Reserve Bank of India goes all out to combat the crisis
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) slashed the repo rate by 115 basis points
(bps) since March 2020 to address financial market stress in the wake of the pandemic and the subsequent lockdown.
In an unusual move, the MPC also asymmetrically slashed the reverse repo initially by 90 bps in March 2020 and by
another 25 bps and 40 bps in subsequent months. The repo and reverse repo rates now stand at 4.00% and 3.35%,
respectively. To tide over any unwarranted volatility, the MPC also increased borrowing limits under the marginal
standing facility (MSF) of the liquidity adjustment facility window from 2% to 3%. The MSF rate now stands at 4.25%
(down from 5.40% as of March 2020).
The RBI also announced a host of other measures to address financial market stress due to the pandemic / lockdown:
18
In June 2021 review meeting, the Reserve Bank of India (RBI) has maintained an easy monetary policy and
conducive financial conditions during the second wave to provide supportive therapy to a convalescent
economy. The focus was on using an expanded set of tools to support financial conditions, including
interventions in bond and foreign exchange markets. The RBI further introduced targeted liquidity support for
contact-intensive sectors, which have been affected the most by the pandemic.
Reducing debt servicing burden through moratorium period: The RBI initially permitted lending
institutions to allow a moratorium of three months on repayment of instalments outstanding as on March 1,
2020 and defer interest payments due on working capital facilities outstanding. The moratorium was further
extended by another three months till August 31, 2020. However, the banks were instructed to provide 10%
additional provisioning for availing this benefit, which could be later adjusted against the provisioning
requirements for actual slippages. These measures were intended to boost confidence in the economy and
provide relief to the borrowers
Loan restructuring: The central bank constituted a committee which identified 26 sectors for restructuring
which included aspects related to leverage, liquidity and debt serviceability to be factored by the lending
institutions while finalising resolution plans for borrowers. However, only those borrower accounts were
eligible for resolution which were classified as standard, but not in default for more than 30 days with any
lending institution as on March 1, 2020. In May 2021, RBI has announced second loan restructuring program
for individual and small businesses for a loan amount up to Rs 25 crore to contain the second wave of COVID-
19. The restructuring 2.0 is applicable to both who had opted for a restructuring earlier and who had not
availed restructuring earlier but the account should be standard as of 31st March 2021.
Enhancing liquidity: Apart from reducing repo and reverse repo rate, the RBI reduced the cash reserve ratio
(CRR) requirements of all banks by 100 bps to 3% of net demand and time liabilities (NDTL). However, it has
been restored to 4% effective from May 27 2021. Further, the minimum daily CRR balance maintenance was
reduced to 80% from 90% till June 26, 2020 which was extended till September 25 2020. In view of the
exceptionally high volatility in domestic financial markets, the RBI also increased MSF borrowing limit from
2% to 3% of bank’s NDTL up to June 30, 2020 which was extended till September 30 2021.
Supporting financial market liquidity: The RBI initially announced targeted long-term repo operations
(TLTROs) of up to three years’ tenure for a total of up to Rupees 1 trillion. Liquidity availed under the scheme
by banks had to be deployed in investment grade corporate bonds, commercial paper, and non-convertible
debentures.
Pushing credit growth: The RBI decided to postpone the implementation of net stable funding ratio to
October 1, 2021 to encourage banks to lend in these challenging times. Deferring the last tranche of capital
conservation buffer to October 1, 2021 was also a step in the same direction. In April 2021, the central bank
announced Rupees 500 billion refinancing facility for NABARD (Rupees 250 billion), SIDBI (Rupees 150
19
billion) and NHB (Rs100 billion) to increase credit availability to microfinance, micro, small and medium
enterprises (MSMEs) and the housing sector
Addressing rupee volatility: Banks in India which operate International Financial Services Centre banking
units have been allowed to participate in the Non-deliverable Forward (NDF) market with effect from June 1,
2020
Regulatory changes: With regards to the moratorium provided on loans, the RBI clarified these measures
would not result in asset quality downgrade, nor would it affect the credit history of borrower
Measures during second wave of Covid-19: On May 5, 2021, RBI announced several measures to protect
small and medium businesses, individual borrowers from the adverse impact of the intense second wave of
Covid-19 across the country. RBI also made provisions for banks to advance loans to businesses and
restructure loans for enhancing liquidity in the system to help mitigate the crisis. Restructuring framework 2.0
was announced wherein individuals, small businesses and MSMEs having aggregate exposure of up to Rs
250 million, who have not availed restructuring under any of the earlier restructuring frameworks (including
under the Resolution Framework 1.0 dated August 6, 2020), and who were classified as ‘Standard’ as on
March 31, 2021 are eligible to be considered. Restructuring under the proposed framework may be invoked
up to September 30, 2021 and shall have to be implemented within 90 days after invocation. Further, for small
businesses and MSMEs restructured earlier, banks and NBFCs have also been permitted, as a one-time
measure, to review the working capital sanctioned limits, based on a reassessment of the working capital
cycle, margins, etc. The RBI also permitted modification of plans under Restructuring framework 1.0 by
increasing the period of moratorium and/or extending the residual tenor up to a total of 2 years
20
‘Aatmanirbhar’ package is a timely relief amid the pandemic
Liquidity boost for NBFCs
The government announced a Rupees 450 billion partial guarantee scheme (for NBFCs) and Rupees 300 billion
special liquidity scheme for NBFCs, housing finance companies (HFCs) and MFIs, aimed at covering the concern of
credit risk perception on mid and small size non-banks.
Collateral-free loans to MSMEs (Rupees 3 trillion)
Banks and NBFCs are directed to offer up to 20% of entire outstanding credit to MSMEs. MSMEs with up to Rupees
250 million outstanding credits and Rupees 1 billion turnover are eligible for these loans. It will have four-year tenure
with a moratorium of 12 months on principal payment and can be availed till October 31, 2020. The government will
provide complete credit guarantee cover to lenders on principal and interest amount.
Subordinate debt to MSMEs (Rupees 200 billion)
The government is also facilitating the provision of Rupees 200 billion as subordinate debt for stressed assets of
MSMEs. It will also provide Rupees 40 billion as partial credit guarantee support to banks for lending to MSMEs.
Equity infusion in MSMEs (Rupees 500 billion)
The government has committed to infuse Rupees 500 billion in equity of MSMEs having growth potential and viability.
It will also encourage MSMEs to list on stock exchanges.
Clearing MSME dues; guarantee scheme
The government has requested central public sector enterprises to release all pending MSME payments within 45
days. It will boost transaction-based lending by fintech enterprises. Under the Emergency Credit Line Guarantee
Scheme (ECLGS), banks will offer Rupees 3 trillion government guaranteed loans to MSME borrowers that are not
non-performing assets (NPAs) to address short-term liquidity concerns and boost the MSME sector.
Global tenders disallowed up to Rupees 2 billion
The government will not allow foreign companies in government procurement tenders of value up to Rupees 2 billion.
This is likely to ease the competition faced by the MSMEs against foreign companies.
Loan interest subvention scheme (Rupees 15 billon)
21
Under this scheme, the government has provided 2% interest subvention for loans given under Mudra-Shishu
scheme. These loans are up to the ticket size of Rupees 50,000 and are mostly given by NBFC-MFIs benefiting low
income groups customers.
Special credit facility for street vendors (Rupees 50 billon)
The government announced this scheme to facilitate easy access of credit to street vendors to offset the adverse
effect of pandemic on their livelihoods.
‘Aatmanirbhar 3.0’ stimulus package rolled out to boost economy in November 2020
The finance minister, on November 12, 2020, announced a stimulus package. Under the package, 12 stimulus
measures were rolled out to boost employment in the formal and informal economy, help housing infrastructure,
enhancing ease of doing business, extending the deadline for the Credit Line Guarantee Scheme, etc. The
announcement was made a day after the government announced new production-linked incentives (PLIs) under
another Rupees 2 trillion PLI scheme for 10 major manufacturing sectors. The government also announced some
fresh projects, collaterally boosting employment in the country.
An additional outlay of Rupees 180 billion for PM Awaas Yojana (PMAY) Urban was announced, which will help
ground 1.2 million houses and complete 1.8 million houses. The move is expected to create additional 7.8 million
jobs and improve production and sale of steel and cement, resulting in a multiplier effect on the economy. Stimulus
packages worth Rupees 2.65 trillion were announced by the government.
Following are the twelve announcements made in the Aatmanirbhar 3.0 stimulus package:
1. Aatmanirbhar Bharat Rozgar Yojana: Aatmanirbhar Bharat Rozgar Yojana, operational during October 1, 2020 to
June 2021 to incentivise creation of new employment opportunities during COVID recovery phase.
2. Emergency credit line guarantee scheme 2.0: Launch of an emergency credit line guarantee scheme 2.0 for
guaranteed credit to 26 stressed sectors. Tenure of additional credit under ECLGS 2.0 to be 5 years, including 1
year of moratorium on principal repayment. Emergency credit line guarantee scheme extended till March 31 2021.
3. PLI scheme: Introduction of the PLI scheme in 13 key sectors for enhancing India’s manufacturing capabilities
and exports.
4. PMAY – Urban: Rupees 180 billion will be provided over the Budged Estimates for 2020-21 for PM Awaas Yojana
(PMAY) - Urban through additional allocation and extra-budgetary resources. This is over and above Rupees 80
billion already budgeted this year.
5. Support for construction and infrastructure - Relaxation of earnest money deposit (EMD) and performance security
on government tenders.
22
Performance security on contracts to be reduced to 3% instead of 5-10%
EMD will not be required for tenders and will be replaced by Bid Security Declaration
Relaxations will be given till December 31, 2021
6. Demand booster for residential real estate income-tax relief for developers and home buyers: Increase in the
differential from 10% to 20% for the period from the date of the announcements to June 20, 2021 for only primary
sale of residential units of value up to Rupees 2 billion.
7. Government will invest Rupees 60 billion as equity in the NIIF debt platform. Infra project financing of Rupees
1.1 trillion will be provided by the government.
8. Government will provide support to farmers with Rupees 650 billion for subsidized fertilizers
9. Boost for the rural employment -Enhanced outlays under PM Garib Kalyan Rozgar Yojana: Rupees 400 billion
was additionally provided in Atmanirbhar Bharat 1.0. Further outlay of Rupees 100 billion to be provided for PM
Garib Kalyan Rozgar Yojana in the current fiscal.
10. Boost for exports - Rupees 30 billion to EXIM Bank for lines of credit: Rupees 30 billion will be released to EXIM
Bank for promotion of project exports through lines of credit under the IDEAS scheme.
11. Capital and industrial stimulus: Rupees 102 billion additional budget outlay will be provided towards capital and
industrial expenditure.
12. Research and development grant for Covid-19 vaccine development: Rupees 9 billion provided for Covid
Suraksha Mission for research and development of an Indian Covid-19 vaccine to the Department of
Biotechnology
23
Healthcare-related measures
India’s Covid-19 emergency response and health system preparedness package of Rs 150 billion is proposed to be
spent in three phases and for immediate COVID-19 Emergency Response an amount of Rs. 77 billion has been
provisioned and rest for medium-term support (1-4 years) to be provided under mission mode approach. To address
immediate needs in wake of the pandemic, a separate health-worker life insurance cover of Rs 5 million under
Pradhan Mantri Garib Kalyan Yojana (PMGKY) was also announced to offer support to families of frontline health
workers fighting the virus.
In addition to emergency funding for the pandemic response, the economic package includes long-term measures to
improve healthcare infrastructure. The government’s emphasis on healthcare offers substantial opportunities for
private investment to create affordable healthcare facilities and services. To boost private investment in social
infrastructure, the government has announced an outlay of Rs. 81 billion with viability gap funding (VGF) limits
enhanced from 20% to 30% of project cost, for both the center and states to attract private investments in the social
infrastructure space.
VGF support will aid in the development of hospitals and healthcare centers under public private partnership (PPP).
It creates an investment opportunity of ₹150-200 billion under the social infrastructure space. Support to private
investments via enhanced VGF will help grow the current health infrastructure by 4-5%. Increased public expenditure
on health (National Health Policy targets public health expenditure at 2.5% of GDP by 2025) also means increased
government focus on development of health systems and research centers. Development of healthcare infrastructure
will gain preference in the current situation with a rise in healthcare spending / demand in India.
24
Health insurance industry went through plethora of developments in 2020
Every year Indian insurance industry goes through various changes in order to provide more customer-centric
products and also promote the orderly growth and development of the industry. Particularly in 2020, the regulator
undertook number of steps to make sure that the coverage of health insurance increases by offering simple,
standardised, and disease-specific policy options to customers in the wake of the onset of Covid-19. Below are some
of the key changes –
Arogya Sanjeevani – A standard health product
On January 2, 2020 IRDAI issued guidelines to all general insurance and specialized health insurers to start selling
standard health insurance product with cover of between Rs 0.1 million -0.5 million called Arogya Sanjeevani from
April 1, 2020. Later on, the health insurance cover range increased between Rs 50 thousand to Rs 100 thousand.
There were number of individual health insurance products and each product had unique features; hence, it was
complex for customers to compare and choose a suitable product based on their needs. The Arogya Sanjeevani has
made buying process much simpler and played major role to develop strong faith and trust in customers towards
health insurance ecosystem.
Major objectives behind the standard individual health insurance products are:
Insurance policy to take care of basic health needs of insuring public
To have a standard individual product with common policy wordings across the industry
To facilitate seamless portability among insurers
Corona Kavach Policy
In view of the Covid 19 pandemic, the Authority has designed a standard Covid specific product addressing basic
health insurance needs of insuring public with common policy wordings across the industry. The Authority has
mandated general and health insurers to offer this indemnity based Individual Covid Standard Health Policy called
“Corona Kavach”. Doctors, Nurses and other healthcare workers will get 5% discount on premium of Corona Kavach
as a gesture of acknowledgement of the contribution of healthcare sector in the nation’s fight with Covid-19.
Corona Rakshak policy
Corona rakshak policy is a benefit based plan which is optional for insurers to provide. Under this policy, if the
individual is hospitalized for a minimum continuous period of 72 hours, the individual will be eligible to receive the
100% of sum insured based on the policy terms and conditions.
Mandatory medical Insurance to workers
25
The Ministry of home affairs has issued revised guidelines on 15th April, 2020 under standard operating procedure
(SOP) that medical insurance for the workers of all industrial and commercial establishments, work places, offices to
be made mandatory. IRDAI has also instructed to all general and standalone Health insurance companies (Except
AIC and ECGC) to devise comprehensive Health insurance products with simple wordings, conditions and at
affordable cost to be offered.
Additional grace period for Insurance policies
Due to the nationwide lockdown from March to May, IRDAI had extended the grace period for all the insurance
policies up to 31st May 2021. This has given comfort to all the policyholders in terms of premium payment and
maintained the coverage of the existing policy.
Introduction of EMI option for premium payment
The IRDAI in April 2020 after the outbreak of covid-19 came out with a modification allowing customers to pay their
health insurance premiums in instalments. The policyholder can pay premium monthly, quarterly, or half-yearly as
decided by the insurer. The modification will play a major part in increasing affordability in the health insurance
industry. ‘Kamath Committee’ identifies 26 sectors for loan restructuring
On August 7, 2020, the RBI announced the constitution of a committee under the chairmanship of KV Kamath to
make recommendations on the required financial parameters for a ‘Resolution framework for Covid-19 related
stresses. On September 4, the committee submitted the report which included aspects related to leverage, liquidity
and debt serviceability for 26 sectors which could be factored by the lending institutions while finalising a resolution
plan for a borrower. However, only those borrower accounts would be eligible for resolution which were classified as
standard, but not in default for more than 30 days with any lending institution as on March 1, 2020. Under this
framework, the resolution may be invoked not later than December 31, 2020 and must be implemented within 90
days from date of invocation for personal loans and 180 days for other exposures.
26
Key structural reforms: Long-term positives for the Indian economy
Financial inclusion
According to the World Bank’s Global Findex Database 2017, the global average of adult population with an account
(with a bank, financial institution, or mobile money providers) was ~69% in 2017. India’s financial inclusion has
improved significantly in the past three years, with the adult population with bank accounts rising from 53% (as per
Global Findex Database 2014) to 80% in 2017 with concentrated efforts by the government to promote financial
inclusion and the proliferation of supporting institutions. That said the rise in the number of bank accounts has not
translated into a corresponding increase in the number of transactions and fruitful usage of those accounts.
As per the Global Findex Database 2017, ~50% of the world’s unbanked adults are in India, Bangladesh, China,
Indonesia, Mexico, Nigeria and Pakistan. Of the world’s total unbanked adults (~1.7 billion), 415 million are from just
two countries – India (11% or 190 million) and China (13% or 225 million), because of their huge population.
Adult population with a bank account (%): India vis-à-vis other countries (2017)
Note: 1. Global Findex data for India excludes the north-eastern states, remote islands and selected districts. 2. Account penetration is for the
population of 15 years and above
Source: World Bank - The Global Findex Database 2017, CRISIL Research
The three key initiatives launched by the government to promote financial inclusion are the Pradhan Mantri Jan Dhan
Yojana (PMJDY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana
(PMSBY). The government has also launched the Pradhan Mantri Suraksha Bima Yojana (PMSBY), which is an
accident insurance policy and offers an accidental death and full disability cover of Rs. 0.2 million at a premium of
Rs. 12 annually. As per the Government of India, more than 100 million people have registered for these two social
security schemes.
100%
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93%
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69%
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80%
90%
100%
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27
1. Pradhan Mantri Jan Dhan Yojana (PMJDY) – This scheme, launched in August 2014, is aimed at ensuring
ensure that every household in India has a bank account which they can access from anywhere and avail of all
financial services such as savings and deposit accounts, remittances, credit and insurance affordably. PMJDY
focuses on household coverage compared with the earlier schemes that focused on coverage of villages. It aims
to extend banking facilities to all within a reasonable distance in each sub-service area (consisting of 1,000-1,500
households) across India.
As on March 31, 2021, 422 million PMJDY accounts had been opened, of which, 66% were in rural and semi-
urban areas, with total deposits of Rupees 1,455 billion.
Number of PMJDY accounts Total balance in PMJDY accounts
Source: PMJDY; CRISIL Research Source: PMJDY; CRISIL Research
2. PMJJBY (Pradhan Mantri Jeevan Jyoti Bima Yojana) – This scheme was launched in May 2015, is aimed at
creating a universal social security system, targeted especially for the poor and the under-privileged. PMJJBY is
a one-year life insurance scheme, renewable from year to year that offers a life cover of Rs. 0.2 million for death
due to any reason and is available to people in the age group of 18 to 50 years (life cover up to 55 years) at a
premium of Rs. 330 per annum per member. This scheme is offered /administered through LIC and other Indian
private life insurance companies.
145
214
282
314
353
383
422
0
50
100
150
200
250
300
350
400
450
Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21
(in million)
146
357
630
785
961
1184
1455
0
200
400
600
800
1000
1200
1400
1600
Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21
(in billion)
28
Cumulative enrolments in PMJJBY Number of Claims Received and Disbursed
Source: PMJJBY; CRISIL Research Source: PMJJBY; CRISIL Research
3. PMSBY (Pradhan Mantri Suraksha Bima Yojana) - This scheme was launched along with PMJJBY in May
2015, is aimed at creating a universal social security system, targeted especially for the poor and the under-
privileged. PMSBY is a one-year accidental death and disability insurance cover, renewable from year to year
that offers an accidental death and full disability cover of Rupees 0.2 million and Rupees 0.1 Million for partial
disability. This cover is available to people in the age group of 18 to 70 years at a premium of Rupees 12 per
annum per member. The scheme is being offered by Public Sector General Insurance Companies or any other
General Insurance Company who are willing to offer the product on similar terms with necessary approvals.
Cumulative enrolments in PMSBY Number of Claims Received and Disbursed
Source: PMSBY; CRISIL Research Source: PMSBY; CRISIL Research
30 31
53
59
71
0
10
20
30
40
50
60
70
80
FY 17 FY 18 FY 19 FY 20 FY 21
(in million)
24
41
37
47 46
21
39
32
44 44
0
5
10
15
20
25
30
35
40
45
50
FY 17 FY 18 FY 19 FY 20 FY 21
Claims Received Claims Disbursed
(in Rs thousands)
94100
135
155
185
0
20
40
60
80
100
120
140
160
180
200
FY 17 FY 18 FY 19 FY 20 FY 21
(in million)
5
89
19
10
3
7 7
16
7
0
5
10
15
20
25
FY 17 FY 18 FY 19 FY 20 FY 21
Claims Received Claims Disbursed
(in thousands)
29
GST implementation
Introduced on July 1, 2017, the GST is an indirect tax regime that subsumed multiple cascading taxes levied by the
central and state governments. Its implementation has spawned structural changes in the supply chain and logistics
network in the country. The crux of the GST mechanism is input tax credit, which ensures more players in the supply
chain come under the tax ambit. As supply from only registered taxpayers will get input tax credit, businesses and
stakeholders will insist on registration of their suppliers and traders, leading to an increase in the share of organised
participants. The GST regime has been stabilising fast and is expected to bring more transparency and increase in
formalisation, eventually leading to higher economic growth.
Ayushman Bharat
Ayushman Bharat was launched by Government of India in 2018 to achieve the vision of Universal Health Coverage
(UHC) as recommended by the National Health Policy 2017. This initiative has been designed to meet Sustainable
Development Goals (SDGs) and its underlining commitment, which is to "leave no one behind."
Ayushman Bharat is an attempt to move from sectoral and segmented approach of health service delivery to a
comprehensive need-based health care service. Ayushman Bharat adopts a continuum of care approach, comprising
of two inter-related components, which are –
a. Health and Wellness Centres (HWCs)
In February 2018, the Government of India announced the creation of 150,000 Health and Wellness Centres (HWCs)
by transforming the existing Sub Centres and Primary Health Centres. These centres are to deliver Comprehensive
Primary Health Care (CPHC) bringing healthcare closer to the homes of people. They cover both, maternal and child
health services and non-communicable diseases, including free essential drugs and diagnostic services.
b. Pradhan Mantri Jan Arogya Yojana (PM-JAY)
The PMJAY was launched on September 23, 2018 with the objective of providing affordable healthcare. PMJAY will
provide volume momentum to the sector, with the scheme providing healthcare cover of Rs 0.5 million per family (on
floater basis) for secondary and tertiary care hospitalization to over 107.4 million poor and vulnerable families
(approximately 500 million beneficiaries) that form the bottom 40% of Indian population. The actual coverage would
be greater on account of states extending the scheme to even some sections of the uncovered populace.
PLI scheme to boost manufacturing in the long run
The government has budgeted ~Rs 2 trillion to give incentives to the locally manufacturing units to 13 key sectors.
The key sectors likely to get benefit from the scheme include automobiles, pharma, telecom, electronics, food, textile,
steel and energy. By incentivising production subject to achieving the desired scale, the scheme aims to spawn a
handful of globally competitive large scale manufacturing units in the identified sectors. Furthermore, the government
30
also hopes to reduce India's dependence on raw material imports from China. The scheme is expected to provide a
boost to economic growth over the medium-term and create more employment opportunities as many of these sectors
are labor intensive in nature.
IBC a key long-term structural positive
The Insolvency and Bankruptcy Code (IBC) is a reform that will structurally strengthen the identification and resolution
of insolvency in India. The IBC enhances the credit enforcement structure and provides certainty around the
timeframes for insolvency resolution. It attempts to simplify legal processes, preserve value for creditors and provide
them with greater certainty of outcome. With this reform, the RBI has sent a strong signal to borrowers to adhere to
credit discipline and also encourage banks to break resolution deadlocks by introducing definite timelines. IBC will
enhance investors’ confidence when investing in India. Internationally, recovery rates have improved significantly
after the implementation of bankruptcy reforms, as can be seen in the following table:
Country Year of bankruptcy
reform
Pre-reforms Five years post-reforms
Recovery rate (%) Time (years) Recovery rate (%) Time (years)
Brazil 2005 0.2 10.0 17.0 4.0
Russia 2009 28.2 3.8 42.8 2.0
China 2007 31.5 2.4 36.1 1.7
India 2016 26.0 4.3 43* 1.6*
Note: * As of 2019
Source: World Bank, CRISIL Research
Household savings to increase
India’s slowing economy took a toll on much-needed savings too, with the savings rate touching a 15-year low, and
household savings also falling. This has weakened India’s macro-economic position which is already hobbled by low
investment and rising external borrowing to fund capital needs. Household savings also declined as consumers spent
more in purchasing durables and travelling. Indian households contribute to about 60% of the country’s savings. But
India remains favorable compared with emerging market peers such as Brazil.
According to World Bank, the savings rate, or the proportion of gross domestic savings (GDS) in GDP in the Indian
economy has trended down in the past decade. India’s GDS peaked at 36.8% of GDP in fiscal 2008 and dipped to
32.0% in fiscal 2009. That was largely on account of a sharp slowdown in public savings, as the government resorted
to fiscal stimulus to address the external shock from global financial crisis (GFC).
CRISIL Research expects India to continue being a high savings economy. Household savings as a percentage of
GDP has been sliding since fiscal 2012, with its share in total savings falling significantly from 23.6% in fiscal 2012
31
to 18.0% in fiscal 2016. The household savings as % of GDP rose to 19.6% in fiscal 2020. CRISIL Research expects
the household savings to increase further on account of expected decline in discretionary spending during the
pandemic. However, the absolute amount of savings might not increase at the same pace since the GDP growth is
expected to be negative in fiscal 2021.
We are also sanguine on savings rate increasing in the medium-term, as households become more focused post the
pandemic-induced uncertainty on creating a nest egg and providing adequate insurance for the future.
Savings rate has increased marginally in fiscal 2020
Source: Ministry of Statistics and Programme Implementation (MOSPI), RBI, CRISIL Research
Gross Domestic Savings rate: India vs other countries (2019)
Source: World Bank, Handbook of Statistics on Indian Economy 2018-19, RBI, MOSPI, CRISIL Research
Gross domestic savings trend
22.4%
23.6%
25.2%
23.1%23.6%
22.5%
20.3%19.6%
18.0% 18.1%
19.3% 19.3% 19.6%
15%
17%
19%
21%
23%
25%
27%
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Household Savings (% of GDP)
55%
47%
35% 35%31% 30% 28%
25% 25% 24% 23%19% 18% 16% 16%
0%
10%
20%
30%
40%
50%
60%
Sin
ga
pore
Chin
a
Ko
rea
Sw
itze
rlan
d
Ma
laysia
India
Ge
rma
ny
Wo
rld
Au
str
alia
Me
xic
o
Fra
nce
So
uth
Afr
ica
US
Bra
zil
UK
32
Parameters (Rs billion) Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
GDS 33,692 36,082 40,200 42,823 48,251 54,807 57,770 63,860
Percentage of GDP 33.9% 32.1% 32.2% 31.1% 31.3% 32.1% 30.6% 31.4%
Household sector savings (net
financial savings, savings in
physical assets and in the form
of gold and silver ornaments)
22,353 22,853 24,391 24,749 27,871 32,966 36,465 39,908
Percentage of GDP 22.5% 20.3% 19.6% 18.0% 18.1% 19.3% 19.3% 19.6%
Gross financial savings 10,640 11,908 12,572 14,962 16,147 20,564 21,341 22,846
Financial liabilities 3,304 3,587 3,768 3,854 4,686 7,507 7,784 6,641
Savings in physical assets 14,650 14,164 15,131 13,176 15,946 19,442 22,481 23,272
Savings in the form of gold and
silver ornaments 367 368 456 465 465 467 427 431
Note: The data is for financial year ending March; Physical assets are those held in physical form, such as real estate, etc.
Source: MOSPI, National Accounts National Accounts Statistics, CRISIL Research
Household savings growth
Note: The data is for financial year ending March
Source: MOSPI, National Accounts National Accounts Statistics, CRISIL Research
Financial savings to remain attractive part of Household savings
While households’ savings in physical assets has declined to 58% in fiscal 2020 from 67% in fiscal 2012, financial
savings has witnessed an uptrend to 41% in fiscal 2020 from 31% in fiscal 2012.
With volatility in the financial markets post Covid and the prevalent lower rates of return in the fixed income products
on account of accommodative stance of the central bank, sizeable proportion of savings is expected to remain in the
physical assets. Along with increase in financial literacy, the relative outperformance of financial assets over recent
years, and the government’s efforts to fight shadow economy activity, we expect the share of financial assets as a
20,656 22,353 22,853
24,391 24,749 27,871
32,966 36,465
39,908
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Rs billion
33
proportion of net household savings to increase over the next five years. The rise in financial assets will further boost
the investment under Insurance funds.
.
Note: The data is for financial year ending March
Source: MOSPI, National Accounts National Accounts Statistics, CRISIL Research
Digitisation: Catalyst for the next growth cycle
CRISIL Research expects technology to play a pivotal role in improving the financial sector, by helping surmount the
challenges stemming from India’s vast geography and populations in smaller locations being commercially unviable
to service. Technology also gels well with India’s demographic structure, where the median age is less than 30 years.
These youth segments are at ease with using technology to conduct financial transactions. With increasing
smartphone penetration and faster data speeds, there is a push from the consumers’ side for digitalisation, as they
are increasingly finding digital platforms more convenient. CRISIL Research expects digitalisation to help improve
efficiency and optimise cost. Players with better mobile and digital platforms will draw more customers and emerge
as winners in the long term.
Mobile and internet penetration: Higher mobile penetration, improved connectivity and faster and cheaper data
speed, supported by Aadhaar and bank account penetration have led India to shift from being a cash-dominated
economy to a digital one.
Data-savvy and younger users to drive adoption of smartphones
31% 33% 36% 36%45% 41% 40% 37% 41%
67% 66% 62% 62%53% 57% 59% 62% 58%
2% 2% 2% 2% 2% 2%1% 1% 1%
0%
20%
40%
60%
80%
100%
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
(%)
Financial savings(Net) Savings in Physical assest Savings in form of gold and silver
34
Note: P: Projected
Source: CRISIL Research
Data subscribers as a proportion of wireless subscribers to increase significantly through FY25
Note: P: Projected
Source: Telecom Regulatory Authority of India (TRAI), CRISIL Research
Rise in 4G penetration and smartphone usage
The digital revolution has paved the way for digital payments. India had 1,157 million wireless subscribers as of
March 2020, and the number is growing at a steady pace every year. The reach of mobile network, internet and
electricity is also expanding the digital payments footprint to remote areas. This is likely to increase the number of
digital payment transactions.
All-India mobile and data subscriber base
19% 25% 30%38% 42% 48%
58% 60% 63% 64% 65%
81% 75% 70%62% 58% 52%
42% 40% 37% 36% 35%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22P FY23P FY24P FY25P
Smartphone installed base Feature phone installed base
31%34%
40%
53%
62% 64%
74%78%
87%90%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY16 FY17 FY18 FY19 FY20 FY21 FY22P FY23P FY24P FY25P
35
FY16 FY17 FY18 FY19 FY20 FY21P FY22P FY23P FY24P FY25P
Wireless subscribers (million) 1034 1170 1183 1162 1157 1181 1178 1191 1195 1203
Data subscribers (million) 322 401 473 615 720 756 860 925 1042 1077
Data subscribers as a
proportion of wireless
subscribers
31% 34% 40% 53% 62% 64% 74% 78% 87% 90%
4G data subscribers (million) 8 131 287 478 645 719 842 901 1022 1070
4G data subscribers
proportion 2% 33% 61% 78% 90% 95% 98% 97% 98% 99%
FY16 FY17 FY18 FY19 FY20 FY21P FY22P FY23P FY24P FY25P
Wireless subscribers
(million) 1034 1170 1183 1162 1157 1181 1178 1191 1195 1203
Data subscribers (million) 322 401 473 615 720 756 860 925 1042 1077
Data subscribers as a
proportion of wireless
subscribers
31% 34% 40% 53% 62% 64% 74% 78% 87% 90%
4G data subscribers
(million) 8 131 287 478 645 719 842 901 1022 1070
4G data subscribers
proportion 2% 33% 61% 78% 90% 95% 98% 97% 98% 99%
Note: P: Projected
Source: TRAI, CRISIL Research
Mobile data consumption in India has grown ~25 times in the past five fiscals at a CAGR of ~90%. The proportion of
data subscribers is hence expected to rise to ~90% in fiscal 2025 from ~62% at FY 20. India's 4G data rates are
among the lowest in the world. So, a combination of affordable handsets, growing consumer preference for data on
the go and affordable data tariffs is set to accelerate the adoption of wireless internet in India, leading to a 4G data
subscriber proportion at ~100%.
Digitalization in Insurance industry
The rapid increase in adoption of smart phones and ubiquitous availability of the internet has affected almost all retail-
focused industries. The need to build direct connect with the end consumers has further elevated the need for
digitalisation. Digitalisation is also picking up the pace in the insurance industry and is expected to be one of the main
growth and efficiency levers of insurance companies in India going forward. The Covid-19 pandemic has acted as a
catalyst for the digitalisation process in Insurance industry. The ability to purchase insurance policies online along
with E-KYC and E-consent has eased the buying process for consumers. During FY21, post-Covid, we have seen a
significant spurt in the number of policies being purchased online either through the direct channel or web
aggregators. Insurers are also increasingly opting for digital claims processing and settlement, and using technology
such as machine learning for enhancing the efficacy of their underwriting process.
36
(More details in this respect are outlined further ahead in this document)
Regulatory focus on digitalisation in insurance sector
With the COVID-19 impacting worldwide, IRDAI also have moved in line with changing time to digitise the insurance
industry. IRDAI has introduced the various steps to facilitate alternate modes of digital contact, particularly with
respect to policy servicing and claims, in order to ensure continuity of business operations. IRDAI has brought the
following measures:
Paperless KYC – IRDAI has allowed insurance companies to avail Aadhaar Authentication services of the Unique
Identification Authority of India. As a result, KYC is done in just 2 minutes which requires user to provide OTP from
Aadhaar registered mobile number.
E-consent of proposal – Due to COVID-19, the traditional approach of filling physical proposal forms, obtaining wet
signatures and the subsequent movement of physical papers has been affected. IRDAI has allowed insurers to obtain
customers’ consent without signature on the hard copy. Insurers will have to send the completed proposal form on
registered e-mail ID or mobile number of customers in the form of an e-mail or message link. Customers have to click
on the confirmation link to validate the OTP shared.
Issuance of e-policies – In 2016, IRDAI had said that if policies are solicited through an electronic mode, insurers
were required to send the policy electronically and also dispatch a hard copy. Exemption for a physical copy was
provided only where the policy was issued using an e-insurance account (eIA). Insurers were unable to send the
policy contracts on time due to the pandemic and hence IRDAI has allowed Insurers to send all life and health
insurance policies electronically to the policyholder’s e-mail ID. The free look period can be started only after the
receipt of policy contracts; however, now Insurers shall confirm the date of receipt of the e-policy through a call or
other means and preserve the proof so that the free-look period can be calculated from that date.
37
38
Health insurance industry
Global health insurance industry overview
Global health insurance market is estimated to be around USD 1.5 trillion in 2019. The health insurance is mainly
driven by rise in health expenses and increase in prevalence of chronic diseases. Also, governments across countries
are taking initiatives to increase health insurance coverage through different ways of funding. The outbreak of covid-
19 pandemic has further accelerated the growth of health insurance industry.
Asia region is expected to see relatively higher growth due to enhancement of health facilities and rising awareness
about health insurance resulting in higher demand for health insurance in high populous countries such as India and
China.
Health insurance penetration in 2019 (Gross direct premium as % of Nominal GDP)
Note: Calendar year (CY) implies fiscal year (FY) for India
Source: OECD, World Bank data, CRISIL Research
The health insurance penetration in India is low at just 0.36% of GDP whereas the global average comes around 2%
of GDP. Countries like UK, China, Argentina and USA have higher penetration level of 0.61%, 0.65%, 0.78% and
4.1% respectively.
Health insurance density indicates, Indian health insurance has huge scope for growth
Health insurance density is an important indicator to know the sector development within the country. India is much
behind in terms of health insurance density as compared to other developing and developed nations. Despite lower
0.0% 0.1% 0.2% 0.2% 0.2% 0.4% 0.4% 0.4%0.56% 0.61% 0.65% 0.78% 0.9%
2.3%
2.7%
4.10%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
39
penetration in Japan and Australia, the per person health insurance premium is much higher than India. Even in
higher populous country like china has 13 times higher premium per person than India.
Health insurance density in 2019 - Premium per person (total population)
Note: Calendar year (CY) implies fiscal year (FY) for India
Source: OECD, World Bank data, CRISIL Research
Impact of covid-19 pandemic on health insurance industry
With the rise of any severe disease in country, we have observed higher demand for term insurance and health
insurance industry, even if income growth and savings are under pressure. For example, in 2003-04 when SARS
outbreak in China and Singapore, China Life Insurance Company witnessed growth of ~40% for short term health
insurance and 34% for long term health insurance in a year.
In 2013-14 when MERS spread in Middle East, the largest health insurer, Bupa Arabia, witnessed a growth of 45%
and 81% year-on-year growth in premiums during 2013 and 2014.
2 5 20 22 33 39 66 77 91 122 242 258 264
1052 1095
2679
0
500
1,000
1,500
2,000
2,500
3,000
Indon
esia
India
Ru
ssia
Turk
ey
Austr
alia
Me
xic
o
Ch
ina
Arg
entina
Japa
n
Ita
ly
Isra
el
Un
ite
dK
ing
dom
Spain
Germ
any
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nce
Un
ite
d S
tate
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USD
40
While the rise in demand for health insurance during outbreak of such diseases enhances the awareness levels and
the opportunity for health insurers, in the short-term, it may result in an increase in claims pay out. In the Indian
market, for example, the regulator, IRDAI, has instructed insurance companies to cover covid-19 related claims under
the existing active policies. Health insurance gross direct premium increased by ~16% in fiscal 2021. This was largely
driven by individual policies, wherein gross premium increased by ~28% as against 10% for group policies and de-
growth in government business. As the covid-19 risk would not have been accounted for in active policies at the time
of outbreak, claims on this front are likely to be higher than originally envisaged.
Healthcare spends in India and comparison to other global markets
While the structural demand for healthcare in India remains strong, players have to frame their strategies taking into
account the poor awareness, inadequate health infrastructure, unequal access and relatively lower per capita
incomes compared to developed countries. For players who are able to provide quality services at effective cost by
effectively leveraging technology and at the same time bringing in personal touch, the opportunity remains
compelling.
India lags peers in healthcare expenditure
Current healthcare expenditure (CHE) as % of GDP and CHE per capita in USD (2018)
1,749 1,993 2,194
3,177
5,740
7,3287,939
30%
14%
10%
45%
81%
28%
8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2010 2011 2012 2013 2014 2015 2016
Bupa Arabia - Gross Written Premium Y-o-Y Growth
(IN SAR Million)
41
Note: Calendar year (CY) implies fiscal year (FY) for India
Source: Global Health Expenditure Database- World Health Organisation, CRISIL Research
According to the Global Health Expenditure Database compiled by the World Health Organisation (WHO), India's
current expenditure on healthcare was 3.5% of gross domestic product (GDP) as of 2018. India trails behind much
behind the world average of 9.8%. (Current health care expenditure includes healthcare goods and services
consumed during each year which is paid either by government, insurance companies or by the concerned individual
on his own.)
India spends too little on its healthcare
2.9%3.5%
4.1%5.3% 5.4% 5.4%
7.5%8.7% 9.0% 9.3% 9.6% 9.8% 10.0%
11.0% 11.3% 11.4%
16.9%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Per capita current expenditure on
health in USD PPP (2018) Current healthcare expenditure (CHE) as % of GDP in
India (2010-2018)
42
Note: Calendar year (CY) implies fiscal year (FY) for India
Source: Global Health Expenditure Database- World Health Organisation, CRISIL Research
India's current healthcare expenditure has decreased from calendar year 2011 to 2018. The skew, however, is more
towards private expenditure as compared with public expenditure. Low healthcare expenditure in India is primarily
due to the under-penetration of healthcare services and lower consumer spending on healthcare.
Further, the share of public spending on healthcare services remains much lower than global peers. For example,
India's per-capita total expenditure on healthcare (at an international dollar rate, adjusted for purchasing-power parity)
was only $73 in 2018 versus $10,624 for the US, $4,315 for the UK and $2,824 for Singapore.
Public healthcare expenditure is low, with private sector accounting for bulk
General expenditure on health as % of CHE (2018)
Note: Calendar year (CY) implies fiscal year (FY) for India
3.27%3.25%
3.33%
3.75%
3.62%3.60%
3.51%3.54% 3.54%
2.90%
3.00%
3.10%
3.20%
3.30%
3.40%
3.50%
3.60%
3.70%
3.80%
2010 2011 2012 2013 2014 2015 2016 2017 2018
Government expenditure
27%
Private expend
iture73%
India's current healthcare expenditure is skewed more
towards private expenditure as compared with public
expenditure. Government expenditure on healthcare has
remained range-bound at 20-30% of the current healthcare
expenditure from calendar year 2010 to 2018. The rest of
the expenditure is private in nature (expenditure from
resources with no government control, such as voluntary
health insurance, and the direct payments for health by
corporations (profit, non-for-profit and non-government
organisations) and households.
43
Source: Global Health Expenditure Database- World Health Organisation, CRISIL Research
Current healthcare expenditure by contributors (Financing Schemes) in India (2016-17)
Government schemes includes expenditures under National Health Mission, Family Welfare Programmes; National
AIDS Control Program IEC programmes, partnership with NGOs, etc. which are directly financed by Union & state
government and local bodies, which is the second highest contributor to current healthcare expenditure. Merely 10%
of current healthcare expenditure comes from voluntary healthcare payment schemes.
Current healthcare expenditure by contributors (Financing Schemes) in India (2016-17)
Source: NHSRC (National Health Systems Resource Centre) India 2016-17, CRISIL Research
Financing schemes in detail (2016-17)
Financing systems Financing schemes Rupees Billion Share (%)
Government Schemes
Union Government (Non-Employee) 361.6 6.7%
Union Government (Employee) 142.1 2.6%
State Government (Non-Employee) 549.3 10.2%
State Government (Employee) 39.2 0.7%
Urban Local Bodies 75.9 1.4%
Rural Local Bodies 46.4 0.9%
Compulsory Contributory Insurance Scheme
Social health insurance schemes 166.1 3.1%
Government Financed Health Insurance 77.1 1.4%
23%
4%
10%63%
Government Schemes Compulsory Contributory Insurance Scheme
Voluntary Healthcare Payment Schemes Out-Of-Pocket Payment
44
Voluntary Healthcare Payment Schemes
Employer-Based Insurance (Private - Group)
147.2 2.7%
Other Primary Coverage Schemes (Private Individual)
125.8 2.3%
Community-Based Insurance 0.4 0.0%
Non Profit Institutions Serving Households 90.3 1.7%
Resident Foreign Agencies Schemes 15 0.3%
Enterprises 148.3 2.7%
Out-Of-Pocket Payment
All Household Out-Of-Pocket Payment 3409.2 63.2%
Source: NHSRC (National Health Systems Resource Centre) India
Government policies to improve healthcare coverage
The government has raised its healthcare budget by ~10% for fiscal 2021 to Rupees 690 billion, keeping in line with
its goal to raise its healthcare spending to 2.5% of GDP by 2025 under the National Health Policy 2017.
Government expenditure as a proportion of current healthcare expenditure
Note: CHE: Current healthcare expenditure; DGGHE: Domestic general government healthcare expenditure
Source: WHO Global Healthcare Expenditure Database
Out-of-pocket (OOPS) as % of CHE (2018)
4.3% 4.0% 4.0% 3.8% 3.6% 3.5% 3.5% 3.5% 3.3% 3.2% 3.3% 3.7% 3.6% 3.6% 3.5% 3.5% 3.5%
18.2% 18.7% 18.0%20.1% 20.5% 20.9%
22.6%
25.6% 26.2%28.8% 28.0%
23.1% 23.7%25.6%
26.8% 27.1% 27.0%
0%
5%
10%
15%
20%
25%
30%
35%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
CHE as % of GDP GGHE as % of CHE
45
Note: Calendar year (CY) implies fiscal year (FY) for India
Source: World Bank data, CRISIL Research
In India, the out-of-pocket (OOP) expenditure on health is nearly 63% of total health expenditure as of 2018 (highest
among all the other countries compared above), indicating the fact that most households and individuals either do not
have health insurance or do not have an adequate cover. Furthermore, in India, insurance cover does not cover out-
patient treatments (only recently an insurance company has started covering OPD treatments under its health
insurance).
Nearly 25% of the rural population and 18% of the urban population are dependent on borrowings for funding their
healthcare expenditure. And nearly 68% of the rural population and 75% of the urban population use their household
savings on healthcare-related expenditure. Health expenditure contributes to nearly 3.6% and 2.9% of rural and urban
poverty respectively and annually, an estimated 60 to 80 million people fall into poverty due to healthcare-related
expenditure. However, with Pradhan Mantri Jan Arogya Yojana (PMJAY), the affordability aspect of healthcare
expenditure is expected to be taken care of to some degree, especially for the deprived population.
Though it represents a pain point in healthcare financing, it also means that there exists a substantial potential for
those involved in provision of auxiliary healthcare services.
Average expenditure spent on hospitalisation in relation to per capita income (2018)
India, 63%
Mexico, 42%
Russia, 38%
China, 36%
Indonesia, 35%
Argentina, 28%
Italy, 24%
Spain, 22%
Israel, 21%
World, 18%
Australia, 18%
Turkey, 17%
United Kingdom, 17%
Japan, 13%
Germany, 13%
United States, 11%
France, 9%
0% 10% 20% 30% 40% 50% 60% 70%
46
Source: world Bank data, CRISIL Research
India has one of the lowest expenditure spent on hospitalisation in relation to per capita income after Indonesia.
Marely 3.6% of per capita income is spent on healthcare service whereas in china 5% of per capita income is spent
on health care services. The overall world average is also ~3 times higher than India’s spending on hospitalisation in
relation to per capita income.
Growing health insurance penetration to propel demand
Low health-insurance penetration is one of the major impediments to the growth of the healthcare delivery industry
in India, as affordability of quality healthcare facilities by the lower-income groups remain an issue. As per the
Insurance Regulatory and Development Authority of India (IRDAI), nearly 499 million people have health insurance
coverage in India (as of fiscal 2020), as against 288 million (in fiscal 2015), but despite this robust growth, the
penetration in fiscal 2020 stood at only 36.1%. CRISIL Research projects the coverage to increase to 46% in FY 25
due to government focus with PMJAY and increasing awareness of the benefits of health insurance in a post-Covid
world.
Category-wise number of lives covered in health insurance (million)
United States, 16.9%
Germany, 11.4%
France, 11.3%
Japan, 10.9%
United Kingdom, 10.0%
World, 9.8%
Argentina, 9.7%
Australia, 9.5%
Spain, 9.0%
Italy, 8.6%
Israel, 8.0%
Mexico, 5.4%
Russia, 5.4%
China, 5.0%
Turkey, 4.1%
India, 4%
Indonesia, 2.9%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18%
47
Source: IRDAI Annual reports, IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding Travel -
Domestic/Overseas and Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
As is evident, the share of government-provided insurance is greater than that due to insurance policies availed of
by individuals not covered under any schemes. Government or government-sponsored schemes, such as the Central
Government Health Scheme (CGHS), Employee State Insurance Scheme (ESIS), Rashtriya Swasthya Bima Yojana
(RSBY), Rajiv Arogyasri (Andhra Pradesh government) and Kalaignar (Tamil Nadu government) account for 73% of
health insurance coverage provided. The remaining is through commercial insurance providers, Standalone health
insurance (such as Star Health Insurance and Care Health Insurance), public sector companies (such as Oriental
Insurance and New India Assurance.) and private (ICICI Lombard and Bajaj Allianz) players. However, in terms of
premium, government sponsored schemes account for merely 10% of overall premium. Around 43 million individuals,
representing 9% of persons covered under health insurance, obtained cover through retail health policies in FY20,
but they cumulatively accounted for 39% of gross written premium in FY20. The average premium per person covered
was ~ Rs.1,000 at overall level in FY20, with the premium per person covered under Government schemes being
just ~Rs.136 vis-à-vis ~Rs. 4,600 for retail health policies.
Number of persons covered under health insurance
21 24 27 25 29 32 33 42 4330 34 34 48 57 71 89 73 94161 149 155
214273
335359 357
36216.7% 16.2% 16.7%
22.0%
27.1%
32.7%
35.6% 34.6%36.1%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
100
200
300
400
500
600
FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20
Retail business Group (other than Govt business)Government sponsered schemes Coverage (RHS)
(mn nos)
72% 74% 76% 77% 74% 76% 73%
16% 17% 16% 16% 19% 15% 19%
13% 9% 8% 7% 7% 9% 9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Government Sponsered Schemes Group (other than Govt. Business) Retail Business
472481437358288216in MN 499
48
Source: IRDAI Annual reports, IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding Travel -
Domestic/Overseas and Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
Gross direct premium
Source: GI Council Segmentwise report, IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding Travel
-Domestic/Overseas and Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
CRISIL Research believes that low health insurance penetration presents a huge opportunity for the growth of
healthcare delivery industry in India. With the PMJAY scheme, the Central government plans to provide health
insurance cover to around 500 million citizens of India hitherto not covered by insurance.
Furthermore, with health insurance coverage in India set to increase, hospitalization rates are likely to go up. In
addition, health check-ups, which is required for health insurance coverage under some policies, are also expected
to increase, boosting the demand for a robust healthcare delivery platform.
Healthcare inflation trends
Healthcare inflation has consistently been higher than the overall CPI inflation between FY18 and FY20. However,
in FY21, the growth in healthcare inflation tapered off, partly as a result of measures by several governments to
control pricing for medical facilities and reserve beds for Covid-19 patients.
12% 12% 10% 10% 11% 12% 10% 7%
46% 44% 48% 48% 48% 45% 51%48%
42% 44% 42% 41% 41% 43% 39% 45%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Government Sponsered Schemes Group (other than Govt. Business) Retail Business
347370304244201175in BN 508 583
49
Source: CSO, CRISIL Research
5.4%
4.6% 4.4%
7.1%
6.3%
5.1%6.0%
4.5%
3.6% 3.4%
4.8%
6.2%
0%
1%
2%
3%
4%
5%
6%
7%
8%
FY 16 FY 17 FY 18 FY 19 FY 20 FY 21
Healthcare Inflation CPI (Inflation)
50
Key challenges of healthcare delivery industry
Along with the structural demand existing in the country and the potential opportunity, it provides for growth, provision
of healthcare in India is still riddled with many challenges. Prime among them being inadequate health infrastructure,
unequal quality of services provided based on affordability and healthcare financing.
Poor healthcare infrastructure
As per world bank data, India’s bed density is very low at 5 beds per 10,000 person; India’s bed density not only falls
far behind the global median of 29 beds per 10,000 populations, it also lags that of other developing nations, such
as Brazil (21 beds), Malaysia (19 beds), and Vietnam (26 beds). The total numbers of government beds in India are
estimated at ~0.7 million in 2019. An estimated population of ~1.31 billion implies that 1,845 people on average are
served per government bed in the country. The paucity of healthcare personnel compounds the problem. At nine
physicians and 18 nursing personnel per 10,000 populations, India trails the global median of 16 physicians and 38
nursing personnel.
Healthcare financing has been a pain point
In India, the out-of-pocket (OOP) expenditure is nearly at 62.6% of total health expenditure (global average is 20.5%),
with high dependence on borrowings and usage of household savings for funding of healthcare expenditure. In India,
insurance cover does not cover outpatient treatments (only recently an insurance company has started covering OPD
treatments under its health insurance), which makes OOP due to outpatient greater in comparison to inpatient
treatments. It has also been noted that annually, an estimated 60-80 million people fall into poverty due to healthcare-
related expenditure.
Government price capping of medical equipment
The government has restricted price capping to four devices – cardiac stents, drug-eluting stents, knee implants and
intra uterine devices. However, the National Pharmaceutical Pricing Authority (NPPA) is proposing to bring in capping
of trade margins instead of extending the list of devices under the National List of Essential Medicines.
Poor health infrastructure
Healthcare financing
Government price
capping of medical
equipment
Outstanding receivables impacting hospitals
Paucity of experienced specialised
doctors
51
Even state governments have been resorting to measures to curb profiteering by hospitals. The Delhi government
had earlier this year proposed norms for restricting the hospitals and nursing homes from marking up prices of
consumables and medicines from their procurement prices to limit their profits.
The price capping on cardiac stents, which was introduced in February 2017, and knee-implant price capping
introduced in August 2017 has acted as a major challenge for the industry, which is majorly run by the private sector.
But the affected parties have since been able to come back to normalcy after taking a hit on their operating margins
initially through price rationalisations via bundle pricing. The National Pharmaceutical Pricing Authority (NPPA) has
further extended the capping of prices of knee implants, ranging from Rupees 54,000 to Rupees 114 thousand for
one more year.
Post the implementation of price caps on stents and implants, the government has identified 23 medical devices to
put price control on.
The Delhi government had earlier this year proposed the norms for restricting the hospitals and nursing homes from
marking up prices of consumables and medicines from their procurement prices to limit their profits.
Outstanding receivables affecting the fiscal profile of hospitals
The financial profile of many hospitals empanelled under state schemes became weak due outstanding receivables
from the government (state and centre) for providing treatments to beneficiaries under health insurance schemes.
However, this challenge is expected to be dealt with utmost priority under the PMJAY by fixing a particular timeline
for reimbursements of claims.
Paucity of experienced specialised doctors
Paucity of experienced specialised doctors compounds the problem. Availability of specialised doctors would
contribute to improve personnel healthcare infrastructure in the country. Experienced specialised doctors also
contribute to the reputation and brand of the hospitals. Paucity of such doctors does impact the growth of the hospital
sector. At nine physicians and 18 nursing personnel per 10,000 people, India trails the global median of 15 physicians
and 38 nursing personnel. Even on this parameter, India lags behind Brazil (22 physicians, 101 nurses), Malaysia
(15 physicians, 41 nurses).
Recognising the need to augment the healthcare infrastructure in the country and enhance the awareness of risk
mitigation mechanisms such as insurance, the government has embarked on a series of measures including
augmenting the primary health center infrastructure and the announcement of the PMJAY scheme providing health
insurance cover to the vulnerable population. These initiatives will, over a period of time, enhance the existing
healthcare delivery infrastructure and enhance the adoption of health insurance in India.
52
Overview on Indian non-life insurance industry
The size of the Indian non-life insurance industry is Rs 1.991 trillion on total-gross direct premium basis as of FY21.
There are multiple products offered by the general insurance companies. The motor segment alone accounted for
around 34% of gross premium as of FY21 as Motor TP is mandatory for all the vehicles, followed by the health
segment which constituted 29% share in the total premium.
Structure of non-life insurance industry:
Non-life Industry Motor OD & TP Motor Package Health & PA Fire Marine Others*
Market share FY21 7.4% 26.7% 32.0% 10.1% 1.9% 22.0%
Note - * Others includes Engineering, Aviation, Liability, Crop Insurance, Credit Guarantee and All other miscellaneous
1 The total premium is gross direct premium and does not include premium from general insurance company (reinsurer)
53
Note: Figure given in bracket is the share of that particular segment for the player group as of FY21. Others include Aviation, Engineering, liability
etc.; SAHI covers overseas travel insurance as well
Source: General Insurance (GI) Council Segmentwise report, CRISIL Research
Health and personal accidents insurance (32% of gross premium in fiscal 2021)
Insurance companies collected gross premium of Rs 583 billion from health insurance (excluding personal accident
and travel insurance) in FY21; health insurance accounted for 32% of the total gross premium of the general
insurance industry. Health insurance is sold by non-life insurers, standalone health insurers and life insurers. The
various types of health insurance products are:
Mediclaim
Health insurance life
General Insurance (Rs. 1.99 tril l ion)
Private sector insurer (49%)
Public sector insurer (36%)
SPECIALISED INSURERS (7%)
STANDALONE HEALTH
INSURERS (8%)
Personal Accident
(0.3%)
Health Insurance
(7.6%)
Motor OD & TP
(4%)
Motor Package
(18%)
Crop (9%)
Health & PA
Fire (6%)
Crop/Agri (7%)
Marine(1%)
Motor OD &
TP(3%)
Motor
Package (9%)
Crop (3%)
Health & PA
Fire (4%)
Marine (1%)
Others (2%)
Others (2%)
54
Critical illness
Personal accidents (PA) are also covered under different types of health insurance products. PA policies pay for
death, permanent total disability, temporary total disability, broken bones, burns, and ambulance costs.
In the general insurance industry, there are following companies in the health insurance segment:
There are five specialised standalone health insurance (SAHI) companies – Star Health, Care Health, Max Bupa,
Aditya Birla and Manipal Cigna
Eighteen private sector firms offering multiple products such as ICICI Lombard, Bajaj Allianz, HDFC Ergo, IFFCO
Tokio, Tata AIG, Reliance General, Cholamandalam MS, and SBI General; while there are 18 private players in
general insurance, not every private sector firms has a significant health insurance portfolio.
Four multi-product public sector general insurance companies offering multiple products are National Insurance
Company, The New India Assurance, Oriental Insurance Company, and United India Insurance
55
Indian Health Insurance Industry
Evolution of health insurance industry
The journey of health insurance in India started with the introduction of mediclaim policy but the growth journey
started after the introduction of Insurance Regulatory and Development Authority of India (IRDAI) in the year 1999
as the apex institution to control and regulate affairs of insurance companies in India. Since then, there are number
of companies including Public Sector, Private Sector and Banks involved in the business of providing health
insurance.
Key regulatory changes in health insurance industry
Source: IRDAI Annual reports, CRISIL Research
IRDAI constituted a Working Group on Health Insurance in September, 2003 to promote and develop Health
Insurance in the country. The Working Group set up the Health Insurance Data Sub-Group, which, in turn,
recommended the setting up sub-committee on registration of Stand-alone health insurance companies. The
authority on the suggestion of the working group considered the need for reducing the entry levels for standalone
health insurance companies in order to encourage their creation.
The year 2006-07 saw the registration of an insurance company focusing specially on health insurance that came
into the business by complying with the minimum capital requirement of Rs.1,000 million required for a general
insurance company, Star Health Insurance. This was followed by 5 more Specialist Health Insurance providers being
given licenses by the year 2013-14 under the Title “Standalone Health Insurance Companies in India” (SAHI). As of
56
March 2021, there are a total of 6 SAHI insurers in India – Apollo Munich (now merged with HDFC Ergo), Aditya Birla
Health, Care Health, Manipal Cigna, Max Bupa and Star Health.
Premium collection in health insurance indicated an upward trend from the year 2006. The growth rate of SAHI in
Indian insurance market enabled them to reach the level of private insurance companies within a span of 12 years
(in FY17). As of fiscal 2021, SAHI accounted for 26% of the total health insurance gross premium collected by the
general insurance industry.
Health insurance premium has increased 86 times from fiscal 2002 to fiscal 2021
Note: Data excludes data for personal accident and travel insurance
Source: IRDAI Annual reports, GI council Segmentwise report, CRISIL Research
Number of lives covered in health insurance in India reached ~500 million in fiscal 2020
7 22
110
201
583
-
100
200
300
400
500
600
700
FY02 FY06 FY11 FY15 FY21
Health insurance premium (Rs Bn)
First ever specialist health insurance company, Star Health Insurance,commenced business
57
Source: IRDAI Annual reports, IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding Travel –
Domestic/Overseas and Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
In terms of products, presently life insurance companies can sell only fixed benefit health plans, while non-life and
standalone health insurers can sell both fixed benefit as well as indemnity-based plans. In fixed benefit policies,
insurers pay a fixed amount which is the sum insured following a claim. In indemnity-based policies, popularly known
as Mediclaim insurance plan, insurers reimburse the cost of medical treatment incurred by the customers (subject to
policy cover, exclusions, co-pay, etc.). The regular individual health plans or family floater plans are mostly available
under indemnity plans.
The advantage of an indemnity-based based health policy is that it covers a wide range of treatments and illnesses
and therefore, most policyholders prefer buying such a cover. These plans may also have a deductible & a fixed
amount paid by the policyholder (Co pay) for hospitalization expenses and the rest of the treatment cost is paid by
the insurer.
Even though, both Life and GI/SAHI companies offer health insurance products, but the basic coverage provided
towards health differs. The life insurers offer fixed health benefit products such as Critical Illness, Hospital Cash and
Cancer cover, etc., General and SAHI companies offer Indemnity based health policies either on reimbursement
basis or cashless basis.
In terms of health insurance premium underwritten by life insurers in India, it stands at Rs 12 billion as of fiscal 2020
which has increased from Rs 9 billion in fiscal 2015 registering a CAGR of 10% during the period.
Health Insurance Premium Underwritten by Life Insurers
254212 207 216
288359
438482 472 499
0
100
200
300
400
500
600
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
in million
58
Source: IRDAI Annual reports, CRISIL Research
9
1211
12
0
2
4
6
8
10
12
14
FY17 FY18 FY19 FY20
Premium (Rs Bn)
59
Gross direct premium has grown at 19% CAGR in last five years ending FY21
The health insurance premium has grown at 19% CAGR in the past six years, i.e. from fiscals 2015 to 2021. Further,
in H1FY22, the health portfolio has grown ~29%, which is significantly higher than the ~18% growth seen in the same
period last year. The double-digit growth in premium can be attributed to expansion in the distribution network and
reach of standalone and private health insurers, introduction of different government schemes such as Pradhan
Mantri Jan Aarogya Yojana (PMJAY), commission-related regulatory changes, and financial inclusion drive (Jan
Dhan Yojana, etc.). These factors have increased awareness about the need for insurance and propelled industry
growth.
Amongst the different player groups, multi-product public insurers hold the maximum 47% share in total health
insurance premium collected as of fiscal 2021, compared with 26% share of standalone health insurers and around
27% share of multi-product private insurers.
Growth in gross written premium of Health Insurance over the past six years
Note: Data excludes data for personal accident and travel insurance
Source: IRDAI Annual reports, GI Council Segmentwise report, CRISIL Research
The fear around covid-19 has pushed people to buy health insurance. Health insurance inquiries increased after the
covid-19 outbreak, but insurers faced key issues like the lack of data related to patient profiles, mortality rates, and
the cost of treatment to underwrite risk and determine the premiums for specially designed products for covid-19.
Retail business witnessed strong growth in fiscal 2021 as compared to same period last year. Thus, in a move to
201
244
304
370
449
508
583
286
37015%
22%
24%
22%
21%
13%15%
0%
5%
10%
15%
20%
25%
30%
0
100
200
300
400
500
600
700
FY15 FY16 FY17 FY18 FY19 FY20 FY21 H1FY21 H1FY22
Gross written Premium (Rs billion) Y-o-Y growth
60
provide insurance protection to a vast majority of people during the pandemic, the insurance regulator allowed all
insures – life and non-life – to offer short term health insurance policies specifically for covid-19. Gross written
premium increased by 15% in fiscal 2021 compared to the year-ago period. This growth was largely driven by strong
demand from retail business, with premium from this segment growing by 28% on-year against 10% growth in group
policies and a 14% decline in government health insurance business.
Strong growth in health insurance products in last five years over other segments
Overall growth in premium is because of higher growth in the premiums of private players. The surge in growth of
private players is owing to increasing demand for insurance in various general insurance segments, including health.
Among the various product segments, where premium growth across all asset classes is expected to be in double
digits in the next five years, health segment will see a very high growth owing to an increase in the number of policies
sold as well as rise in pricing. For e.g. we are already witnessing price correction in the group health segment given
the high loss ratios.
Premium growth in various general insurance segments
Source: IRDAI Annual reports, GI council Segmentwise report, CRISIL Research
Among the major segments, others (which include crop insurance, liability, aviation, etc.) witnessed highest six-year
CAGR of 21% between fiscals 2015 and 2021. The six-year CAGR of health was at 19%, higher than motor segment
which grew at 10% during the period. The six-year CAGR of marine was the lowest as total premium grew by ~2%
in the ensuing period. Given the significant growth in the health premium of all the players in the general insurance
industry, the share of health insurance premium in total general insurance premium increased by three percentage
points in last 6 years to 32% in fiscal 2021 and further to 37% in H1FY22.
Share of health insurance premium is increasing in overall industry gross premium
2%
10%
16%
19%
21%
0%
5%
10%
15%
20%
25%
Marine Motor Fire Health Others
6 year CAGR in gross premium (FY15-21)
61
Note: Including Personal Accident premium
Source: IRDAI Annual reports, GI council Segmentwise report, CRISIL Research
27%28%
27% 28%30% 30%
32%
37%
0%
5%
10%
15%
20%
25%
30%
35%
40%
FY15 FY16 FY17 FY18 FY19 FY20 FY21 H1FY22
62
Standalone health insurers’ growth much faster than the overall industry
Health insurance premiums have grown at a CAGR of 19% in the last 6 years ending FY21. This stupendous growth
in premium was due to the strong surge in premium income of standalone health insurance companies as the
premium zoomed at a 39% CAGR during the last 6 years (FY15-FY21), admittedly on a low base, while that of private
players surged at a 21% CAGR. On the other hand, the growth of public sector players has been relatively low as
compared to others at 13% for the same period.
Share of different player groups in health insurance in
fiscal 2021
Share of different segments in health insurance in
fiscal 2021
Note: Data excludes data for personal accident and travel insurance
Source: GI council Segmentwise report, CRISIL Research
SAHI accounts for 46% market share in Retail Business as of fiscal 2021
47%
27%
26%
Public Sector Insurers Private Sector Insurers SAHI
7%
48%
45%
Government business Group business Retail business
30%
57%
84%
46%11%
0%24%
33%16%
0%10%20%30%40%50%60%70%80%90%
100%
Retail business Group business Government business
Public Sector Insurers SAHI Private Sector Insurers
263 278 43Rs billion
63
Note: Figures in box represent size of business as of fiscal 2021
Source: GI Council Segmentwise report, CRISIL Research
While Public Sector Insurers dominate the Government and Group Business with market share of 84% and 57%
respectively in fiscal 2021. SAHI players have mainly focused on the retail business and have a cumulative market
share of 46% in this segment as of fiscal 2021 which has increased from ~27% in fiscal 2015.
Top five states contribute more than half of the industry premium
The share of top five states is almost constant in last five years which together constitute more than 50% of the gross
direct premium of the industry. Maharashtra is the largest state in terms of share in total premium with 30% as of
FY20, followed by 10% share of Tamil Nadu and 10% share of Karnataka. Share of other states has increased over
the years from 29% in fiscal 2015 to 36% in fiscal 2020. Share of states like Rajasthan, Haryana and Telangana has
increased from 7% in fiscal 2015 to 11% in fiscal 2020. Urban areas continue to account for most of the health
premium, accounting for ~93% of total gross direct premium in the industry in fiscal 2020.
Share of different states in health insurance
Note: Data excludes data for personal accident and travel insurance
Source: GI council Year book, CRISIL Research
Share of urban vs rural in health insurance
33% 32% 32% 32% 31% 30%
12% 13% 13% 13% 11% 10%
11% 11% 11% 10% 10% 10%
9% 8% 8% 8% 8% 8%
7% 6% 6% 6% 6% 6%
29% 31% 31% 32% 34% 36%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY15 FY16 FY17 FY18 FY19 FY20
Maharashtra Tamil Nadu Karnataka Delhi Gujarat Others
64
Source: GI council Year book, CRISIL Research
8% 9% 7% 8% 6% 7%
92% 91% 93% 92% 94% 93%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY15 FY16 FY17 FY18 FY19 FY20
Rural Urban
65
Impact of covid-19 pandemic on Health Insurance Industry
With the nationwide lockdown since March 2020 and economy coming to halt due to the covid-19 pandemic, health
insurance became the most valuable segment for non-life insurers in terms of premiums collected and growth. The
prospect of hospitalisation due to covid-19, and high medical costs in private hospitals have both increased the
awareness and need for health insurance and driven individuals to sign up for health insurance. While gross direct
premium in Fire segment grew at 27% in FY21 largely be driven by hardening of rates by reinsurers, health insurance
gross direct premium increased by 16% in during the same period compared to the year-ago period. This was largely
driven by individual policies, wherein gross premium increased by ~28% as against 10% for group policies and de-
growth in government business.
Insurers, however, have seen elevated levels of Covid claims in March 2021 and the first three months of fiscal 2022
due to the second wave of the pandemic.
Health insurance gross direct premium witnessed
strong growth in FY 2021.…
…supported by strong growth from Retail Business
segment
Note: Data excludes data for personal accident and travel
Source: GI council Segmentwise report, CRISIL Research
Trend in Claims ratio Trend in Combined ratio
27%
16%
-1% -1%-2%-5%
0%
5%
10%
15%
20%
25%
30%
Fire Health Others Marine Motor
Y-o-Y gowth
-14%
10%
28%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
GovernmentBusiness
Group Business Retail Business
Y-o-Y growth
66
Note: (*) Estimated based on player wise analysis; Combined ratio is on overall business
Source: IRDAI Annual reports, GIC Year book, CRISIL Research
In terms of claims, number of covid-19 claims reduced for insurers during the period since the number of planned
surgeries were down during the same period. While majority of the insurers incur underwriting loss in health insurance
business, it was more than offset by the returns on their investment incomes.
102%106%
94% 91% 88%93%
0%
20%
40%
60%
80%
100%
120%
FY16 FY17 FY18 FY19 FY20 FY21*
118% 118%
100% 101% 101%
113%
0%
20%
40%
60%
80%
100%
120%
140%
FY16 FY17 FY18 FY19 FY20 FY21
67
Investment income supporting profitability
Despite the underwriting losses, the industry has been profitable at the net level, supported by healthy investment
income both in the form of income from interest, dividend, and rents and profit from sale of investments. The
investment income of SAHI and private players witnessed growth of 8% and 22% in FY21 respectively, while that of
public players declined by around 17%.
Public sector insurers posted high losses as their premium growth reduced and provisions rose due to losses in other
business segment like motor and lack of clarity on merger of select insurers.
Trend in underwriting surplus and gross investment Income
Note: Underwriting surplus and investment income for general insurers is on overall business
Source: IRDAI Annual report, GI Council Financial highlight, CRISIL Research
Player-group wise underwriting surplus and gross investment Income (FY21)
-106
-150
-197
-153
-223 -237
-193
157181
206238 250
272 272
-300
-200
-100
0
100
200
300
FY15 FY16 FY17 FY18 FY19 FY20 FY21
Underwriting Surplus (Rs bn) Investment income (Rs bn)
68
Note: Underwriting surplus and investment income is on overall general insurance business
Source: IRDAI Annual report, GI Council Financial highlight, CRISIL Research
Capital employed by insurers
Source: GI Council yearbook, GI Council Financial highlight, CRISIL Research
Going forward, the sector is expected to see strong growth with rising number of people suffering from chronic
diseases, rising awareness, increased cost of healthcare, increasing number of road accidents and increased focus
from both public and private sector companies. Also, with economic growth gradually picking up and structural drivers
in place (rise in healthcare spending), CRISIL Research expects the growth trajectory of health insurance products
to remain strong in the coming years.
-131
-36 -25
-193
128 137
8.0
272
-300
-200
-100
0
100
200
300
Public Sector Insurers Private SectorInsurers
SAHI Industry
Underwriting Surplus (Rs bn) Investment income (Rs bn)
408 435 447524 545 602
687
27 31 39
42 5279
94
0
100
200
300
400
500
600
700
800
900
FY15 FY16 FY17 FY18 FY19 FY20 FY21
General Insurers SAHI
69
Gross direct premium to be close to Rs 1,150 billion by fiscal 2025
CRISIL Research forecasts the gross direct premium for health insurers to grow at ~18% CAGR over the next four
years. Consequently, the total premium is expected to grow by ~ 2 times from Rs 583 billion (as of fiscal 2021) to
close to Rs 1150 billion by fiscal 2025. Pick-up in economic growth, higher disposable incomes, government initiatives
focusing on health segments and growing awareness of insurance would be key growth facilitators.
Availability of wide range of products that offer varied health covers, depending on the need for the customers is
expected to provide further impetus to the sector's growth. The introduction of health insurance schemes by
government, which includes personal accident (PA) schemes like Pradhan Mantri Suraksha Bima Yojana (PMSBY),
introduction of Pradhan Mantri Jan Aarogya Yojana (PMJAY) and financial inclusion drive (Jan Dhan Yojana, etc.).
PA cover from Indian Railway Catering and Tourism Corp (IRCTC) and so on, has resulted in increasing penetration
of the health insurance market in India.
Projected growth in gross direct premium over next five years (Rs billion)
Note: P = Projected; Data excludes data for personal accident and travel insurance
Source: IRDAI Annual reports, GI council Segmentwise report, CRISIL Research
Going forward, digital innovation is key to increase productivity of the core business, optimize costs, enhance
customer experience, improve business quality and unlock partnerships with digital players outside insurance.
Insurers in India are thus redefining business by deploying business intelligence (BI) and analytics which offers data
visualization, self-service, data discovery with data governance and predictive planning. Increasing digitization is
helping insurers in improving their risk selection, pricing, underwriting, ability to service and pay claims.
Retail business segment to growth at much faster pace
201244
304370
449508
583
683
803
955
1143
0
200
400
600
800
1000
1200
1400
FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22P FY23P FY24P FY25P
70
Within health insurance industry, we expect Retail business to growth at a CAGR of 23% between fiscal 2021 to
2025 as compared to 15% and 11% CAGR growth in Group and Government business respectively. Covid-19 have
both increased the awareness and the need for health insurance which has driven individuals to sign up for health
insurance during the current financial year. Going forward, with increasing penetration, rising customer awareness
and increasing focus from private and SAHI towards retail business is expected to facilitate strong growth.
Segment wise growth outlook
Note: Figures in box represent size of business as of fiscal 2021
Source: GI Council Segmentwise report, CRISIL Research
Health insurance coverage as a percentage of total population
The number of lives covered under health insurance sector has increased from ~290 million to ~500 million.
Government sponsored schemes (including RSBY Rashtriya Swasthya Bima Yojana) accounted for more than 70%
of total number of lives covered as of fiscal 2020. During the last 5 years ending FY20, the number of lives covered
has increased at a 12% CAGR increasing the proportion of lives covered to population to 36% from 22%. This is
further expected to increase to ~670 million accounting for ~46% of total population by fiscal 2025.
In terms of retail business, number of lives increased from 25 million in fiscal 2015 to 43 million in fiscal 2020,
increasing the proportion of lives covered from 1.9% to 3.1% during the same period.
Number of lives covered in health insurance in India
11%
15%
23%
18%
0%
5%
10%
15%
20%
25%
GovernmentBusiness
Group Business Retail Business Industry
4 year CAGR in gross premium (FY21-25)
43 278 263 583Rs billion
71
Note: E = Estimated; P = Projected
Source: IRDAI Annual reports, IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding Travel –
Domestic/Overseas and Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
Number of lives covered in retail health insurance business in India
Note: E = Estimated; P = Projected
Source: IRDAI Annual reports, IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding Travel –
Domestic/Overseas and Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
214273
335 359 357 362 356 377 400 416 4394857
7189 73 94 105 112 118 137
160
25
29
3233 42 43 49
5664
6873
22.0%
27.1%
32.7%35.6% 34.6% 36.1% 36.5%
38.6%40.8%
43.0%46.1%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
0
100
200
300
400
500
600
700
800
FY15 FY16 FY17 FY18 FY19 FY20 FY21E FY22P FY23P FY24P FY25P
(mn nos)
Government Business Group Business Retail Business Coverage (RHS)
2529
32 33
42 4349
56
6468
73
1.9%2.2%
2.4% 2.5%
3.1% 3.1%3.5%
4.0%
4.5%4.7%
5.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
0
10
20
30
40
50
60
70
80
90
100
FY15 FY16 FY17 FY18 FY19 FY20 FY21E FY22P FY23P FY24P FY25P
Number of lives covered (in million) as a % of population
72
Key growth drivers
Government policies to improve healthcare coverage
India’s total healthcare spending is 3.54% of GDP, which is comparatively lower than that of other countries. The
average health care expenditure for OECD countries in 2018 was 8.8% of GDP. Developed nations (OECD
Countries) —the US (16.9%), Germany (11.2%), France (11.2%) and Japan (10.9%) spend much more than the
average cost on health care. India spends the least amongst the BRICS economies on healthcare; Brazil (stands at
9.2% of GDP), followed by South Africa (8.1%), Russia (5.3%), China (5%).
The total expenditure spent on Health care by the centre and states for FY2020 is 1.6% of GDP, including
establishment expenditure comprising salaries, gross budgetary support to various institutions and hospitals and fund
transfers to states under centrally sponsored schemes such as Ayushman Bharat.
In the Union Budget, the Central government has estimated Rs ~82 billion budget for health in fiscal 2021, as
compared to Rs 63 billion in the fiscal 2019-20, a growth of ~30%. Going forward for fiscal 2022, it has proposed Rs
75 billion for healthcare expenditure. Apart from this the Central government has also proposed Rs 35 billion
exclusively for vaccines.
Trend in healthcare expenditure as a proportion of GDP in India
Note: CHE: Current healthcare expenditure
Source: OECD, WHO, Global Healthcare Expenditure Database, CRISIL Research
3.27%3.25%
3.33%
3.75%
3.62%3.60%
3.51%3.54% 3.54%
3.00%
3.10%
3.20%
3.30%
3.40%
3.50%
3.60%
3.70%
3.80%
2010 2011 2012 2013 2014 2015 2016 2017 2018
CHE as a % of GDP
73
Pradhan Mantri Jan Arogya Yojana (PMJAY) – a step towards universal health coverage
The Pradhan Mantri Jan Arogya Yojana (PMJAY) was launched on September 23, 2018 with the objective of
providing affordable healthcare. The scheme primarily has three objectives-
1. Strengthening of physical health infrastructure: Sub-centres
Upgradation of 150 thousand ‘Health and Wellness’ centres to provide comprehensive healthcare, including coverage
of non-communicable diseases and maternal and child health services. These centres would also provide essential
medicines and diagnostic services free of cost. Inclusion of new ailments under the ambit of the scheme would go a
long way in ensuring focus on preventive care as opposed to only curative care. A strong referral network is vital in
providing a continuum of care.
2. Strengthening of physical health infrastructure: Government hospitals
Setting up of 24 new government hospitals and medical colleges and upgradation of existing district hospitals. The
intention is to have at least one medical college for three parliamentary constituencies. The government already has
a scheme in place, Pradhan Mantri Swasthya Suraksha Yojana (PMSSY), to correct the geographical imbalance in
the availability of tertiary healthcare. Six AIIMSes, one each at Patna (Bihar), Raipur (Chhattisgarh), Bhopal (Madhya
Pradesh), Bhubaneshwar (Odisha), Jodhpur (Rajasthan), and Rishikesh (Uttarakhand), have been set up. An AIIMS
is under construction at Rae Bareli (OPD services have started) and 13 new ones have been announced by the
government. Tackling issues of inadequate physical and personnel infrastructure is targeted via this objective.
3. Expansion of health insurance coverage: Ayushman Bharat
This involves a provision of Rs 0.5 million assured healthcare coverage to each family who is eligible, selected on
the basis of inclusion under the Socio Economic Caste Census (SECC) list. Nearly 107.4 million families are proposed
to be covered under the scheme. All existing central and state health insurance schemes will be subsumed under
Ayushman Bharat. The model of implementation of the scheme (via insurance company, trust or mixed model) is left
to the prerogative of the states.
However, healthcare delivery at affordable prices would require a shift in focus towards capitalising on volumes (with
nearly 165 million new people coming under a healthcare scheme) rather than on value (via margins).
The government has started an initiative of National Health Stack (NHS), a shared digital framework for both private
and public hospitals. It is expected to digitise all health records and keep track of all details concerning healthcare
enterprises in the country.
The scheme is well-intentioned and holds huge potential for the healthcare delivery and allied industries but the
mechanism for quality control and monitoring along with raising resources for implementation will be a key
monitorable.
74
Pradhan Mantri Jan Arogya Yojana adds a demand impetus
Note: PMJAY stands for Pradhan Mantri Jan Arogya Yojana;, Ayushman Bharat updates till September 2021; Claims data is as of January 2021
Source: PMJAY, CRISIL Research
Ayushman Bharat will further provide volume momentum to the sector, with the scheme providing healthcare
assurance of Rs 0.5 million per family (on floater basis) to nearly 107.4 million families (the actual coverage would
be greater on account of states extending the scheme to even some sections of the uncovered populace). As on
February 25, 2021, nearly 16 million treatments had taken place under Ayushman Bharat since the inception of the
scheme in September, 2018.
In terms of implementation till date, most states have signed a MoU with the National Health Agency (NHA) under
varied implementation models, i.e., trust-based, insurance-based or mixed model; however, some states are yet to
kick-start full-scale adoption. Madhya Pradesh, Uttar Pradesh and Bihar, which were devoid of any health insurance
scheme, have extended coverage under PMJAY to more than 25% of its population.
Note: ^ Includes data from IRDAI report FY19; healthcare penetration denotes persons covered
Source: PMJAY, CRISIL Research
~24,334 hospitals empanelled
~21 million treatments
~164 million cards
Claims worth Rs 170 billion
75
Claim ratio likely to go up under PMJAY
CRISIL Research believes with increased coverage and increased awareness, the claim ratio (refers to the number
of policies against which claims have been filed by the insured) under the scheme is expected to increase, unlike in
the past when claim ratio (number of claims) under government schemes has remained at 1-2% vis-à-vis 7-8% under
individual health insurance schemes.
Note: Claim ratio refers to the number of policies against which claims have been filed by the insured.
Source: PMJAY, CRISIL Research
But the scheme’s progression and adoption by private players will be primarily dependent on a) timely payment of
dues to hospitals and b) attractive package rates.
The claim ratio may rise in the initial years of implementation with most beneficiaries coming under the higher
coverage for the first time, leading to an increase in overall expenditure. Ergo, making payment in a timely manner
to hospitals is crucial for enhanced effectiveness and spread of the scheme. Prolonged delays in receipt of payments
from the government can affect prolonged participation of players under the scheme and also their fiscal profile.
(During earlier insurance schemes, there were cases of hospitals facing cash-flow issues on account of delayed
payments by state authorities or insurance companies).
Players will also remain cautious in major states such as Bihar, Uttar Pradesh and Madhya Pradesh which are
implementing health insurance scheme for the first time and have a relatively higher fiscal deficit at state level.
Private hospitals have a higher share in PMJAY treatments
76
Source: PMJAY, CRISIL Research
Package rates have been another area of concern for most corporate hospitals, reflecting the low participation of the
private sector. Of the 33,000 private hospitals (as per ROHINI database), only 29% have participated in the scheme.
This clearly indicates the preference of beneficiaries for private hospitals, given that the government infrastructure is
already overburdened. Among the treatments sought, 56% of the total spending has been on tertiary treatments, with
orthopaedics, cardiology, cardio-thoracic, oncology and urology being the most preferred, indicating the unmet
demand in this category.
Average treatment cost under various schemes
Note: GIPSA (General Insurance Public Sector Association) is a group made up of four top public sector insurance companies, namely Oriental
Insurance Company, New India Assurance Company, National Insurance Company and United India Insurance Company. They have negotiated
special package rates from many hospitals across India for a good number of procedures commonly undergone. Cashless facility for those
procedures is available only in the GIPSA Network Hospitals. Claim for treatment taken elsewhere will have to be submitted for reimbursement.
Source: GIPSA, RSBY, Ayushman Bharat updates, IRDAI annual report
44281
28453
13500-14500
88854825
0
10000
20000
30000
40000
50000
IndividualSchemes
CorporateSchemes
Ayushman Bharat State Schemes RSBY
PMJAY package rates almost 30-35% of GIPSA rates
(Rs)
77
Standard health insurance package
Arogya Sanjeevani
The Insurance Regulatory and Development Authority of India (IRDAI), on 2 January 2020, issued a circular
mandating health and general insurance companies to offer a standardised product that will take care of the basic
requirements of policyholders. In an effort to provide standardized health insurance plans for families, the newly
launched standard health insurance, known as the Arogya Sanjeevani Policy, can be availed by individuals as well.
According to IRDAI’s guidelines, issued on January 2, these are the key features of the Arogya Sanjeevani Policy –
Insurance policy to take care of basic health needs of insuring public
To have a standard product with common policy wordings across the industry
To facilitate seamless portability among insurers
Insurance Coverage is available in Arogya Sanjeevani Policy for the following:
Hospitalization Expenses
Expenses incurred on treatment of Cataract
Dental treatment and Plastic surgery necessitated due to disease or injury
All the day care treatments
AYUSH Treatment
Pre-Hospitalization medical expenses
Post-Hospitalization medical expenses
Coverage from Rs 0.1 million to Rs 0.5 million
All the general and health insurers were directed to offer Arogya Sanjeevani Policy from April 01, 2020 and 30
General and Health Insurers launched this product by May 2020. Since features of Arogya Sanjeevani Policy are
common across the industry and the terms and conditions of the policy are already specified by the Authority, with
the objective of reducing the operating costs and to pass on this benefit of reduced operational cost to the
policyholders by way of affordable premiums, insurers are allowed to issue the policy contract of Arogya Sanjeevani
Policy in electronic / digital format.
To widen the coverage of health insurance across the country, the Insurance Regulatory and Development Authority
of India (IRDAI), in its latest circular in March 2021, has expanded the sum insured bands under the standard Arogya
Sanjeevani policy to between Rs 50,000 and Rs 100 thousand. The latest modifications to the product’s sum insured
slabs will make it compulsory for insurers to offer a sum insured of up to Rs 100 thousand, starting from Rs 50,000
and in multiples of Rs 50,000.
The move to issue a health cover with standard terms and conditions through Arogya Sanjeevani is laudable, given
the low penetration of health insurance in India and the fact that a large section of customers are unaware of the
78
nuances of health insurance and the benefits. In the long run, getting more new customers into the health insurance
fold by issuing a standard policy, and gradually migrating these customers to suitable plans as per their coverage
requirements would help enhance the addressable market for the industry.
Arogyashree
Arogyashree is a policy to provide access to primary, secondary and tertiary healthcare at affordable rates that the
government of India runs health insurance schemes across several states. Enrolment in these state specific health
insurance schemes ensures that the objective of Universal Health coverage to all Indians is realised with medical
facilities available at affordable rates.
Vajpayee Arogyashree scheme
The Karnataka Government launched the Vajpayee Arogya Shree Suvarna Arogya Suraksha Trust for those residing
within the state. This health scheme offers families who rank below the poverty line or BPL subscribers, cashless
medical treatment in government hospitals for several diseases including surgery and hospitalisation. The Suvarna
Arogya Suraksha Trust scheme seeks to minimise the expenditure by providing quality medical care to poor
households at reasonable rates with the state government incurring the entire cost of treatment.
Features of the Vajpayee Arogya Shree Scheme –
People of all ages can enroll in this scheme which has no upper age limit
Benefits available to a maximum of 5 members in a family
Annual cover of Rs 150 thousand to each family on a floater basis, on exhaustion of this an additional amount
of Rs 50,000 is provided
Single card to get free treatment with coverage for any pre-existing diseases
Fully funded by the state government
YSR Aarogyasri Scheme
The YSR Aarogyasri Scheme is a health insurance programme that was launched by the State Government of
Andhra Pradesh by the then chief minister Dr Y S Rajasekhar Reddy in the year 2007. This program is now referred
to as the YSR Aarogyasri Health Scheme and is handled by the Aarogyasri Health Care Trust. The Dr. YSR
Aarogyasri scheme is targeted at those desiring excellent health care in Andhra Pradesh and Telangana at
discounted costs. Some of the scheme’s features include –
Hospitalization (In-patient care): All the diseases that are listed under the programme and require
hospitalization are covered
Out-Patient Treatment: These treatments can be availed at health camps and in the network hospitals in a
cashless manner
79
Cashless Services: An annual coverage of Rs. 0.5 million per family to registered family members and
beneficiaries
Coverage A coverage for diseases that a beneficiary might already suffer from before registering under the
scheme, is provided under this plan
Coverage For Follow-up treatments: The scheme also covers procedures post hospitalization
Family-floater Health Insurance Cover: The sum insured can be used by the entire family without any
separate plans
Micro insurance
Insurance Regulatory and Development Authority of India (IRDAI) has created a special category of insurance
policies called micro-insurance policies to promote insurance coverage among economically vulnerable sections of
society. Earlier, Life Insurance Corporation of India (LIC) contributed the most both in terms of policies sold and
number of micro-insurance agents. However, with the notification of the IRDAI (Micro-insurance) Regulations 2005,
by the Authority, there has been a steady growth in the number of products catering to the needs of the poor.
Insurance companies are now offering already approved general insurance products as micro-insurance products
with the approval of the Authority, if the sum assured for the product is within the range prescribed for micro-
insurance.
Benefits covered under Health category are - Disability, hospitalisation, loss, etc. Popular format of Health insurance
cover is a fixed sum in case of the hospitalisation (Pre, during and Post). Generally, benefits are 150 Rs/day
hospitalisation expenses, consultant fee up to Rs 4500/ hospitalisation, diagnostic expenses up to Rs 4500/
hospitalisation, transportation expenses Rs 350 per hospitalisation. One overall limit for hospitalisation may be
defined as Rs 15,000 and overall sum insured for one year defined as Rs 30,000. Group products with discounts
offered to the members/clients of MFIs and NGOs and to specific sections of the population (such as all the BPL
families in a state).
Scheme portability
Changing or porting health insurance policy from one company to another resulted in losing benefits like waiting
period for covering pre-existing diseases. However, in 2011 IRDAI protected this for policyholders by giving them the
right to port their policy to any other insurers of their choice. This applies not only when the policyholder moves from
one insurer to another but also from one plan to another with the same insurer.
Conditions:
Policyholder can port the policy only at the time of renewal. That is, the new insurance period will be with the
new insurance company
80
Apart from the waiting period credit, all other terms of the new policy including the premium are at the
discretion of the new insurance company
At least 45 days before your renewal is due, a customer has to
o Write to your old insurance company requesting a shift
o Specify company to which the customer wants to shift the policy
The customer is required to renew the policy without a break (there is a 30 day grace period if porting is
under process)
Furthermore in May 2020, IRDAI said in its guidelines that in order to accept a policy which is being ported in, the
insurer shall not levy any additional charges exclusively for the purpose of porting. This will help improve customer
experience and stickiness towards insurance policy which they like.
81
With life expectancy improving and changing demographic profile, healthcare
services are a must
With improving life expectancy, the demographic of the country is also witnessing a change. As of 2011, nearly 8%
of the Indian population was of 60 years or more, and this is expected to surge to 12.5% by 2026. However, the
availability of a documented knowledge base concerning the healthcare needs of the elderly (aged 60 years or more)
remains a challenge. Nevertheless, the higher vulnerability of this age group to health-related issues is an
accepted fact. The number of people in the working age group (15-64) is also continuously increasing. This evolving
demographic profile of the country increasingly requires better healthcare services and health insurance covers in
line with their requirement.
Life expectancy (at birth) and infant mortality rate: India vs other
Note: LEB – Life expectancy at birth; IMR – Infant mortality rate (probability of dying by age of 1 per 1000 live births)
Source: WHO World Health Statistics 2020
According to the Report on Status of Elderly in Select States of India, 2011, published by the United Nations
Population Fund (UNFPA) in November 2012, chronic ailments, such as arthritis, hypertension, diabetes, asthma,
and heart diseases, were commonplace among the elderly, with ~66% of the respective population reporting at least
one of these. In terms of gender-based tendencies, while men are more likely to suffer from heart, renal and skin
diseases, women showed higher tendencies of contracting arthritis, hypertension, and osteoporosis.
Population in 60+ age group to grow faster
76
8
75
9
70
37
66
51
69
30
69
42
71
14
60
22
58
8878
6
77
7
73
26
71
28
71
19
72
30
72
9
65
20
63 66
81
3
79
4
76
11
75
9
76
5
76
5
75
4
72
3
69
23
0102030405060708090
LEB IMR LEB IMR LEB IMR LEB IMR LEB IMR LEB IMR LEB IMR LEB IMR LEB IMR
UnitedKingdom
UnitedStates ofAmerica
Vietnam Brazil Thailand China Malaysia RussianFederation
India
1990 2000 2017
82
Source: Census, CRISIL Research
With the Indian population is expected to grow to ~1.4 billion by 2026 and, considering the above mentioned factors,
the need to ensure healthcare services to this vast populace is an imperative. But this also provides a huge
opportunity to expand into a space that bears huge potential.
Rising income levels to make quality healthcare services more affordable
Even though healthcare is considered a non-discretionary expense, considering that an estimated 83% of households
in India had an annual income of less than Rs 0.2 million in fiscal 2012, affordability of quality healthcare facilities
remains a major constraint.
Growth in household incomes and, consequently, disposable incomes are critical to the overall growth in demand for
healthcare delivery services in India. The share of households falling in the income bracket above Rs 0.2 million is
estimated to go up to 35% in fiscal 2022 from 23% in fiscal 2017, providing potential target segment for healthcare
service providers.
Income demographics
35.4%29.0% 27.0% 26.0% 23.0%
27.0%28.6% 30.0%
26.0%24.0%
19.6%20.5% 21.0%
23.0%24.0%
11.1% 13.6% 13.0% 16.0%16.0%
6.9% 8.2% 9.0% 10.0% 13.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2001 2011 2016E 2021P 2026P
0-14 years 14-29 years 30-44 years 45-59 years 60+ years
In Cr 103 121 127 134 140
83
Note: E = Estimated; P = Projected
Source: CRISIL Research
83%76%
65%
14%19%
28%
2% 2% 4%
1% 2% 3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011-12E 2016-17E 2021-22P
Below 0.2 million Rs 0.2 to 0.5 million Rs 0.5 to 1 million Rs 1million and above
84
Increasing hospital network
The number of network hospitals enrolled by third party administrators (TPAs) has increased from 115 thousand in
fiscal 2015 to over 173 thousand as of fiscal 2020. This increase in number of network hospital has further enhanced
reach and penetration of the health insurance industry. Increasing hospital network has enhanced reach for both
TPAs and insurers thus enabling better services for policyholders. Increasing network increases the options for
policyholders as they can avail health insurance services much more easily. For insurers as well, increasing hospital
networks enables them to cater customer needs and wants more effectively. The details laid down include number
of beds, doctors – full time and consultants – surgeons or interventionists, qualified nurses, intensive care unit beds,
doctors exclusively available for ICU and qualification of doctors. This is further expected to increase customer
service.
Trend in number of network hospital enrolled by TPAs
Note: Hospitals may have tied up with more than one TPA
Source: IRDAI Annual report, CRISIL Research
1,15,542 1,27,548
1,34,499 1,47,093 1,49,739
1,72,995
-
20,000
40,000
60,000
80,000
1,00,000
1,20,000
1,40,000
1,60,000
1,80,000
2,00,000
FY15 FY16 FY17 FY18 FY19 FY20
Network Hospitals Enrolled by TPAs
85
Advancements in medical diagnosis and treatments
The healthcare industry, like other industries, is constantly evolving in terms of technology. Developments in
information technology have helped create systems which ensure faster and reliable services. While, on one hand,
these systems help increase the reach and quality of healthcare delivery systems across the country, on the other,
they also enable healthcare delivery providers to improve efficiency by helping them in resource planning, maintaining
patient records, etc. CRISIL Research believes that with the advent of 5G, smartphone penetration and increasing
health conscious population, digital healthcare penetration will grow significantly.
Electronic health records (EHRs) - EHRs are designed to manage detailed medical profile and history of patients
such as medication and allergies, immunisation status, laboratory test results and radiology images. EHRs can be
shared between multiple systems allowing doctors from various specialties and hospitals to share the same set of
patient data. This feature helps improve coordination between doctors, saves time and prevents redundancy of
recreating medical records. EHRs allow medical histories to be transferred quickly and accurately thereby ensuring
effective and timely treatment. They can be secured with various privacy settings.
Artificial Intelligence (AI) and blockchain - Healthcare establishments like hospitals are looking at opportunities to
deploy AI or/and blockchain in improving their operating efficiency – scheduling appointments depending on the
gravity of the issue, healthcare monitoring, etc., thereby minimising human error through technological intervention.
For e.g., NITI Aayog has extended its support to an AI based project - Radiomics, which is also supported by Tata
Memorial Centre Imaging Biobank.
Radiology information system (RIS) - RIS is a tool that allows managing digital copies of medical imagery such as
X-ray, MRI, ultrasound, and associated data on a network. Implementation of RIS allows hospitals eliminate the need
of generating and maintaining medical imagery on expensive films. RIS enable hospitals to store complete radiology
history of patients together. This feature allows generating detailed analytical reports on patient's medical history.
Clinical decision support system (CDSS) - CDSS is a software designed to assist doctors in taking decisions
pertaining to the diagnosis and treatment of patients. A CDSS is supported by a large database which has detailed
information on ailments with data aspects ranging from symptoms to the diagnosis. The database is supported by a
set of rules which help generate accurate results for the query made by the user. It also contains patient specific
information such as medical history, allergies, etc., which helps the doctors to make effective decisions on the
treatment. CDSS databases are open-ended to allow addition of information on newly discovered diseases,
procedure and medications, rectification of erroneous procedures, and updating of patient information.
Mobile-based application - Healthcare delivery is also seeing an influx of mobile-based applications (mobile apps)
which assist both doctors as well as patients. These apps typically provide features such as self-diagnosis, drug
references, hospital/doctor search and appointment assistance, electronic prescriptions, etc. While certain apps allow
doctors to obtain information on drugs, dosage, contradictions, disease and condition references and procedures,
86
there are others which allow patients to locate doctors and fix appointments and also view video consultations.
Furthermore, there are apps that help patients save their medical records and keep them updated regularly.
Even the government is looking at adopting these measures with the launch of UMANG (Unified Mobile Application)
which offers 242 services across 57 departments in 12 states. It has a feature to book hospital appointments, check
blood availability and view medical reports online upon registration.
Telemedicine - Telemedicine is a technology designed to increase accessibility of healthcare services from remote
locations. Telemedicine makes extensive use of information technology to create a connection between doctors at
the main hospital and patients at the remote / telemedicine centre. The doctor analyses the patient through telephonic
conversation or video conferencing. She/he is assisted by a junior doctor or health worker who is physically present
at the telemedicine centre. The junior doctors physically examine the patient and convey the information to the doctor.
The doctor communicates diagnosis and medication based on the inputs provided by the junior doctors. If the ailment
is complex, then the patient is advised to get admitted at the main hospitals to avail of intensive care. This model is
useful in healthcare service provision at a time there is a dearth of healthcare professionals in the country.
Robotic surgery - Robotic surgery or robot-assisted surgeries (RAS) is surgery conducted using a robotic arm that
is controlled electronically using a control pad which may be located at a local or remote location and is also equipped
with high-definition cameras allowing surgeons to take a closer look at the areas being operated. Since RAS can be
performed from remote locations, it allows patients to avail of treatment from the desired specialist surgeons across
the world without having to travel. Robot assisted surgeries have been used to conduct general surgeries, bypass
surgeries, colorectal surgeries, gastrointestinal surgery, neurosurgery, orthopaedic surgeries, etc.
Wearables and sensors - With awareness regarding healthcare increasing, people have started adopting wearables
and sensors which keep a track of the vitals of the user. It also has data about the user’s historical health records
and sends out alerts in case of any irregularities. Some sensors are used solely from a curative healthcare
perspective, to lead a healthy life with a proper fitness regimen.
87
Increasing product portfolio with innovative products
Indian insurance sector has undergone a drastic change over the years in terms of product innovation. Traditionally,
the industry started offering Hospital Daily Cash Benefit and Hospitalization/ Critical Illness benefit products in
addition to the indemnity products which have predominated the market so far. However, over the years, products
has evolved to cover many additional risks related to travel, specific diseases, customized products and more. Some
of the innovations in the health insurance sector related to product evolution include:
Specialized products focusing on specific disease – Insurance schemes generally provide umbrella
coverage for generic diseases, but affordable insurance coverage are now also offered for specific diseases.
These insurance policies can provide coverage for diseases that policyholders feel most susceptible to, such
as cancer, dengue or malaria. During the covid-19 pandemic, the IRDAI was also prompt in directing insurers
to come up with specific protection against covid-19, even though the impact of the disease was unknown
and uncertain.
One stop insurance solution – Insurers offer an umbrella product covering multiple risks/ disease under
one policy. These policies offer flexibility wide coverage like hospitalization, day care or home treatment.
Such policies provide policy holder one single solution for policy holders at affordable rates as they are
relatively cheaper than individual covers.
Wellness benefits – Insurers are encouraging customers’ by providing discounts or other benefits based on
their fitness. Based on the disclosed fitness and wellness criteria, insurers are offering redeemable vouchers
or for various activities. Also, smartwatches and fitness bands are being used to monitor the health of
policyholders and award points which can be redeemed against future premiums, bump up sum assured or
to avail medical benefits.
IRDAI has also allowed insurers to stretch the benefits by covering non-payable items of cost of treatment.
Insurers can offer benefits based on product design, geography or claims experience, thereby allowing them
to come up with customized health risk assessment tools to incentivise policyholders based on their fitness
levels.
Regulator as an enabler for product innovation – Health insurance offerings have gone a drastic change
as customer expectations towards insurance has changed significantly as a result of covid-19. In response
and at the instance of the regulator, the industry launched multiple products like Arogya Sanjeevani, a
standard and simple health insurance policy, Corona Kavach and Corona Rakshak that specifically cater to
covid-19 expenses.
The IRDAI in February 2021 allowed general and health insurance companies to launch four categories
(personal accident, overseas travel insurance, domestic travel insurance and benefit-based health insurance
88
products) of individual products, add-ons and riders of health policies under the use-and-file procedure.
Under this use and file norms, IRDAI has permitted insurers to market certain products without prior approval.
Outpatient department (OPD) insurance policies – Health insurance policies were generally available
only on hospitalization. However, OPD accounts for a considerable share of medical expenditure in India.
Insurers have thus launched OPD-specific products covering day care treatment or treatments which does
not require hospitalization. These policies thus make is much easier and affordable to avail healthcare
facilities OPD insurance policies along with telemedicine/ tele doctor is expected to have positive impact on
medical accessibility and affordability, especially in the rural segment.
Private players and standalone health insurers have increased their product portfolio
Source: IRDAI Annual report, CRISIL Research
26 313 9 10 19
30 3059 53
94
118
1020 26 37
30
46
6681
8899
134
183
0
20
40
60
80
100
120
140
160
180
200
FY15 FY16 FY17 FY18 FY19 FY20
Number of health insurance products approved
Public Sector Insurers Private Sector Insurers Standalone Health Insurers
89
Digitisation to be at the core of industry transformation
The Indian health insurance industry has grown at a strong pace over the years and is expected to continue its growth
trajectory as digital trends continue to evolve the industry. Evolving digital trends coupled with changing customer
and other stakeholder expectations is demanding transformation of existing business models. New and innovative
business models across verticals will generate greater value and deliver better services for customers. Growth in the
healthcare services and technology vertical has been material; players are bringing technology-enabled services to
help improve patient care and also boost efficiency. Insurers are increasing focus towards technology to engage with
consumers, and to provide real-time and convenient access to health information.
Indian health insurers have also started adapting to technological advancement, with innovative tools to support
customers in policy purchase and claim processing. For example, insurance companies are using wearable devices
to track policyholder’s daily activity such as walking, sleeping, exercising, etc. enabling them to perform real time risk
assessment. Apart from helping the individuals in robust healthcare management, these gadgets have empowered
the health insurance companies to provide better health care solutions. Besides, insurers have invested in online
tools as well as entered into partnerships with web aggregators and fintechs for enabling desirous customers to
purchase polices digitally at a click of a button. Besides, the large tracts of data on customer behaviour and claims
experience over the years are being leveraged using machine learning, thereby improving the efficacy of the machine
learning process.
Digital transformation offers insurers opportunities to rethink business operations in order to enhance customer
satisfaction, reduce cost and prevent errors. For example, on the selling side, insurance has traditionally been sold
on the basis of trust and relationships, but with technological progress, speed, flexibility and innovation will be brought
into the equation.
Key areas in insurance processes where digitalisation is finding application
90
Source: CRISIL Research
Path ahead for Indian health insurers
Technology to be leveraged to provide customised solutions: Indian insurers will increasingly leverage artificial
intelligence, telematics, connected devices and big data analytics to enhance the value proposition to customers as
well as enhancing efficiency in claims processing, underwriting, loss prevention and fraud management. Just as is
the trend globally, Indian insurers will also make use of customer insights to offer on-demand and usage-based
insurance covering risks on specific activities at specified times.
Direct purchase of individual policies to gain traction: Given the increasing usage of the internet in India and
ubiquitous availability of mobile broadband, direct purchase of insurance policies online will grow exponentially. Given
the limited awareness of health insurance in India and plethora of options available, a large number of these policies
would, however, still be sold through assisted digital service, i.e. sold digitally but with the assistance of a physical
representative.
Think partnerships: With rapid changes in technology and continuous innovation, it is imperative for insurers to
collaborate with technology partners, wherever required, to counter legacy data systems and complex internal
processes. They also have the opportunity to get access to a much broader set of customers and participants and
thus improve their offerings. For example, insurers in India are collaborating with fintech, digital wallets and other e-
commerce platforms, which enables them to increase reach and grow their market share with innovative products.
Product design
•Tailored products through data analytics based on consumer needs
•One-stop platform to manage and respond to issues
•Artificial Intelligence (AI) enabled platforms to address customer requests in an automated fashion real time without any human intervention
Distribution
•Collaboration with non-traditional distribution partners such as fintechs
•Transform the selling and distribution by providing easy and efficient buying experience to customers
•Up-skill agent network or in house team to seamlessly conduct sales through digital channels and educate customers
Underwriting and risk manageme
nt
•Monitor customer behaviour using wearable devices
•Real time data helps improve risk assessment and promote better behaviour among customers
•Machine learning and AI being used to underwrite risk in a better manner
Claim processing
•Trusted and verified submission of claim request
•Online claim process; accepting digital documents to ensure quick and efficient claims processing
91
Overall, digital is starting to change the industry dynamics and competitive scenario as insurers look beyond price as
a factor to attract customer. Insurers would be required to reshape and reimagine the ingredients across the value
chain right from customer acquisition, customer requests to claim settlement for enhancing the customer experience
through the life cycle and operational efficiencies.
92
Key factors shaping customer behaviour and adoption of insurance
Customer mindset and expectations towards health insurance has changed over the years and continue to evolve
rapidly. Earlier, customers used to shy away from buying health insurance due to lack of awareness, complicated
buying process, ambiguous underwriting procedure, lack of adequate network of hospitals, and most important of all
uncertainty over the claims process. But, with rising awareness and increasing data availability, as also proactive
measures taken the regulator as well as the industry, customer demand for health insurance has increased. Over
the years, insurers and web-aggregators have ensured that relevant features, exclusions, and conditions are
explained in a clear and consistent manner such that the customer understands the details of the policy, thus
maintaining transparency and build trust. Automatic claim verification and processing has not only helped in reducing
the time for final settlement but has also helped to build trust among customers.
Need for individual policy over and above corporate/ group policy
Many customers avoid buying individual health insurance policies simply because they are covered under a corporate
health plan. Over the years, customer awareness towards drawbacks of group cover such as non-availability of no
claim bonus, lack of cumulative bonus benefit, losing the cover while switching jobs or in case of job loss and difficulty
in getting individual coverage post retirement has propelled customers to purchase retail health policies for
themselves and their families. Apart from this, retail policies are also more convenient to customise basis ones need
and wants as compared to corporate plans.
Significant increase in number of lives covered
Source: IRDAI Annual reports, IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding– Travel -
Domestic/Overseas and Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
48
94
25
43
0
10
20
30
40
50
60
70
80
90
100
FY15 FY20
(in million)
Group Business Retail Business
93
Expansion in hospital and agent network
While the awareness of health insurance has increased, it still remains a fairly complex product for several
consumers, who can easily get unnerved by the plethora of options and covers made available by insurers. Therefore,
the industry depends a lot on individual agents to guide and educate the customers to purchase policies and seek
coverage in line with their needs and requirements. This, being the case, players have been focusing on increasing
their agent network to enhance their breadth as well as depth of distribution. For example, all the SAHI insurers
cumulatively had 400 thousand agents between them as of FY18; this number has increased to 772 thousand agents
by the end of FY21.
Similarly, insurers have also been focusing on increasing their tie ups with hospitals on the ground so as to make the
process more convenient for customers. Insurers either tie up with hospitals on their own or tap into the network of
TPAs.
Source: IRDAI Annual report, GI council financial highlights, CRISIL Research
Digital distribution channel is expected to grow in future
Retail business policies are often purchased with the guidance of an insurance agent or broker to help navigate plan
choices and premium costs. However, increasing digitalization and easy data availability through digital channels like
web aggregators has increased transparency and in turn increased customers trust aspect towards insurance
process over the years.
These digital channels have witnessed exponential growth due to increased online footprint and convenience of
comparing quotations and features offered by web-aggregators. Insurers are also starting to engage with third party
1,15,542 1,27,548
1,34,499 1,47,093 1,49,739
1,72,995
FY15 FY16 FY17 FY18 FY19 FY20
Network Hospitals Enrolled By TPAs
4,05,924
5,20,650
6,81,145
7,72,227
0
1,00,000
2,00,000
3,00,000
4,00,000
5,00,000
6,00,000
7,00,000
8,00,000
9,00,000
FY18 FY19 FY20 FY21
Agent network of SAHI
94
digital partners such as e-commerce websites, online travel portals, cab sharing apps and online payment companies
to cross-sell insurance and further enhance customer experience.
Individual agents dominate the distribution network for retail business; but share of web-aggregator and
other online channels has increased
Source: IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 82: Channel wise performance of Health Insurance business excluding
travel (domestic/ overseas) and personal accident insurance business), CRISIL Research
Customers are keen to purchase innovative, customized products addressing specific needs
Customers are now open to trying innovative products which better meet their needs, and insurers also have tapped
this emerging opportunity by offering policy options designed to meet specific needs and habits.
Disease specific policies - Insurance schemes generally provide umbrella coverage against a range of diseases,
but affordable insurance coverage are now also offered for specific diseases. These specialized insurance policies
provide coverage for diseases that policyholders feel most susceptible to, such as cancer, dengue or malaria, and
are designed taking into account the needs of patients battling these diseases. During the covid-19 pandemic, the
IRDAI was also prompt in directing insurers to come up with specific protection against Covid-19, even though the
impact of the disease was unknown and uncertain.
Telemedicine - Telemedicine makes extensive use of information technology to create a connection between doctors
at the main hospital and patients at the remote / telemedicine centre. The doctor analyses the patient through
telephonic conversation or video conferencing with a junior doctor who is physically present at the telemedicine centre
to physically examine the patient and convey the information to the doctor. This model is likely to be scaled up over
3% 4%
43% 42%
12% 8%
4%12%
4%1%
1%
4%
3%2%
0%
1%
8%7%
45%33%
70%75%
8% 8%
0% 2% 0% 0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY15 FY20 FY15 FY20
Brokers Corporate Agent - Banks Corporate Agent - Other than Banks
Direct Sale - Online Direct Sale - Other than Online Individual Agents
Web- aggregators
Retail Business Group Business
95
time with improving technological effectiveness. Telemedicine can also help partly mitigate the challenges caused
by the dearth of healthcare professionals in the country.
As digitally mature customers are willing to share their data to avail of personalized solutions, insurers fully leverage
insights from high frequency data sources, such as wearables, and carry out dynamic underwriting policies to
construct products that are suitable with customer needs. Based on these disclosed fitness and wellness criteria,
insurers are offering wellness benefits to customer through redeemable vouchers or for various activities. Also,
smartwatches and fitness bands are being used to monitor the health of policyholders and award points which can
be redeemed against future premiums, bump up sum assured or to avail medical benefits.
Reimagining claim settlement process
The share of TPAs in total health insurance claims paid has decreased from 74% in fiscal 2016 to 69% in fiscal 2020.
This has largely been on the back of various private insurers enhancing focus towards in-house claims processing.
This is because In-house claims processing is relatively faster as the insurer is better equipped to explain expenses
which are not covered directly to the policyholder, enabling redressal of grievances quickly. Over the years, insurers
have reimagined the claim settlement process for policyholders by accepting digital documents without human
intervention, providing real time tracking of the claim status and cashless settlement to ensure quick and efficient
claims processing.
Cashless claims represents another move made by the industry, along with TPAs, to enhance customer convenience.
In the cashless claims process, customers do not have to make any payment towards the insured amount to the
hospital; rather, the process is directly managed between the hospital and the TPA/insurer. Prior to cashless claims
being introduced, customers had to make the payment to the hospitals and thereafter seek reimbursement from
insurers after submitting the required documents. As of fiscal 2020, ~56% of claims were cashless claim settlement
which has increased from ~49% in fiscal 2016.
Increase in share of in-house claim settlements Share of in-house cashless claim settlement has
increased over the years
96
Source: IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 83: Details of claims development–& aging - Health insurance excluding
travel (Domestic/ Overseas) and personal accident insurance business), CRISIL Research
74%69%
26%31%
0%
10%
20%
30%
40%
50%
60%
70%
80%
FY16 FY20
TPAs In-house
52%54%
42%
60%
0%
10%
20%
30%
40%
50%
60%
70%
FY16 FY20
TPAs In-house
97
Key trends in health insurance industry in India
Low penetration indicates significant growth potential
India’s health insurance penetration has increased from ~0.2% in fiscal 2015 to 0.43% in fiscal 2021. However, it
remains much lower than the global average of ~2%. The insurance density too, at Rs. 418 in fiscal 2021, is much
lower than the global average.
The current level of low insurance penetration in health insurance can be attributed to various reasons such as, lack
of education, awareness among customers, affordability, and the complicated access.
As of FY21, only 36-38% of Indians have a health insurance policy, either provided by the private sector or
government schemes. The low penetration levels indicates the ample opportunity for growth. To tap this opportunity,
it is imperative for the industry to keep innovating and designing products that meet customer needs. In addition,
there is a need to improve customer awareness as well.
Penetration and density for Indian health insurance industry
Source: IRDAI Annual report, CRISIL Research; Note: Density is in per capita in Indian Rupees; Penetration is in (%)
153
185
227
274
328
368
418
0.19%0.22%
0.25%
0.28%
0.32%
0.35%
0.43%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.40%
0.45%
0.50%
FY15 FY16 FY17 FY18 FY19 FY20 FY21
0
50
100
150
200
250
300
350
400
450
500
Density (LHS) Penetration as per Real GDP
98
Insurance density as a proportion of per capita income
Note: Insurance density and per capita are in nominal terms
Source: World bank, IRDAI Annual report, CRISIL Research
Given the low penetration level in health insurance business, the premium growth for the industry has been
significantly high for India as compared to nominal GDP growth. This has largely been due to rising customer
awareness and growing demand from individuals. With India expected to be the fastest growing Asian economies –
with double-digit nominal GDP growth between 2021 and 2025 (11% CAGR), the Indian health insurance industry
seems poised for strong growth in the years to come.
Strong scope for increase in health penetration in India
0.15%0.16%
0.18%0.20%
0.22% 0.23%
0.27%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
FY15 FY16 FY17 FY18 FY19 FY20 FY21
Health insurance Density as a % of per capita income
10.5%11.8% 11.0% 10.5%
7.8%
-3.0%
18%
22% 22%
15%17%
28%
0.22%0.25%
0.28%
0.32%0.35% 0.43%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.40%
0.45%
0.50%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
FY16 FY17 FY18 FY19 FY20 FY21
GDP growth (nominal) Retail Premium growth Penetration (RHS)
99
Note: Penetration is calculated as health insurance premium as a proportion of real GDP
Source: MOSPI, IRDAI Annual report, GI Council Segmentwise report, CRISIL Research
Percentage of household covered by a health scheme/health insurance
increasing in rural area
According to the 2019-20 National Family Health Survey (NFHS) 5, health insurance coverage has increased in the
past ten years. Rural areas where only 2% of households had a health scheme in 2005-06 has increased to more
than 1/3rd households in year 2019-20. In states, Andhra Pradesh has the most households of ~70% where at least
one member had a health scheme, although it has seen a decline in the last five years followed by Goa 66% and
Meghalaya 63%.
Progress in health insurance coverage, 2005-06 to 2019-20
Note: 2019-20 numbers are calculated using weighted average numbers of States
Source: National Family Health Survey (NFHS) reports, CRISIL Research
State-wise percentage of household covered by a health scheme/health insurance in 2019-
20
10%
28%30.7%
2%
29%
35.2%
5%
29%
33.8%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2005-06 2015-16 2019-20
Urban Rural PAN India
100
Source: NFHS reports, CRISIL Research
Out-of-pocket expenses trend
Out of pocket expenses have reduced as a proportion of current health expenditure, but
remain very high
Given the high reliance on one’s own sources of funds for financing healthcare expenses, India has one of the highest
health protection gap (defined as direct out of pocket expenses and medical expenses that are required to be incurred
but are avoided by households due to lack of affordability) in Asia. Out of pocket expenses as a proportion of current
health expenditure has improved over the years from ~72% in year 2000 to ~63% in year 2018. Government efforts
to reduce the out of pocket expenses include - National Health mission (NHM), Ayushman Bharat- Pradhan Mantri
Jan Arogya Yojna (PMJAY), Surakshit Matritva Aashwasan (SUMAN) and NHM Free Drugs Service Initiatives.
62% 65%
53% 53%58%
50%
40%47%
41%36% 37%
25% 26% 28% 31%
15%20%
27%
12% 12%19%
1%
74%68% 67% 65% 67%
62%66%
55% 53%
41%34% 37%
31% 28%22% 23% 20%
12% 15% 15%10%
2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Urban Rural
71.70
74.1173.37 73.43
72.4873.15
72.2670.82
69.15
66.7665.19
62.2363.00
69.07
67.01
64.6663.21
62.40 62.67
56.00
58.00
60.00
62.00
64.00
66.00
68.00
70.00
72.00
74.00
76.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Out-of-pocket expenditure (% of current health expenditure)
101
Source: World Bank, CRISIL Research
State-wise average out of pocket expenditure in public health facility (Rs ‘00)
According to NFHS 5 data, the Out-of-Pocket expenditure (OOPE) incurred by people while accessing public health
services is on the rise. Average out of pocket expenditure in a public health facility has risen in 10 states and two
Union Territories.
Source: NFHS reports, CRISIL Research
7
21
46
79
18
13
36
23 3
3 33
50
27
42 4
8
42
38
59
48
69
43
40
10
3
7
17 2
5 27 28 29 30 31 32 3
8 38
38 38 5
0 51 54 58 6
6 67 70
83
14
5
0
20
40
60
80
100
120
140
160
(Rs '00)
2015-16 2019-20
102
Player-group wise analysis
Public sector insurers continue to lose market share; Market share for SAHI increased
Health insurance premiums have grown at a CAGR of 19% in the last 6 years ending FY21. This stupendous growth
in premium was due to the strong surge in premium income of private players and standalone health insurance
companies. Some public sector players lost market share during this period due to capital constraints being faced by
them. Premium of SAHI zoomed at a 39% CAGR during FY15-FY21, compared to that of private players at a 21%
CAGR. While market share for SAHI players increased from 10% in fiscal 2015 to 26% in fiscal 2021, it is further
expected to increase by fiscal 2025 as insurers increase their focus on retail business where SAHI have a market
share of 46% as of fiscal 2021.
Some of the key growth drivers for SAHI include:
Single product focus helps SAHI to better cater to customer requirements
Strong focus on underpenetrated and relatively profitable retail business segment
Open architecture where banks/ other corporate agents are allowed to partner with three SAHIs insurers
Trend in player group wise market share in health insurance (excluding personal accident and travel)
Note: P = Projected; Figures in box represent health insurance premium (excluding PA and Travel)
Past number from FY15 to FY20 for Private sector insurers and SAHI are adjusted; HDFC Ergo Health (Erstwhile Apollo Munich) is considered
as private sector insurer (as is got merged with HDFC Ergo General Insurance) instead of SAHI for our analysis
64% 64% 63% 58% 52% 48% 47% 45% 43% 41% 40%
26% 24% 22%25%
28%29% 27% 28% 29% 30% 30%
10% 12% 14% 17% 19% 22% 26% 27% 28% 29% 30%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22P FY23P FY24P FY25P
Public sector insurers Private sector insurers SAHI
201 244 304 370 449 508 1143Rs Bn 583 683 803 955
103
Source: GI Council Segmentwise report, IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding– Travel
-Domestic/Overseas and Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
Player group wise y-o-y growth varies across years
Note: Past number from FY15 to FY20 for Private sector insurers and SAHI are adjusted; HDFC Ergo Health (Erstwhile Apollo Munich) is
considered as private sector insurer (as is got merged with HDFC Ergo General Insurance) instead of SAHI for our analysis
Source: GI Council Segmentwise report, IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excludin– Travel
-Domestic/Overseas and Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
Group business accounts for 57% and 58% share in health insurance business in fiscal 2021 for private sector
insurers and public sector insurers respectively. However, for standalone health insurers, retail business accounts
for 80% of overall health insurance business. The share of group business has increased from 11% in fiscal 2015 to
20% in fiscal 2021 and 23% in H1FY22 for SAHI.
Group Business accounts for more than 60% share for Private Sector Insurers
21%
14%
44%
23%
16%
45%
12%
36%
44%
9%
37%39%
5%
18%
31%
11%8%
33%
27%25%
39%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Public sector insurers Private sector insurers SAHI
FY16 FY17 FY18 FY19 FY20 FY21 H1FY22
104
Note: Past number from FY15 to FY20 for Private sector insurers and SAHI are adjusted; HDFC Ergo Health (Erstwhile Apollo Munich) is
considered as private sector insurer (as is got merged with HDFC Ergo General Insurance) instead of SAHI for our analysis
Source: GI Council Segmentwise report, IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding– Travel
-Domestic/Overseas and Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
Share of retail business has reduced for Public Sector Insurers
Source: GI Council Segmentwise report, IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excludin– Travel
-Domestic/Overseas and Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
Standalone Health Insurers focus mainly on Retail Business segment
11% 7% 6% 5% 7% 8% 4%11%
42% 45% 44% 50%57% 57%
57%57%
47% 48% 50% 45%36% 34% 39%
32%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY15 FY16 FY17 FY18 FY19 FY20 FY21 H1FY22
Government Business Group Business Retail Business
51 59 68 93 126 149Rs Bn 160 101
14% 13% 14% 16% 19% 14% 13% 15%
51% 55% 57% 56% 54%58% 58%
63%
35% 32% 29% 28% 27% 28% 29%22%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY15 FY16 FY17 FY18 FY19 FY20 FY21 H1FY22
Government Business Group Business Retail Business
Rs Bn 129 156 192 215 235 246 273 178
105
Note: Past number from FY15 to FY20 for Private sector insurers and SAHI are adjusted; HDFC Ergo Health (Erstwhile Apollo Munich) is
considered as private sector insurer (as is got merged with HDFC Ergo General Insurance) instead of SAHI for our analysis
Source: GI Council Segmentwise report, IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding– Travel
-Domestic/Overseas and Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
Operating Expense as a proportion of Gross premium trend in health insurance
On the opex side, operating expenses as a proportion of gross premium was 20% for the industry in FY21. It is
estimated to come down going forward as insurers gradually increase their focus towards digitisation. It remains
relatively high for SAHI, reflecting their focus on the retail business over group and government business.
Furthermore, these companies are also of relatively of lesser vintage compared to multi-product public and private
insurers. However, for SAHI as well, operating expense as a proportion of gross premium has dropped from 34% in
fiscal 2015 to 23% in fiscal 2021. Going forward, with increasing scale, it is expected to further come down for SAHI
players.
Operating Expense as a proportion of Gross premium has improved for SAHI over the years
2% 1% 1% 1% 3% 4% 0% 0%11% 13% 16% 17%
19% 21%20% 23%
87% 86% 83% 82% 78% 75% 80% 77%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY15 FY16 FY17 FY18 FY19 FY20 FY21 H1FY22
Government Business Group Business Retail Business
Rs Bn 21 30 43 63 87 114 151 90
106
Note: Operating expense as a proportion of gross premium = Total operating expenses / Total gross direct premium; Standalone Health Insurer’s
data includes data for personal accident and travel; Public and Private Insurers data for overall general insurance business is considered
Source: IRDAI Annual report, GI Council Financial highlights, CRISIL Research
Claim ratio in health insurance
The corporate health segment, which represents about 50% of health insurance premium, has historically impacted
the sector’s profitability due to lack of pricing discipline across the players presenting corporate customers with strong
bargaining power. Private players and standalone health insurers (SAHI) have a claim ratio of 85% and 78%,
respectively, while the claim ratio is much higher at 102% for public insurers as of fiscal 2021. Claim ratio has
improved over the last four years as the industry witnessed price correction in the group health segment with many
players increasing premium rates and making co-payment mandatory.
Claim ratio in health is highest for public players
25%23%
34%
24%
20% 20%
29%
20%
16% 17%
28%
17%17% 16%
27%
17%20%
18%
25%
19%21%
19%
23%
20%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Public Sector Insurers Private Sector Insurers SAHI Industry
FY16 FY17 FY18 FY19 FY20 FY21
107
Note: Data excludes data for personal accident and travel; (*) Estimated on the basis of playerwise analysis
Source: IRDAI annual report, CRISIL Research
Combined ratios remained lowest for SAHIs due to their focus on retail businesses, but
increased in fiscal 2021
India’s non-life insurance market had a combined ratio of 113% as of fiscal 2021, primarily because of the high 120%
combined ratio of public insurers. SAHI players had lower combined ratio till fiscal 2020, reflecting their higher focus
on the retail business wherein claims ratios are relatively lower, however, this increased to 112% in fiscal 2021 due
to increase in claims.
Combined ratio trend for insurance companies (%)
112%
84%
63%
101%
117%
81%
58%
102%
122%
84%
58%
106%108%
80%
62%
94%
105%
84%
63%
91%
102%
82%
66%
88%
102%
85%78%
94%
0%
20%
40%
60%
80%
100%
120%
140%
Public Sector Insurers Private Sector Insurers SAHI Industry
FY15 FY16 FY17 FY18 FY19 FY20 FY21*
108
Note: Combined ratio is on overall business
Source: GI council financial highlights, CRISIL Research
Higher underwriting losses of public players hurting the profitability of the industry
Profitability of non-life insurance companies is dependent on underwriting performance and investment returns. The
Indian non-life insurance industry is continuously struggling with high underwriting losses, most of which is because
of large losses incurred by public sector insurance companies. These players reported a cumulative underwriting
loss of Rs 131 billion compared to Rs 36 billion for private and Rs 25 billion for SAHI insurance companies in FY21.
Investment income has steadily improved between FY15 to FY21 and has thus supported underwriting losses in the
industry. While the investment income of standalone health insurers zoomed at a 28% CAGR during the last 6 years,
admittedly on a low base, that of private players surged at an 18% CAGR. On the other hand, the growth of public
sector players has been relatively low as compared to others at 4% for the same period.
Profitability trend for the public insurance companies
123%
111%104%
118%
130%
107%101%
118%123% 123%
100% 100%
133% 133%
101% 101%
132% 132%
101% 101%
120%
105%112% 113%
0%
20%
40%
60%
80%
100%
120%
140%
Public Sector Insurers Private Sector Insurers SAHI Industry
FY16 FY17 FY18 FY19 FY20 FY21
109
Note: Data is for overall General insurance business
Source: IRDAI annual report, GI Council Financial highlight, CRISIL Research
Profitability trend for the private insurance companies
Note: Data is for overall General insurance business
Source: IRDAI annual report, GI Council Financial highlight, CRISIL Research
Profitability trend for the standalone health insurance companies
-70
-108
-160
-126
-185 -187
-131
107121 132
157 156 153137
-250
-200
-150
-100
-50
0
50
100
150
200
FY15 FY16 FY17 FY18 FY19 FY20 FY21
Underwriting Surplus (Rs bn) Investment income (Rs bn)
-25-37 -32
-21-29
-36 -36
4857
7178
89
112
128
-60
-40
-20
0
20
40
60
80
100
120
140
FY15 FY16 FY17 FY18 FY19 FY20 FY21
Underwriting Surplus (Rs bn) Investment income (Rs bn)
110
Source: IRDAI annual report, GI Council Financial highlight, CRISIL Research
-6.1
-2.7 -2.6-4.4
-5.7 -6.5
-25
1.8 2.4 3.1 3.95.2
7.4 8.0
-30.0
-25.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
FY15 FY16 FY17 FY18 FY19 FY20 FY21
Underwriting Surplus (Rs bn) Investment income (Rs bn)
111
Health insurance industry classification
Retail business segment to gain market share as players increase their focus
The growth in health insurance premium until fiscal 2020 was being led by group insurance scheme, which resulted
in increased share of group insurance schemes in overall health premium in fiscal 2020 to 50% from 44% in fiscal
2015. However, in FY21, retail insurance schemes have gained market share by 5 percentage points. Share of health
insurance through government policies is coming down year on year though the number of persons covered under
government-sponsored schemes (including RSBY) is highest among all.
Going forward, retail business is expected to grow at a much faster pace due to increasing awareness, especially
after the onslaught of covid-19. Consequently, its share in overall health insurance is expected to increase to 52%
by fiscal 2025; increase in health insurance and rise in healthcare spends by individuals are the key factors that are
expected to drive this growth.
Trend in segment wise market share in health insurance (excluding personal accident and travel)
Note: P = Projected; Figures in bracket reprent health insurance premium exluding PA and Travel
Source: GI Council Segmentwise report, IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding– Travel
-Domestic/Overseas and Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
In fiscal 2021, retail business witnessed a strong growth of 28% as compared to 10% in group business and de-
growth of 10% in government business. During the first half of fiscal year 2022, government business rebounded
very strongly but on a low base.
12% 10% 10% 11% 13% 10% 7% 7% 6% 6% 6%
44% 48% 48% 48% 48% 50%48% 46% 45% 43% 42%
44% 42% 41% 41% 39% 40% 45% 47% 49% 51% 52%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22P FY23P FY24P FY25P
Government Business Group Business Retail Business
201 244 304 370 449 508 1143Rs Bn 583 683 803 955
112
Segment wise y-o-y growth trend
Source: GI Council Segmentwise report, IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding– Travel
-Domestic/Overseas and Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
Number of lives covered in health insurance
Source: IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding– Travel -Domestic/Overseas and
Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
Family/ floater schemes are gaining share in health premium
2%
31%
18%25% 27%
22%29%
21% 22%
42%
22%15%
-11%
17% 17%
-14%
10%
28%
106%
28%19%
-20%
0%
20%
40%
60%
80%
100%
120%
Government Business Group Business Retail Business
FY16 FY17 FY18 FY19 FY20 FY21 H1FY22
214273
335 359 357 362
48
57
7189 73 94
25
29
32
33 4243
288
359
438
482 472499
0
100
200
300
400
500
600
FY15 FY16 FY17 FY18 FY19 FY20
Government Business Group Business Retail Business
113
Note: Figures in box represent health insurance premium (excluding PA and Travel insurance)
Source: IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding– Travel -Domestic/Overseas and
Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
SAHI accounts for 46% share in retail health insurance business in fiscal 2021 and 49% in H1FY22, which is a
significant increase from the 21% market share in fiscal 2015. Public sector insurers and private sector insurers have
lost market share in retail business during the same period. In terms of group business, both private sector insurers
and SAHI has increased their market share. Government business, on the other hand, continues to be dominated by
public sector insurers which together accounted for 84% market share in fiscal 2021. However, private sector insurers
have increased their focus towards government business during H1FY22 period and now account for 30% market
share.
12% 10% 10% 11% 13% 10%
44% 48% 48% 48% 48% 51%
20% 19% 23% 21% 23% 27%
24% 23% 19% 20% 16% 13%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY15 FY16 FY17 FY18 FY19 FY20
Individual insurance excluding family/floater policies
Family/floater insurance excluding individual policies
Group insurance schemes excluding govt sponsored schemes
Government sponsored
201 244 304 370 449 508Rs Bn
114
SAHI accounts for 46% share in Retail Business
Note: Past number from FY15 to FY20 for Private sector insurers and SAHI are adjusted; HDFC Ergo Health (Erstwhile Apollo Munich) is
considered as private sector insurer (as is got merged with HDFC Ergo General Insurance) instead of SAHI for our analysis
Source: GI Council Segmentwise report, IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding– Travel
-Domestic/Overseas and Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
Private sector insurers have increased their market share in group business
Note: Past number from FY15 to FY20 for Private sector insurers and SAHI are adjusted; HDFC Ergo Health (Erstwhile Apollo Munich) is
considered as private sector insurer (as is got merged with HDFC Ergo General Insurance) instead of SAHI for our analysis
Source: GI Council Segmentwise report, IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding– Travel
-Domestic/Overseas and Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
52% 48% 44% 39% 36% 34% 30% 28%
27%27%
27%27%
26% 25%24% 23%
21% 25% 29% 34% 39% 42% 46% 49%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY15 FY16 FY17 FY18 FY19 FY20 FY21 H1FY22
Public sector insurers Private sector insurers SAHI
Rs Bn 88 104 126 153 175 205 263 140
73% 74% 75%68%
59% 57% 57% 59%
24% 23% 20%26%
33% 34% 33% 30%
3% 3% 5% 6% 8% 10% 11% 11%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY15 FY16 FY17 FY18 FY19 FY20 FY21 H1FY22
Public sector insurers Private sector insurers SAHI
Rs Bn 89 116 147 178 217 253 278 191
115
Public sector insurers account for more than 84% market share in Government business
Note: Past number from FY15 to FY20 for Private sector insurers and SAHI are adjusted; HDFC Ergo Health (Erstwhile Apollo Munich) is
considered as private sector insurer (as is got merged with HDFC Ergo General Insurance) instead of SAHI for our analysis
Source: GI Council Segmentwise report, IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding– Travel
-Domestic/Overseas and Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
Business segment wise trend in claim ratio
The claims ratio is significantly high in case of group health insurance schemes for all player groups. As of fiscal
2020, the claims ratio was at 99% in group business compared with 73% in retail business and 92% in government-
sponsored schemes, respectively. Share of health insurance through government policies is coming down year on
year though the number of persons covered under government sponsored schemes (including RSBY) is highest
among all.
Retail business has the lowest claim ratio
74%82% 86% 87%
79%67%
84%70%
24%17% 13% 12%
16%
25%
16%30%
2% 1% 1% 1% 5% 8%0% 0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY15 FY16 FY17 FY18 FY19 FY20 FY21 H1FY22Public sector insurers Private sector insurers SAHI
Rs Bn 24 25 31 40 57 50 43 38
116
Note: Data excludes data for personal accident and travel
Source: IRDAI annual report, CRISIL Research
In terms of player wise analysis, retail segment has the lowest claims ratio for all SAHI, Private sector and Public
sector insurers. Within retail segment, claims ratio remain relatively better for SAHI at 59% as of fiscal 2020 as
compared to 67% and 92% for Private sector and Public sector insurers respectively.
Segment wise claims ratio for SAHI
Note: Data excludes data for personal accident and travel
Source: IRDAI annual report, CRISIL Research
Segment wise claims ratio for Private Sector Insurers
108%116%
81%
101%109%
120%
77%
102%
122% 125%
75%
106%115%
107%
71%
94%90%
105%
72%
91%92%99%
73%
88%
0%
20%
40%
60%
80%
100%
120%
140%
Government Business Group Business Retail Business Industry
FY15 FY16 FY17 FY18 FY19 FY20
49%
87%
58% 63%75% 73%
54% 58%55%
76%
54% 58%
98%85%
55%62%
182%
78%
57%63%
78%86%
59%66%
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
Government Business Group Business Retail Business Overall
FY15 FY16 FY17 FY18 FY19 FY20
117
Note: Data excludes data for personal accident and travel
Source: IRDAI annual report, CRISIL Research
Segment wise claims ratio for Public Sector Insurers
Note: Data excludes data for personal accident and travel
Source: IRDAI annual report, CRISIL Research
Retail business has the lowest claims ratio; within retail, SAHI has the lowest claims ratio
FY15 FY16 FY17 FY18 FY19 FY20
Government Business
Public Sector Insurers 117% 117% 124% 116% 86% 99%
Private Sector Insurers
88% 82% 115% 109% 93% 97%
88%
98%
61%
84%82%
93%
62%
81%
115%
92%
64%
84%
109%
85%
63%
80%
93% 91%
66%
84%
97%87%
67%
82%
0%
20%
40%
60%
80%
100%
120%
140%
Government Business Group Business Retail Business Overall
FY15 FY16 FY17 FY18 FY19 FY20
117%123%
95%
112%117%
131%
95%
117%124%
138%
93%
122%116% 116%
88%
108%
86%
115%
90%
105%99%
106%
92%102%
0%
20%
40%
60%
80%
100%
120%
140%
160%
Government Business Group Business Retail Business Overall
FY15 FY16 FY17 FY18 FY19 FY20
118
SAHI 49% 75% 55% 98% 182% 78%
Overall Government 108% 109% 122% 115% 90% 97%
Group Business
Public Sector Insurers 123% 131% 138% 116% 115% 106%
Private Sector Insurers
98% 93% 92% 85% 91% 87%
SAHI 87% 73% 76% 85% 78% 86%
Overall Group 116% 120% 125% 107% 105% 99%
Retail Business
Public Sector Insurers 95% 95% 93% 88% 90% 92%
Private Sector Insurers
61% 62% 64% 63% 66% 67%
SAHI 58% 54% 54% 55% 57% 59%
Overall Retail 81% 77% 76% 71% 72% 73%
Note: Data excludes data for personal accident and travel
Source: IRDAI annual report, CRISIL Research
Pricing in retail business has increased over the years
Pricing in retail business has increased over the years. This increase is due to the increase in incurred claims ratio,
which is the total claims paid from the net premiums collected during the year. As the ratio increases, it prompts
insurers to raise rates. Also, as medical inflation is soaring (covid-19 has further driven rise in healthcare cost and
regular medical inflation) has also played a role in increasing overall health premiums. Average ticket size for Family
floater schemes increased from Rs 8,747 in fiscal 2015 to Rs 13,362 as of fiscal 2020 as compared to Rs 7,934 and
Rs 9,131 for Individual business during the same period.
Note: Average ticket size is calculated as Health insurance premium (excluding PA and Travel) by number of policies
Source: IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding– Travel -Domestic/Overseas and
Personal Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
8,747 7,934
9,119 9,013
13,555
7,475
10,801 10,918 11,879
6,624
13,362
9,131
-
5,000
10,000
15,000
Family floater Individual
FY15 FY16 FY17 FY18 FY19 FY20
Distribution trends and impact of digital channels
Individual agents account for more than 1/3rd of the health insurance premium collected;
hold a dominant 3/4th market share in case of retail business
The choice of distribution channel in health insurance is dictated by the target segment of various insurers. For
example, players catering to the group business largely rely on the broking and the direct channel for garnering
business, while in the retail business; the individual agent is the primary driver of business, given the retail-oriented
nature of the business.
In aggregate, individual agents have the highest share, accounting for 34% of the health insurance premium garnered
by SAHI and general insurance players in FY20. The share of individual agents has been fairly stable in last 5 years
in the range of 30-35%. The share of business through direct channel has also remained stable at ~29% during the
same period. On the other hand, broker channel has lost market share to corporate agent – banks and their market
share has reduced from 26% in fiscal 2015 to 23% in fiscal 2020.
Brokers and individual agents account for more than 50% share in channel wise premium
Note: Data excludes data for personal accident and travel insurance; Figures in bracket represents health insurance premium (excluding PA and
travel)
Source: IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 82: Channel wise performance of Health Insurance business excluding
travel (domestic/ overseas) and personal accident insurance business), CRISIL Research
26% 24% 28% 25% 22% 23%
7% 7%7% 8%
6% 9%2% 2%
2% 3%5%
2%1% 2%
1% 1% 1% 1%
29% 28%29% 29% 34% 29%
35% 33%32% 30% 31% 34%
0% 0% 0%0% 0% 0%
0% 0% 0%0% 1% 1%
0% 3% 0% 3% 0% 0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY15 FY16 FY17 FY18 FY19 FY20
Brokers Corporate Agent - Banks Corporate Agent - Other than Banks
Direct Sale - Online Direct Sale - Other than Online Individual Agents
Micro-insurance Agents Web- aggregators Others
201 244 304 370 449 508Rs Bn
121
The share of distribution channels for retail business and group/ government business is considerably different from
each other. Almost 75% of the total premium of retail business came from individual agents in FY20, while direct
sales (other than online) and broker accounted for around 7% and 4% respectively. Retail business has also not
been very successful in exploiting the bancassurance channel accounting for 8% during the same period. The
dominant channel of the individual agent channel in distribution of health insurance to individual customers can be
attributed to the fact that health is still largely an assisted product, wherein customers often require help in choosing
the right policy in line with their needs.
On the other hand, premium share is relatively well distributed for group/ government business. Brokers contributed
maximum share with 42% of total premium in FY20 whereas 33% of the business came from direct sales (other than
online). Share of bancassurance is relatively high for group business at 12% compared to 8% share for retail
business. This is because some of the large private players are efficiently utilising their banking channel to capture
the market.
Distribution mix for Retail business: individual agents continue to drive significant share
Note: Figures in bracket represents indvidual health insurance premium
Source: IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 82: Channel wise performance of Health Insurance business excluding
travel (domestic/ overseas) and personal accident insurance business), CRISIL Research
Distribution mix for Group and Government business: premium share is relatively well distributed
3% 4% 4% 4% 4% 4%12% 11% 11% 11%
3% 8%4% 5% 4% 4%
8% 1%3% 2% 2% 2%
2% 2%
8% 8% 9% 11%8% 7%
70% 70% 70% 66%73% 75%
0% 0% 0% 0% 0% 0%0% 0% 0% 1% 2% 2%0% 0% 0% 0% 0% 0%
0%
20%
40%
60%
80%
100%
FY15 FY16 FY17 FY18 FY19 FY20Brokers Corporate Agent - BanksCorporate Agent - Other than Banks Direct Sale - OnlineDirect Sale - Other than Online Individual AgentsMicro-insurance Agents Web- aggregatorsOthers
88 104 126 153 175 205Rs Bn
122
Note: Group business includes government business; Figures in bracket represents group and government health insurance premium
Source: IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 82: Channel wise performance of Health Insurance business excluding
travel (domestic/ overseas) and personal accident insurance business), CRISIL Research
Number of offices has increased for SAHI and Private sector insurers over the years
Source: GI Council financial highlights, CRISIL Research
43% 39% 45% 49% 43% 42%
4%4%
5%8%
10% 12%1%1%
1%2% 4% 4%
0% 2%1%
1% 0% 1%
45% 43%43%
35% 38% 33%
8%6%
5% 5% 5% 8%0%
0%0% 0% 0% 0%0%
0%0% 0% 0% 0%
0%5%
0% 0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY15 FY16 FY17 FY18 FY19 FY20
Brokers Corporate Agent - BanksCorporate Agent - Other than Banks Direct Sale - OnlineDirect Sale - Other than Online Individual AgentsMicro-insurance Agents Web- aggregatorsOthers
Rs Bn 113 141 178 217 273 303
8,278 8,150 7,546 7281
2,022 2,430 2,641 2728
774 881 1,107 1,150
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
FY18 FY19 FY20 FY21
Public sector insurers Private sector insurers SAHI
11,074 11,461 11,291 11,159
123
Agent network and health insurance business
While individual agents account for ~34% share as of fiscal 2020 in overall health insurance distribution channel mix,
they have significantly higher share in retail business segment at 75% during the same period. Share of individual
agents in retail health insurance business increased from 70% in fiscal 2015 to 75% in fiscal 2020. As stated earlier,
this is mainly because an individual is mainly influenced or dependent on an agent to purchase the health insurance
in order to understand and identify best suitable policy based on his needs and wants.
Due to variations of products with respect to coverage, disease specific policy, critical illness schemes, policy
inclusions/ exclusions and various other specific customer-related factors, it becomes more important for insurers to
have on board trained individual agents to assist customers while selecting any policy.
In terms of retail business premium growth, players witnessed strong co-relation with increase in number of agents.
Between fiscal 2019 to 2021, number of individual agents for SAHI saw a CAGR of 22% from 520 thousand to 770
thousand as compared to 22% CAGR growth in retail business premium during the same period.
The chart below depicts the linearity between growth in premiums and growth in the agent network on the ground in
the case of SAHI. While the importance of the online channel is expected to increase in the post-Covid scenario, we
believe that agents will continue to remain the pre-dominant mode of garnering health insurance business in retail
category, given the need for customers’ to be assisted in choosing the right product.
Co-relation between growth in number of agents and individual health insurance premium
Total Number of agents Retail business premium (Rs Bn)
FY19 FY20 FY21 CAGR FY19-FY21
FY19 FY20 FY21 CAGR FY19-FY21
Public sector
general insurers 1,98,422 2,23,141 2,90,800 21% 63 69 79 12%
Private sector
general insurers 2,71,662 2,92,356 3,91,514 20% 31 34 62 41%
SAHI 5,20,650 6,81,145 7,72,227 22% 81 103 121 22%
Note: In case of general insurers, agents may be selling products other than health insurance as well.
Source: GI Council financial highlight, CRISIL Research
Increase in number of individual agents has direct co-relation with increase in retail business premium for
SAHI
124
Source: GI Council Segmentwise report and financial highlights, CRISIL Research
Comparison of number of agents in life insurance business vs SAHI
IRDAI norms allow individual agents to sell policies of three insurers – one life insurance company, one non-life
insurer and one standalone health insurer. While selecting a health insurance, people are largely influenced by
insurance agents to take decisions as regards to features, exclusions and more. Agents thus play an important role
in promoting insurance products in the market.
As of fiscal 2021, there are over 2.4 million life insurance agents. In comparison, only 772 thousand agents are selling
health insurance policies for SAHI. Thus, only around 3 out of 10 life insurance agents sell health insurance policies,
as per the below data. This indicates the huge underlying growth opportunity for health insurers in India to tap the
under penetrated market by enhancing their agent network.
Wide gap in number of agents for life insurance and SAHI
Number of Individual agents
FY18 FY19 FY20 FY21
Health insurance
Star Health 2,38,240 2,83,829 3,59,341 4,62,502
Religare 55,520 85,544 1,24,340 1,56,669
Apollo Munich* 49,481 72,747 98,072 -
Max Bupa 25,368 31,540 39,998 68,290
ManipalCigna 21,490 27,655 34,335 41,935
Aditya Birla 15,825 18,811 25,059 42,831
Reliance health 524
SAHI 4,05,924 5,20,650 6,81,145 7,72,227
Life insurance
LIC 11,48,811 11,79,229 12,08,826 13,53,808
Private 9,33,856 10,15,518 10,69,639 11,01,268
FY 18
FY 19
FY 20
FY21
0
20
40
60
80
100
120
140
0 100 200 300 400 500 600 700 800 900
Ret
ail b
usi
nes
s p
rem
ium
(R
s B
n)
Number of agents (in '000)
125
Industry 20,82,667 21,94,747 22,78,465 24,55,076
Note: * Merged with HDFC Ergo Health Insurance in January 2020
Source: IRDAI annual report, GI Council financial highlight, CRISIL Research
Proprietary agency channel (IC38)
IC38 is an exam conducted by IRDAI for offering insurance agency services. It is a combination of Health, Life and
General insurance. The main objective of the exam is to promote the importance and educating people about
insurance with proper training and guidance. The institute directs examination at 3 levels: Licentiate, Associateship,
and Fellowship.
Once an individual clears this exam, he is entitled to operate as authorized insurance advisor for any insurance
company. An agent has some responsibilities. For the orderly growth and development of the insurance industry as
also customer satisfaction, it’s important to sell policies as per client’s needs and want and it’s the agents duty to
explain the features of the policy and other related aspects, be it basic premium, maturity, claim or surrender. These
individual agents helps in building retail health business and act as an intermediary between insurer and customer
by explaining product features, policy terms and assisting in final on-boarding of the customer.
After the covid-19 outbreak, IRDAI, in November 2020, allowed insurance companies to conduct remote agent exams
on pilot basis. This model was allowed on pilot basis for an initial time period of thirty days in the four cities Delhi,
Mumbai, Kolkata and Thiruvananthapuram. This new mode of remote exam helped insurers ramp up new
recruitments, amid growing demand for insurance in India. The announcements also came at a time when several
insurers both in life and non-life sectors are planning to increase their agent networks. Going forward, this remote
proctor model should help authority and insurers to conduct examinations in a much smoother manner and also
reach out to a wider network of potential agents.
Bancassurance to gain in importance
Though the life insurance sector has high share of premium through bancassurance channel, its share in health
insurance premiums is still at a low level, especially for retail business.
Nevertheless, the potential of bancassurance as a channel cannot be ignored, particularly as health insurance
providers are attempting to increase their presence in the retail segment. In the current scenario, the banking sector
is a stellar example of how technology has been combined with existing client bases and other records to provide
significant value addition to customers. Banks, as distributors, play an active role in helping clients analyse their risk
appetite, investment portfolio and assist in decision-making. Banks have been able to adopt technology making
convenience and relationship management their top selling points. The one-stop-shop model of providing multiple
services through the optimum utilisation of technology is clearly sustainable. Thus, it is quintessential for the existing
health insurance companies to tap the bancassurance channel to the greatest possible extent in selling the insurance
policies.
126
Increasing digitization; online channels to gain traction
Online sales of insurance policies is comparatively a new trend and some of the private players are using this channel
for selling the policies. Currently, online channel accounts for a negligible proportion ~2% of overall health insurance
premium and ~5% of retail health insurance business. But this is all set to change given the increasing usage of the
internet in India and ubiquitous availability of mobile broadband.
The online channel has great potential to take off, especially in the retail segment. Selling policies digitally is more
profitable for insurers as it gives them better access to customer data and behavior, and also enhances the likelihood
of policies being renewed.
Besides, increasing digitization will help in increasing the penetration of insurance players as:
Processes such as purchase of insurance products, transfer of premium amounts and filing of claims can be
carried out through remote devices.
Applications can be developed or modified to spread financial literacy, which could be especially effective in
small towns and rural areas.
Increasing focus towards tele-medical services, thus avoiding any physical medical check-up and thereby
enhancing operational efficiency
By making the insurance process paperless, clients in remote areas can be saved from the worry of
maintaining physical documentation. Further, premium payments can also be made effortlessly through
digital modes.
Players are tapping opportunities of tie-ups with web-aggregators or other fintech players to market insurance
products and to simplify processes and improve the customer experience. For example, Star Health Insurance has
partnered with digital wallet player PhonePe to offer digital health insurance, Max Bupa has partnered with MobiKwik
to promote “bite-sized2” insurance products and ICICI Lombard has tied up with True Balance a mobile wallet app to
offer health insurance. Thus, going forward, it is expected that the players leveraging the bancassurance and online
channel optimally will be at a competitive advantage and should be able to improve their market position in the retail
health insurance business.
Possibility of web aggregators playing a significant role in underwriting
Web Aggregators collect data from various sources and databases, of various insurance company websites, and
compile information about insurance policies to make it presentable and easy to understand to any potential
insurance policy buyers. The insurance web aggregators not only act as information providers but also act as
telemarketers, solicitors and brokers. IRDAI has defined the role and duties of such web aggregators related to the
process of attaining a license, disclosure norms, penalties, remuneration and other related matters.
2 Bite-sized insurance products are affordable insurance offerings that can be purchased over the counter for specific health needs
127
Over the years, insurers have entered into tie-ups with one or more web aggregators in order to increase online traffic
for their business. Online channel is fast and growing business due to increasing internet penetration. As of fiscal
2021, India’s total wireless internet subscriber base is expected to be over 770 million and is estimated to reach ~950
million by fiscal 2025. While on one hand web aggregators enable the customer to obtain detailed information of the
insurers products and other policies, on the other hand it also facilitate insurers in understanding customer’s needs
and underwriting information for assessing the risk in order to decide pricing terms and conditions for cover.
Going forward as well, web aggregators are expected to play a key role in providing suitable insurance policies as
per customers’ requirement, which thereby enhances customer experience and also increases potential business for
insurers. With rising internet penetration and increasing insurance penetration, web aggregators are expected to not
only offer information services to potential policyholders or provide leads to insurers but also facilitate in terms of
underwriting. Given the large amount of data and increasing digital footprint of customers, these web aggregators
along with insurers can help in understanding potential policyholders better by monitoring customer behavior,
spending patterns and health habits.
128
Claims handled and settled by TPAs v/s Insurers
TPAs account for two-thirds of health insurance claims processed
TPAs or Third Party Administrators (TPA) were introduced by the IRDAI in 2001, mainly to process claims related to
group and retail health insurance policies in addition to providing cashless facilities as an outsourcing entity of an
insurance company. TPAs function as an intermediary between the insurance provider and the insured. In terms of
claims, TPAs assist in processing of claims in terms of accepting intimation, approving cashless claims and disbursing
the claims. In December 2020, IRDAI also allowed policyholders to choose a TPA for their health insurance policy
instead of solely depending on the insurer, either at the time of buying the policy or while renewing it.
During fiscal 2020, TPAs processed 11.8 million claims as compared to 5.8 million in fiscal 2016. In terms of total
claims paid, TPAs account for more than 2/3rd market share as of fiscal 2020. The share of TPAs in total health
insurance claims paid has decreased from 74% in fiscal 2016 to 69% in fiscal 2020. This has largely been on the
back of certain private insurers enhancing focus towards in-house claims processing. This is because In-house
claims processing is relatively faster as the insurer is better equipped to explain expenses which are not covered
directly to the policyholder, enabling redressal of grievances quickly. Furthermore, in-house claims processing also
helps in managing operating expenses better, especially if the insurance company has a large customer base. In
contrast, while the TPAs process the claims, the final decision on the claims payable is taken by the insurance
company.
Trend in number of claims paid during the year Trend in total claims paid during the year
Source: IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 83: Details of claims development & aging - Health insurance business
excluding travel (Domestic/ Overseas) and personal accident insurance business), CRISIL Research
5.88.4
10.3 11.4 11.82.2
2.6
4.24.5
5.0
8.0
11.0
14.515.9
16.8
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
FY16 FY17 FY18 FY19 FY20
(in million)
TPAs In-house
161208 210
242275
57
67 93
108
126
218
275302
350
400
0
50
100
150
200
250
300
350
400
450
0
50
100
150
200
250
300
350
400
450
FY16 FY17 FY18 FY19 FY20
(Rs Billion)
TPAs In-house
129
TPAs account for more than 2/3rd of total amount of claims paid as of fiscal 2020
Source: IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 83: Details of claims development & aging - Health insurance business
excluding travel (Domestic/ Overseas) and personal accident insurance business), CRISIL Research
Average claim size has reduced for TPAs from Rs ~28,000 in fiscal 2016 to Rs ~23,000 in fiscal 2020.
Average claim size for TPAs declining as compared to In-house claims
Source: IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 83: Details of claims development & aging - Health insurance business
excluding travel (Domestic/ Overseas) and personal accident insurance business), CRISIL Research
74% 76%69% 69% 69%
26% 24%31% 31% 31%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY16 FY17 FY18 FY19 FY20
TPAs In-house
27,494
24,735
20,285 21,232 23,317
25,978 25,649
22,041 23,878
25,160
-
5,000
10,000
15,000
20,000
25,000
30,000
FY16 FY17 FY18 FY19 FY20
in Rs
TPAs In-house
130
A TPA can either approve of a cashless claim settlement or reimburse it later to the policyholder. As of fiscal 2020,
cashless claims accounted for 54% share in total claims paid by TPAs. During the covid-19 outbreak, the regulator
had underlined that policyholders must be given cashless facilities for covid-19 treatment at all network hospitals with
whom the insurer or the TPA has tie ups. It also directed insurers to empanel more hospitals across the country for
cashless treatment, including covid-19 treatment and put in place a grievance redressal mechanism for complaints
relating to the denial of cashless claims.
Trend in share of cashless claims paid by industry and TPAs
Source: IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 83: Details of claims development & aging - Health insurance business
excluding travel (Domestic/ Overseas) and personal accident insurance business), CRISIL Research
For providing claim settlement services, the TPAs generally charge the insurance company a certain percentage of
the claim amount. Based on our analysis of 10 TPAs which together account for 85 per cent of the aggregate claims
processed by TPAs, we estimate that TPAs charge 3-4% of the total claims amount processed by them as claims
handling charge. These charges are relatively more in retail business as compared to group business.
Claim handling charges paid to TPAs
52%49%
39% 40%
48% 49%
54% 53%54%56%
0%
10%
20%
30%
40%
50%
60%
TPAs Overall industry
FY16 FY17 FY18 FY19 FY20
131
Note:
1. Data includes data for - Health Insurance TPA Of India Ltd, Health India Insurance TPA Services Private Limited, Paramount Health
Services & Insurance TPA Pvt. Ltd, Family Health Plan Insurance TPA Limited, Mdindia Health Insurance TPA Private Limited, East
West Assist Insurance TPA Private, Limited, Ericson Insurance TPA Private Limited, Good Health Insurance TPA Limited, Heritage
Health Insurance TPA Private Limited, Medi Assist Insurance TPA Private Limited, Vipul Medcorp Insurance TPA Private Limited
2. Above players represent ~85% of claims paid through TPAs in health insurance business;
3. Claim handling charges are calculated as amount of claim paid as a proportion of income/ remuneration received
4. E = Estimated
Source: Company reports, CRISIL Research
3.7%3.4%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
FY19E FY20E
132
Retail health insurance business segment
With gross premium of Rs 263 billion, retail health insurance business segment accounted for 45% share in overall
gross direct premium in health insurance business as of fiscal 2021. It has seen a strong 28% y-o-y growth in
premiums of fiscal 2021 in the backdrop of Covid-19.
Retail business is expected to emerge as a key growth driver for overall health insurance industry in the post Covid
era. Low penetration, high out of pocket expenses at over 60% of spends and less than 10% population with
insurance policies outside government plans are the key factors that bring forth the huge latent potential in this
segment.
The more complicated nature of health insurance products and the associated specialized proprietary distribution
and customer assistance that are required to service customers result in higher entry barriers and more attractive
claims ratios. As against this, the group business is largely driven by tying up with relevant corporate customers
through a network of brokers, direct sales team and other intermediaries. While in both cases insurance has to
generally be renewed on an annual basis, the stickiness is observed to be higher in case of retail customers. On the
pricing front as well, given that they provide bulk business to the insurer, the bargaining power of the insured is
higher, which impacts the pricing power of the insurer. Although pricing for group health insurance schemes has
improved in the last few years with insurers increasingly having an eye on profitability, claims ratio for group schemes
are still hovering around 100 per cent, signifying that most insurers barely make profits while underwriting group
policies.
To summarize, retail business tends to stay for a longer time with the insurer and also has relatively high premium
per person as also profitability. It also provides much stronger and defendable business to the insurer.
Premium per person is relatively higher in Retail Business segment
Note: Premium per person is calculated as gross direct premium/ number of lives covered
1.1
18
35
0.9
20
36
0.9
21
39
1.1
20
46
1.6
30
42
1.4
28
46
-
10.0
20.0
30.0
40.0
50.0
Government Business Group Business Retail Business
(in hundred)
FY15 FY16 FY17 FY18 FY19 FY20
133
Source: IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding Travel -Domestic/Overseas and Personal
Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
In terms of distribution channels, individual agents with feet-on-street are the major source for garnering retail health
insurance business, while group business is more influenced by brokers and direct sales teams. This dependence
on individual agents is starkly evident in the fact that 6 SAHI, for whom retail business accounts for 75% of premiums,
between them have a total of 772 thousand individual agents on board, as against 682 thousand agents for 25 public
and private insurers put together. In the Indian market, where both awareness of insurance and penetration of
insurance is still very low, individual agents will continue to be the key vehicle for health insurance distribution, as
they marry customer need with the products available in the market.
Number of Individual agents
FY19 FY20 FY21
Public sector insurers
1,98,422 2,23,141 2,90,800
Private sector insurers
2,71,662 2,92,356 3,91,514
SAHI 5,20,650 6,81,145 7,72,227
Source: GI Council financial highlights, CRISIL Research
Health insurance claim are settled by insurer either through third-party administrators (TPA) or through the insurer's
in-house claims processing department. A TPA is basically an intermediary who facilitates the settlement of a health
insurance claim who is appointed by the insurer. Many insurers over the years have built their own in-house
departments to handle the claims process, especially for the retail health portfolio. This has benefited them as the
turnaround time (TAT) for resolving a query or claim is relatively faster and hassle-free for the policy holder as the
final decision is taken by the insurer themselves. It also enhances the operational efficiency, especially in cases
where the company has a large retail health portfolio.
Incurred claim ratio is higher for group and government business
134
Source: IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 73: Health Insurance (excluding Travel -Domestic/Overseas and Personal
Accident) Incurred claims ratio), CRISIL Research
108%116%
81%
109%120%
77%
122% 125%
75%
115%107%
71%
90%
105%
72%
92%99%
73%
0%
20%
40%
60%
80%
100%
120%
140%
Government Business Group Business Retail Business
FY15 FY16 FY17 FY18 FY19 FY20
135
Comparison of Retail business v/s group business
The key difference between retail business and group business in health insurance is the need to create a strong
customer franchise and a well-entrenched distribution network for scaling up in the retail business. While in both
cases insurance has to generally be renewed on an annual basis, the stickiness is observed to be higher in case of
retail customers. While group business brings in large business for the insurer, for customers, individual policies offer
better services in terms of customized or innovative products and availability of in-house claim processing with most
private insurers. Over the years, customer awareness towards drawbacks of group cover such as non-availability of
no claim bonus, lack of cumulative bonus benefit, losing the cover while switching jobs or in case of job loss and
difficulty in getting individual coverage post retirement has propelled customers to purchase retail health policies for
themselves and their families. Apart from this, retail policies are also more convenient to customise basis ones need
and wants as compared to corporate plans.
Parameters Retail business Group business
Definition Retail health insurance is one that an
individual person buys for self & family
Group insurance is simply insurance
that a company buys for its
employees.
Distribution
Policies are often purchased with the
guidance of an insurance agent or broker to
help sift through various available plans and
associated premium costs
The employer selects the plan, or
plans, to offer to employees, often
with the aid of insurance brokers
Longevity of policy
Generally renewed annually at the same
terms and conditions as long as the customer
pays the required premium
The employee loses the cover in
case of job change or loss of
employment
Customized products
An individual can customize products basis
his needs and wants and insurance
requirements. With wearable devices that
measure activity increasingly being used,
customers are also willing to share their data
to avail of customized solutions and
personalized pricing
Cannot be customized to individual
needs and wants.
Innovative products
Retail business segment has witnessed rapid
innovation in products. Insurers are offering –
disease specific products, wellness products,
critical illness
Policies under group business are
generally standardized at
organization level
136
Claim processing
Claim processing can be either through TPAs
or directly with the insurer. Over the years,
many private players have moved towards in-
house claim processing to enhance customer
experience.
Corporates generally tie up with
TPAs to handle claim processing for
their employees
Source: CRISIL Research
Product innovation in retail health insurance
Health Insurance in India is expected to witness several changes going forward. With regulatory support and rise in
the demand of health insurance in India, insurers are increasingly focusing on product innovation and offer better
services to customers. Modifications in existing policies and regulations to make it more customer friendly while
protecting the interest of the insurer is critical for the sustainable growth of the industry.
Some of the recent modifications include –
Exclusion of Pre-existing diseases (PED) period – Earlier, PED used to include certain illnesses of the
insured if it was diagnosed within three months after purchasing the health insurance policy. However, the
IRDAI, in February 2020, deleted this clause, thus, reducing claim rejections rates in health insurance.
Wellness Benefits - New guideline issued by IRDAI in Sept 2020 emphasizes on providing incentive to
policyholders with wellness and preventive health care. Insurers are required to reward their customers with
discounted premium or other benefits who meet the conditions and criteria set out under their health
insurance policy. The wellness benefit is also available in the form of discount on medicines or diagnostic
and consultation services offered by providers within their network.
Cumulative bonus - Cumulative bonus is a reward that a policyholder gets for remaining fit and not filing a
claim. The benefit is given by increasing the sum insured amount, for every claim-free year. However,
currently this feature is not available in defined benefit policies such as critical illness plans. As per IRDAI
guidelines in February 2020, going forward, this will be offered in defined benefit policies as well. This will
help policyholders to increase their sum assured over the years at much affordable rates.
Pilot Products – IRDAI, in February 2021, allowed general and health insurance companies to launch four
more categories of individual products, add-ons and riders of health policies to be filed under the use-and-
file procedure. The four new categories are personal accident insurance, overseas travel insurance, domestic
travel insurance and benefit-based health insurance products for five years. After the stipulated five years,
health or general insurers can either withdraw the products or consider them as a regular one as other
mainstream health insurance plans. While the insurers have the flexibility to withdraw or continue the product
after 5 years, customers of pilot policies are allowed to port to an existing product of a health insurer. This
137
move is expected to encourage insurers to innovate more and test new products keeping in mind customer
expectations and needs.
Regulatory sandbox – The “Regulatory Sandbox Approach” is used to carve out a safe and conducive
environment to experiment with innovative approaches (including Fin-Tech solutions). In light of the same,
the IRDAI has created a Regulatory Sandbox whose objective is to use innovative ideas to foster growth and
increase the pace of most innovative companies, in a way that provides flexibility in dealing with regulatory
requirements and at the same time focussing on policyholder protection. The Authority notified the IRDAI
(Regulatory Sandbox) Regulations, 2019 in July 2019. The objectives of these Regulations are:
o To strike a balance between orderly development of Insurance sector on one hand and protection of
interests of policyholders on the other, while at the same time facilitating innovation.
o To facilitate creation of regulatory sandbox environment and, if deemed fit, to relax such provisions
of any existing Regulations as needed.
In terms of number of products, Star Health & Allied Insurance offers the highest number of retail products of 17,
followed by HDFC Ergo General Insurance and Bajaj Allianz with 16 and 11 products respectively. Amongst disease
specific products for cancer, diabetes, cardiac care or other schemes, Star Health, HDFC Ergo, and Care Health
offer relatively high number of products.
Player wise number of retail products
Number of products Individu
al Senior citizen
Family Disease specific
Critical illness
Others Total
Star Health & Allied Insurance Co
Ltd 5 1 2 5 1 3 17
HDFC Ergo General Insurance Co
Ltd 7 1 3 1 4 16
Bajaj Allianz General Insurance
Co Ltd 5 1 2 2 1 11
Care Health Insurance Ltd 2 1 1 3 2 1 10
Max Bupa Health Insurance Co
Ltd 5 1 1 1 2 10
The Oriental Insurance Co Ltd 1 1 2 1 5
National Insurance Co Ltd 2 1 1 4
ICICI Lombard General Insurance
Co Ltd 2 1 1 4
United India Insurance Co Ltd 1 1 1 3
Note: (*) HDFC Ergo General includes HDFC Ergo Health and Apollo Munich; Players with Retail health insurance premium of more than Rs 5000
million are considered for analysis; Others includes top-up or micro insurance policies
Source: Company websites as of September 2021 end, CRISIL Research
138
Personal accident insurance and Travel insurance
Personal accident (PA) insurance is a policy that reimburses policyholders medical costs or provides compensation
in case of disability or death caused by accidents. Travel insurance, on the other hand, protects the policyholder
against any unexpected expenses that may incur when travelling either domestic or abroad such as accidents,
sickness, flight delays, loss of baggage etc.
In fiscal 2020, the gross premium income from Personal Accident insurance business was Rs 52 billion and has
grown at a CAGR of 20% from fiscal 2015 to fiscal 2020. While private sector general insurers have contributed 63%
of total premium, public sector general insurers contributed 25% of premium and the rest 12% was contributed by
the stand-alone health insurers. Gross premium income from travel insurance on the other hand was Rs ~8 billion in
fiscal 2020 has grown at a CAGR of 10% during the same period.
In India, Travel insurance market is relatively small as compared to personal accident or health insurance. This is
mainly because people are not willing to incur any additional costs towards any probable risks that may arise during
travel. From fiscal 2015 to fiscal 2020, PA segment witnessed strong CAGR growth of 19% as compared to 10% of
travel insurance during the same period.
Going forward, these products are expected to witness increased uptake with rising awareness, increasing number
of road accidents and encouragement from both public and private sector companies. Also, with increasing focus of
Insurers and Fintech tie-ups for distribution of travel, CRISIL Research expects the adoption of travel insurance to
increase in the coming years.
Gross direct premium trend in Personal Accident and Travel Insurance
22 26
3746
52 52
4.7 5.4 5.8 6.4 7.6 7.60
10
20
30
40
50
60
FY15 FY16 FY17 FY18 FY19 FY20
(Rs billion)
Personal Accident Insurance Travel Insurance
139
Note: Travel insurance includes both domestic and overseas travel insurance
Source: IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 74: Personal accident insurance – Number of policies, Number of persons
covered & gross premium), CRISIL Research
SAHI has increased market share in Personal
Accident Insurance
Private Sector Insurers has 84% market share in
Travel Insurance
Note: Travel insurance includes both domestic and overseas travel insurance; Figures in box represent size of the market in Rs billion
Source: IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 74: Personal accident insurance – Number of policies, Number of persons
covered & gross premium), CRISIL Research
33% 34%41% 39%
32%25% 31%
63% 60%52% 53%
57%63% 57%
4% 7% 7% 9% 11% 12% 12%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY15 FY16 FY17 FY18 FY19 FY20 FY21
Public Sector Insurers Private Sector Insurers SAHI
22 26 37 46 52 52Rs Bn 58
9% 6% 6% 4% 4% 3%
87% 88% 84% 83% 84% 84%
4% 7% 10% 13% 13% 13%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY15 FY16 FY17 FY18 FY19 FY20
Public Sector Insurers Private Sector Insurers SAHI
7.67.66.45.85.44.7Rs Bn
140
Reserving in health insurance business
Indian non-life insurance insurers, in line with global practices, are required to establish a liability in their accounts
(claim reserves) for the unpaid portion of ultimate costs (including loss adjustment expenses) of claims that been
reported but not settled (“IBNER”) and of claims that have been incurred but not reported (“IBNR”). Reserving
triangles are used to depict the adequacy of reserves based on successive valuations. Over period of time, as claims
get settled and greater certainty emerges on the ultimate cost of claims for a particular year, the quality of initial
reserving based on the original estimate of ultimate losses can be evaluated through reserving triangles.
Insurers are required to create appropriate reserves towards Unearned Premium Reserves, Premium Deficiency
Reserves and Outstanding Claims Reserves (including IBNR/IBNER) in accordance with IRDAI (Assets, Liabilities
and Solvency Margin of General Insurance Business) Regulations, 2016.
Unearned Premium Reserve (UPR)
As per the latest IRDAI regulation in 2016, a reserve for unearned premium is created as the amount representing
the part of the premium written which is attributable to, and is to be allocated to succeeding accounting periods. UPR
is computed as follows:
a. Marine hull: 100% of Net written premium during the preceding 12 months
b. Other segments: Currently, insurers follow one of the above two methods for calculation of UPR for other
segments. Insurers have an option to create UPR either at 50% of net written premium of preceding 12 months or
on the basis of 1/365th method on the unexpired period of the respective policies. Under the 1/365th method
calculation, actual number of days left in the policy period are divided by total number of days of policy period)
The insurers can follow either percentage or 1/365th method for computation of UPR of the other segments. However,
Insurers shall follow the method of provisioning of UPR in a consistent manner. Any change in the method of
provisioning can be done only with the prior written approval of the Authority.
Background on regulation pertaining to Reserve for Unexpired risks
Section 64V of the Insurance Act lays down how asset and liabilities needs to be valued. Earlier (prior to 2016)
provision (ii) (b) of the said section provided for creation of reserves for unexpired risks in respect of –
Health, Fire and all other miscellaneous general insurance business excluding marine cargo and marine hull
business, 50 per cent,
Marine cargo business, 50 per cent, and
Marine hull business, 100 per cent,
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of the premium, net of re-insurances, during the preceding twelve months.
Further, Clause 2 of part I of Schedule B of the IRDAI (Preparation of Financial Statements & Auditors’ Report of
Insurance Companies) Regulations, 2002 (the Regulations) provided that a reserve for unexpired risks shall be
created as the amount representing that part of the premium written which is attributable to, and to be allocated to
the succeeding accounting periods and shall not be less than as required under Section 64V (1) (ii) (b) of the
Insurance Act (as described above).
However, in the year 2009, IRDAI examined the request of insurers seeking relaxation from the above approach in
respect of the health insurance business. It allowed the non-life insurance companies while preparing the financial
statements for year 2008-09, to provide for the Reserve for Unexpired Risks in the health segment on the 1/365 day
method basis. Furthermore, taking into account the unique nature of the health segment and in order to promote the
health insurance, IRDAI extended the said relaxation for a further period of three financial years.
Impact of UPR regulation (50:50 vs 1-365 method)
The 50:50 approach does not take into account the distribution of business during the year and is more practical in
nature. However, the 1-365 or the pro-rata method is more logical and accurate method of calculating unearned
premium reserves. The UPR is determined on the basis of the number of days from expiry of financial year to the
expiry of policy. Because of the accuracy of this method in differentiating each policy on the basis of its expiry and
not treating all the policies issued in a particular financial year at a similar level, it is more suitable as compared to
the 50:50.
The 1/365th method leads to calculation of UPR and corresponding net premium earnings in line with the policy
period. For e.g. If the policies are booked in the beginning of the 4th quarter of a fiscal year, premium earnings will
be accounted for proportionately only for the period during which the policy is in force during the fiscal. However,
under the method where 50% of net written premium of preceding 12 months is used for calculation of UPR, net
premium earning shall be higher or lower, if the gross premium is unevenly distributed during the year.
International Financial Reporting Standard 17 (IFRS 17)
In January 2020, IRDAI in its circular “Implementation of Ind AS in the Insurance Sector” noted that International
Accounting Standards Board (IASB) has taken a considered view to amend IFRS 17: Insurance Contracts, due to
the concerns raised around accounting treatments, operational complexity and implementation challenges raised by
various stakeholders. Against this background, IRDAI decided to implement Ind AS 109 and Ind AS equivalent of
IFRS 17 simultaneously, along with all other applicable Ind AS.
IFRS 17 is designed to improve insurance accounting in two major ways:
It makes sure that more transparent, more useful and ultimately, more precise information is provided by the
insurers on the value and profitability of their operations.
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It creates a framework that applies the same rules across different nations, different insurance contracts and
different industries
IFRS 17 requires a current measurement model, where estimates are measured in each reporting period. The
measurement is based on the discount, profitability-weighted cash flows, risk adjustment and a contractual service
margin (CSM) representing the unearned profit of the contract. Indian insurers at present are yet to move to IRFS
accounting; hence, the profitability of Indian insurers cannot be directly compared with global insurers who follow
IRFS accounting. This is mainly because insurance liabilities and assets acquired are measured at fair value and
expenses incurred are also required to be fully provided for within the same year itself. As compared to this, insurers
in developed markets are allowed to amortise cost over the period in which the benefit is expected to be realised,
which reduces volatility in the profit and loss account.
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Corporate Governance Guidelines for Insurance Companies
To facilitate prudent corporate governance among the insurance companies, IRDAI has released guidelines for the
same in May 2016. The guidelines encompass structure and composition of the boards of insurance companies,
committees of the board, their responsibilities and meetings, appointment of MD/CEO, directors and key
management persons (KMPs), appointment of auditors, reporting and disclosure requirements. While several
insurance companies have put in place mechanisms for effective corporate governance, IRDAI’s guidelines envisage
harmonisation of corporate governance across insurance companies. Due to broad changes in the governance of
the companies brought by the Companies Act 2013, the Authority decided to review the guidelines related to the
governance of insurance companies. These guidelines were made applicable from FY 2016-17 onwards.
Some of the key features of the guidelines are:
A minimum lock-in period of 5 years is prescribed from the date of certificate of commencement of business
of an insurer for the promoters & no transfer of shares of the promoters is permitted without the specific
approval of the Authority
Sec 2 (7A) of the insurance act, 1938 prescribes the ceiling of foreign investment at 49%, being controlled
and owned by Indian company. The policy shall be reviewed by the Board on a yearly basis
Mandatory committees for audit, investment, risk management, policyholder protection, nomination and
remuneration and CSR for all the insurance players.
The other committees like Ethics committee and ALM committee can be set up by the board, though such
committees are not mandatory to form
The mandatory committees, except Nomination & remuneration committee the CSR and the with profits
committee, shall meet at least four times in a year between two successive meetings, the gap shall not be
more than four months
The board should have a minimum of 3 Independent Directors; this requirement though is relaxed to 2
Independent Directors for the initial 5 years from the grant of certificate of registration to insurers. Insurance
companies that had less than 3 Independent Directors as on the date of notification of the guidelines are
required to ensure that they comply with this requirement within one year.
An independent Director shall fulfil all the conditions specified under Section 149 of the Companies Act,
2013. Also, there shall be at least one Women Director on the Board
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The IRDAI Regulations, 2002, have prescribed certain disclosures in the financial statements-
Quantitative and qualitative information on the insurance company’s financial and operating ratios, viz.
incurred claim, commission and expenses ratios.
Actual solvency margin details vis-à-vis the required margin
Financial performance including growth rate and current financial position of the insurance company
Description of the risk management architecture
Details of number of claims intimated, disposed-off and pending with details of duration
All pecuniary relationships or transactions of the Non-Executive Directors vis-à-vis the insurance company
shall be disclosed in the Annual Report
Elements of remuneration package (including incentives) of MD & CEO and all other directors and Key
Management Persons
Payments made to group entities from the Policyholders Funds
Any other matters, which have material impact on the insurer’s financial position.
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Industry regulations
The health insurance sector in India is only a few decades old. After independence, primary health care was given
importance and the industry has come a long way. Three major milestones mark the evolution of health insurance
industry in India –
1. Employees’ State Insurance Act (ESI) 1948: Employees' State Insurance Corporation (ESIC) is an autonomous
corporation under Ministry of Labour and Employment, Government of India. It was introduced as an umbrella of
social security for blue-collar workers of the organized sector. It provides health care services through a network of
dispensaries and hospitals that is empaneled with ESIS. The coverage under ESIS includes OPD and IPD expenses
and cash benefits to compensate for the loss of pay and other medical contingencies. This scheme is still prevailing
and financed mainly through the contribution of employers and employees. This is a self-financing social security and
health insurance scheme where the fund is managed by the Employees' State Insurance Corporation in accordance
with the rules and regulations stipulated in the ESI Act 1948.
2. Central Government Health Scheme (CGHS): The Central Government Health Scheme (CGHS) is a health care
facility scheme for the existing and former employees of the Central Government of India. The scheme was
introduced in the year 1954 by the Ministry of Health and Family Welfare, as of 1st March 2021, Govt. of India and
the CGHS has enrolled over 1.31 million members and provided medical facility to over 3.8 million beneficiaries. It is
a contributory health scheme to provide comprehensive healthcare services, especially to the central government
employees and their families. The government of India and central government employees also contribute a nominal
amount per month based on their pay scale. Central Government Health Scheme provides comprehensive medical
care to not only Central Government employees but also to the pensioners enrolled under the scheme. CGHS caters
to the healthcare needs of eligible beneficiaries covering all four pillars of democratic set up in India namely
Legislature, Judiciary, Executive and Press. CGHS is the model Health care facility provider for Central Government
employees & Pensioners and is unique of its kind due to the large volume of beneficiary base, and comparatively
most economical health care treatment.
3. Mediclaim Policy: In 1986, India’s First Mediclaim policy was launched by public sector General insurance
companies with standard terms and conditions. It was a voluntary health insurance scheme covering hospitalization
expenses with exclusions like pre-existing diseases, pregnancy, childbirth etc. Initially, the scheme was operative on
reimbursement basis. However lately cash less was introduced in the claim settlement process after the entry of
TPAs into the market.
With the opening of insurance sector to private insurers, the health insurance sector started gaining popularity in
India. At present, health insurance is one of the fastest growing segments in India with the CAGR of 20% between
fiscal 2015 to fiscal 2020. There are different stakeholders like insurance companies, IRDAI, TPA, and Health care
service providers who actively participate in this ecosystem. The sector has come out with numerous innovative
health insurance products catering to the changing needs of the customers.
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IRDAI is statutory regulator for health insurance industry in India
The health insurance industry is regulated by Insurance Regulatory Authority of India (IRDAI). In 1993, the
government set up a committee under the chairmanship of RN Malhotra with an objective to propose recommendation
for reforms in the insurance sector. Post the recommendations submitted by Malhotra Committee in 1999, the IRDAI
was incorporated as a statutory body to regulate and develop the insurance industry in April, 2000.
The health insurance business was introduced first when the first insurance act was passed in 1912. Later in 1948
the central government introduced the employees’ State Insurance Scheme (ESIS) for blue-collar workers employed
in the private sector followed by the Central Government Health Scheme (CGHS) for central government employees
and for their families in 1954 and mediclaim policy in 1986.
IRDAI constituted a Working Group on Health Insurance in September, 2003 to promote and develop Health
Insurance in the country. The Working Group set up the Health Insurance Data Sub-Group which in turn
recommended the setting up sub-committee on registration of Stand-alone health insurance companies. The
authority on the suggestion of the committee considered the need for reducing the entry levels for standalone health
insurance companies in order to encourage their creation. The year 2006-07 saw the registration of a stand-alone
health insurance company that came into the business by complying with the minimum capital requirement of
Rs.1000 million required for a general insurance company, Star health and Allied Insurance Co. Ltd. This was
followed by 5 more Specialists Health Insurer by the year 2013-14 under the Title “Standalone Health Insurance
Companies in India” (SAHI). As of now there are a total of 5 SAHI insurers in India; Aditya Birla Health, Care Health,
ManipalCigna, Max Bupa and Star Health.
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Health insurance industry went through plethora of developments in 2020
Every year Indian insurance industry goes through various changes in order to provide more customer-centric
products and also promote the orderly growth and development of the industry. Particularly in 2020, the regulator
undertook number of steps to make sure that the coverage of health insurance increases by offering simple,
standardised, and disease-specific policy options to customers in the wake of the onset of Covid-19. Below are some
of the key changes –
Arogya Sanjeevani – A standard health product
On January 2, 2020 IRDAI issued guidelines to all general insurance and specialized health insurers to start selling
standard health insurance product with cover of up to Rs 0.5 million called Arogya Sanjeevani from April 1, 2020.
There were number of retail health insurance products and each product had unique features; hence, it was complex
for customers to compare and choose a suitable product based on their needs. The Arogya Sanjeevani has made
buying process much simpler and played major role to develop strong faith and trust in customers towards health
insurance eco system. Major objectives behind the standard individual health insurance products are:
Insurance policy to take care of basic health needs of insuring public
To have a standard individual product with common policy wordings across the industry
To facilitate seamless portability among insurers
In July 2020, IRDAI has allowed the insurers to offer the same standard policy also as group policy under the same
name “Arogya Sanjeevani” provided that all the terms and conditions of the standard policy are retained.
IRDAI has also clarified that Arogya Sanjeevani covers COVID-19 as well whether in individual or group form.
Key features of Arogya Sanjeevani - A standard health product
The product shall have basic mandatory covers which are covered in construct of standard health product.
The standard product can be offered on family floater basis also which includes legally wedded spouse,
parents and parents-in law and dependent children (Natural or legally adopted) between the age 3 months
to 25 years and child above 18 years who is financially independent shall be ineligible.
No add-ons or optional covers are allowed to be offered along with the standard product
The standard product shall be offered on indemnity basis only and shall not be combined with critical illness
or Benefit based covers.
The policy tenure of the standard product shall be for a period of one year.
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At the time of renewal, a fixed 30 days is to be allowed a grace period and for all other payment method it
should be 15 days.
Minimum sum assured shall be Rs 50,000 and thereafter in multiples of 50,000 which shall be up to Rs 1
million.
Policy term should be offered with a policy term of one year.
Fixed co-pay of 5% shall be applicable across all the ages and it shall be explicitly disclosed in the format of
application.
The insurer may determine the price keeping in view the covers proposed to be offered.
The premium shall be Pan India basis and no geographical location or zone based pricing is allowed.
Construction of Standard health product
Hospitalisation
Room, boarding, nursing expenses as provided by hospital/nursing home up to 2% of the sum insured subject
to maximum of Rs.5000/- per day
Surgeon, Anaesthetist, medical practitioner, consultants, specialist fees whether paid directly to the treating
doctor/surgeon to the hospital
Anaesthesia, blood, oxygen, operation theatre charges, surgical appliances, medicines and drugs, costs
towards diagnostics, diagnostics imaging modalities, and such other similar expenses.
ICU/ICCU expenses up to 5% of sum insured subject to maximum of rs.10000/- per day
The time limit of 24 hours shall not apply when the treatment does not require hospitalization as specified in
the terms and conditions of policy contract, where the treatment is taken in the hospital and insured is
discharged on the same day
Pre-Hospitalisation
Medical expenses incurred for a period of 30 days prior to the date of hospitalization shall be admissible.
Post-Hospitalisation
Medical expenses incurred for a period of 60 days from the date of discharge from the hospital, following an
admissible claim shall be included
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Ayush Treatment
Medical expenses incurred for a period of 30 days prior to the date of hospitalization shall be admissible.
Other expenses
Expenses incurred on treatment of cataract subject to sub limits of up to 25% of sum insured or Rs.40000/-
whichever is lower per eye.
Dental treatment, plastic surgery necessitated due to dieses or Injury.
All day care treatments.
Expenses incurred on Road ambulance subject to a maximum of rs.2000/- per hospitalization
Cumulative bonus
Sum insured (excluding CB) shall be increased by 5% in respect of each claim free policy year, provided the policy
is renewed without a break subject to maximum of 50% of the sum insured. If a claim is made in any particular year,
the cumulative bonus accrued may be reduced at the same rate at which it has incurred
Corona Kavach Policy
In view of the Covid 19 pandemic, the Authority has designed a standard Covid specific product addressing basic
health insurance needs of insuring public with common policy wordings across the industry. The Authority has
mandated general and health insurers to offer this indemnity based Individual Covid Standard Health Policy called
“Corona Kavach”. Doctors, Nurses and other healthcare workers will get 5% discount on premium of Corona Kavach
as a gesture of acknowledgement of the contribution of healthcare sector in the nation’s fight with Covid-19.
Key features of “Corona Kavach”
Available on Individual and Family Floater Basis.
Covers the hospitalization expenses incurred due to coronavirus treatment and offers a daily cash benefit up
to certain days as mentioned in the policy document
The sum assured can be in multiples of Rupees. 50000/- up to 500,000.
The waiting period for the policy is 15 days.
Policy can be taken for Three and Half Months (3 ½ months), Six and Half Months (6 ½ months), Nine and
Half Months (9 ½ months) including waiting period and it can be further renewed by 31st March, 2021.
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Policy can be availed by persons between the age of 18 to 65 years and policy can be availed for self,
spouse, Parents, Parents-in-law and Dependent Children up to 25 years of age.
Medical Expenses of Hospitalization on diagnosis of Covid shall be admissible.
15 days of Pre-hospitalisation and 30 days of Post hospitalisation expenses shall be covered.
This also covers home care treatment with limits of maximum of 14 days per incident, which in the normal
course would require care and treatment at a hospital but is actually taken while confined at home.
Single premium payment option will be available.
For the purpose of Corona Kavach policy, any set-up designated by the government as hospital for the
treatment of Covid shall also be also considered as hospital.
Any co-morbid condition triggered due to Covid-19 shall be covered during the period of hospitalization.
The policy will be offered on Individual and group basis.
Corona Rakshak policy
Corona rakshak policy is a benefit based plan which is optional for insurers to provide. Under this policy, if the
individual is hospitalized for a minimum continuous period of 72 hours, the individual will be eligible to receive the
100% of sum insured based on the policy terms and conditions.
The sum assured can be in multiples of Rupees. 50000/- up to Rupees 250,000.
The waiting period for the policy is 15 days.
Policy can be taken for Three and Half Months (3 ½ months), Six and Half Months (6 ½ months), Nine and
Half Months (9 ½ months) including waiting period and it can be further renewed by 31st March, 2021.
Policy can be availed by persons between the age of 18 to 65 years and policy
Mandatory medical Insurance to workers
The Ministry of home affairs has issued revised guidelines on 15th April, 2020 under standard operating procedure
(SOP) that medical insurance for the workers of all industrial and commercial establishments, work places, offices to
be made mandatory. IRDAI has also instructed to all general and standalone Health insurance companies (Except
AIC and ECGC) to devise comprehensive Health insurance products with simple wordings, conditions and at
affordable cost to be offered.
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Introduction of EMI option for premium payment
The IRDAI in April 2020 after the outbreak of covid-19 came out with a modification allowing customers to pay their
health insurance premiums in instalments. The policyholder can pay premium monthly, quarterly, or half-yearly as
decided by the insurer. The modification will play a major part in increasing affordability in the health insurance
industry.
Committee’s report on study of the feasibility of allowing life insurers to offer indemnity
based health policies
A committee was constituted by IRDAI in February 2020 to study the feasibility of Life insurers to offer Indemnity
based Health policies. The committee submitted its report to the regulator in September 2020.
However, the committee could not come to a consensus view on the following aspects:
Should life insurers be allowed to manufacture and distribute indemnity health products including Arogya
Sanjeevani health product.
Should life insurers be allowed sell indemnity health at least as a rider to Life insurance policies
The committee after deliberations found a middle ground and made the following recommendations:
Life insurers be permitted to distribute products of GI and SAHI indemnity health products. This could be
through Corporate Agency model or any other model. Open architecture be allowed in respect of tie-ups both
from Life insurers as well as GI/ SAHI perspective.
COMBI products, which is a combination of health and life insurance products, is being allowed for many
years now. However the concept has not succeeded due to various issues in the regulatory construct. Taking
this into cognizance, the committee made a number of recommendations to revamp and strengthen sales of
COMBI products including -
o Tie-ups between one Life and one Non-Life Insurance Companies: The tie up should be allowed
between any life insurer and any non-life/ SAHI insurer
o File and use approach: Benefits of the combined offering are passed on to the policyholders can
be checked the first time that the two individual products are integrated, when a File & Use
application can be mandated. Subsequently if there are any changes in the underlying individual
products either through the File & Use approach or through the Use & File route, the revised versions
should be allowed to be offered under the ‘Combi Product’ with only a change in the UIN of the
‘Combi Product’.
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o Product Structure: The product structure can be flexible and certain parameters can be kept aligned
to one of the products and not necessarily both the products, and adjustments may be allowed
subject to internal certification by the Appointed Actuary.
o Commission Payment: The committee suggested that it would be preferable if the insurance
intermediary got the total commission from the main insurer for that intermediary. The processes
regarding commission payment, rewards etc. to be aligned with what the distribution partner is
familiar with. The lead insurer and secondary insurer to have a bilateral arrangement to reconcile
their books periodically.
o Rewards and Recognition: The two companies to be allowed to develop a joint R&R program for
Combi products that exist as a subset of their own individual programs.
o Training of Composite Agents: Each company to be allowed to train and certify the Agent of the
other company for Combi products.
Health insurance is emerging as a very specialized line of business. The expansion of health insurance
market and increasing complexities in the healthcare sector of India call for huge focus and developing
adequate skill sets in this space. The standalone insurance companies have been able to bring the
specialization to the table. In order to encourage this, Life insurers and General insurers should be allowed
to set up stand down subsidiaries in health business.
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Key regulation in insurance industry
FDI Cap increased from 49% to 74%
The Parliament, in March 2021, passed the Insurance Amendment Bill 2021 to increase the foreign direct investment
(FDI) limit in the insurance sector to 74% from 49% of paid up equity capital previously. This measure was first
announced by the Finance Minister, Nirmala Sitharaman, in the Union Budget February 2021. This move will attract
higher amounts of foreign capital, which will aid in increasing insurance penetration in India. There are several other
benefits on increasing the cap which includes following –
Because of better availability of more capital than earlier, the insurance companies can increase impetus on
business growth and diversification of their portfolio
More options available to consumers with an increase in competition, which also leads to better offers for
them
Risk based pricing in health insurance
In September 2017, IRDAI formed a ten-member steering committee to implement the Risk Based Capital (RBC)
Regime in accordance with the recommendation of Risk Based Capital Committee Report. At present, it is mandatory
to maintain a solvency margin of 150% (or 1.5 times) for every insurer, irrespective of the amount of risks that the
insurer carry or the extent of liabilities that arise from the pricing of the insurance policies. Solvency margin is the
extent to which an insurance company’s assets exceed its liabilities.
Risk-based supervision norms will ensure that those insurers who carry relatively higher risks will be subject to greater
regulatory oversight. Risk based capital will encourage insurers to become cost efficient, protect their capital
conservation ratio, preserve solvency and have a business continuity plan.
Feasibility of allowing Life Insurers to offer Indemnity based Health Policies.
Life insurers in India had been selling indemnity-based Health insurance policies till 2016. Changes in Health
regulations in 2016 have prohibited Life insurers to issue indemnity based health policies. While life Insurers offer
fixed health benefit products such as Critical Illness, Hospital Cash and Cancer cover, General and SAHI companies’
offer Indemnity based health policies which works on either reimbursement basis or cashless basis in addition to
benefit covers. The advantage of an indemnity based health policy is that it covers a wide range of treatments and
illnesses.
Capital Gearing Treaties
The Insurance Regulatory and Development Authority of India (IRDAI) in a circular to all general/health/specialised
insurance companies on March 28, 2020 said some insurers have entered into Capital Gearing treaties in various
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forms including Quota Share Reinsurance Treaty. The IRDAI stated that such capital Gearing treaties are of the
nature of financial arrangements and not primarily a risk transfer mechanism. As such, it appears that insurers had
adopted these arrangements in order to improve the solvency margin ratio.
The circular directed the insurers to –
Submit board approved Action Plan to the Authority on or before June, 2020 for phasing out the treaties
along with timelines such that it complies with the Solvency Stipulations.
The direct insurers (cedants) to create appropriate reserves towards Unearned Premium Reserves, Premium
Deficiency Reserves, Outstanding Claims Reserves (including IBNR/IBNER) in accordance with IRDAI
(Assets, Liabilities and Solvency Margin of General Insurance Business) Regulations, 2016.
Scheme portability and migration
Changing or porting health insurance policy from one company to another resulted in losing benefits like waiting
period for covering pre-existing diseases. However, in 2011, IRDAI allowed policyholders by giving them the right to
port their policy to any other insurers of their choice. This applies not only when the policyholder moves from one
insurer to another but also from one plan to another with the same insurer.
Conditions:
Policyholder can port the policy only at the time of renewal. That is, the new insurance period will be with the new insurance company
Apart from the waiting period credit, all other terms of the new policy including the premium are at the discretion of the new insurance company
At least 45 days before your renewal is due, a customer has to
o Write to your old insurance company requesting a shift
o Specify company to which the customer wants to shift the policy
The customer is required to renew the policy without a break (there is a 30 day grace period if porting is under process)
Furthermore in May 2020, IRDAI said in its guidelines that in order to accept a policy which is being ported in, the
insurer shall not levy any additional charges exclusively for the purpose of porting. This will help improve customer
experience and stickiness towards insurance policy which they like.
Wellness benefits
IRDAI guidelines of 2013, already covered rewarding policyholders with an early entry and continued renewals.
However, to further incentivise consumers to lead a healthy lifestyle, IRDAI guidelines issued in September 2020
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mainly focuses on rewarding policyholders on the basis of preventive and wellness habits by disclosing upfront such
mechanism or incentives in the prospectus and the policy document.
IRDAI has also allowed insurers to stretch wellness benefits by covering non-payable items of cost of treatment.
Insurers can offer benefits based on product design, geography or their claims experience allowing them to come up
with customized health risk assessment tools to incentivise policy holders based on their fitness levels.
Introduction of Web Aggregators
In order to monitor the content on the websites of web aggregator insurance companies, the IRDAI introduced the
Insurance Web Aggregators Regulations in May 2017. Web aggregators are companies registered under the
Companies Act and approved by IRDAI, which maintain or own a website and provide information on insurance
products of different insurers. As of December 2020, there are a total 22 Web aggregators registered with IRDAI.
Duties and functions of web aggregators -
Web aggregators shall display information pertaining to the insurers who have signed the agreement with
them
Web aggregators are not allowed to promote or push any particular product of a particular company, either
through their website or through distance marketing approaches
No charges are to be paid for generation of leads through web aggregators; in case of sales conversion, web
aggregators will earn remuneration as applicable to insurance intermediaries
Use only RBI licensed payment gateways for collection and transfer of premium to insurers
Ensure the information systems, (both hardware and software) including aggregation website(s) / Portals,
lead management systems and data centers hosting the website(s) / portals / LMS are in compliance with
generally accepted information security standards
Repudiation on insurance policy only for a period of three years
No policy can be repudiated on any ground, including miss-statement of facts after three years, post the
commencement of the policy by the company.
Regulation of Investments - General Insurer including an insurer carrying on business of
re-insurance or health insurance
An insurer carrying on the business of General Insurance including an insurer carrying on business of re-insurance
or health insurance shall invest and at all times keep invested its investment assets in the manner set out below -
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No. Type of Investment Percentage of Investment Assets
(I) Central Government Securities Not less than 20%
(ii) Central Government Securities, State Government Securities or Other Approved Securities
Not less than 30% (including (i) above)
(iii)
(iv)
Approved Investments as specified in Regulation 3 (a), (b) and Other Investments as specified in Section 27A (2) and Schedule II to these Regulations, (all taken together) subject to Exposure / Prudential Norms as specified in Regulation 9:
Other investments as specified in Section 27A (2), subject to Exposure / Prudential Norms as specified in Regulation 9:
Not exceeding 70%
Not more than 15%
(v) Housing and loans to State Government for Housing and Fire Fighting equipment, by way of subscription or purchase of:
A. Investments in Housing
a. Bonds / Debentures issued by HUDCO, National Housing Bank
b. Bonds / debentures of Housing Finance Companies either duly accredited by National Housing Bank, for house building activities, or duly guaranteed by Government or carrying current rating of not less than ‘AA’ by a credit rating agency registered under SEBI (Credit Rating Agencies) Regulations, 1999
c. Asset Backed Securities with underlying Housing loans, satisfying the norms specified in the Guidelines issued under these regulations from time to time.
B. Investment in Infrastructure
(Explanation: Subscription or purchase of Bonds/ Debentures, Equity and Asset Backed Securities with underlying infrastructure assets would qualify for the purpose of this requirement.
‘Infrastructure facility’ shall have the meaning as given in Regulation 2 (h) as amended from time to time.
Note: Investments made under category (i) and (ii) above may be considered as investment in housing or infrastructure, as the case may be, provided the respective government issues such a security specifically to meet the needs of any of the sectors specified as ‘infrastructure facility’
Total Investment in housing and infrastructure (i.e.,) investment in categories (i), (ii), (iii) and (iv) above taken together shall not be less than 15% of the Investment Assets
Source – IRDAI
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Key regulations pertaining to customers
Focus on innovation and transparency
IRDAI initialized a regulation in 2016, on issuance of electronic insurance policies, wherein it is mandatory for the
players to issue policies in electronic form if the sum assured or annual premium exceeded a pre-set amount.
With the introduction of Web aggregators, the customers can check different insurance products and compare the
same on different parameters. The web aggregators have to use only RBI approved payment gateways for premium
collection or transfers.
Also, the introduction of Bancassurance has improved the reach of insurance companies, as banks have a well-
entrenched branch network.
Commission Structure for insurance products
The regulator has the power to fix premium rates for various products. In December 2016, the IRDAI released the
new commission rates that will come into effect from April 2017. The regulator hiked the commission rate for
comprehensive auto insurance (own damage plus third party) policies to 15% from 10% previously. In addition, a
commission of 2.5% on annual premium is payable on third party motor insurance. For individual health insurance,
the IRDAI has reduced the commission cap on non-agency channel to 15% from the existing 17.5%; for group health
insurance, the commission rate was reduced from 15% to 7.5%.
Further, reward in the general insurance is to be calculated separately for health insurance and other than health
insurance for insurance agents and insurance intermediaries respectively and not linked to each and every policy
solicited by an insurance agent or an insurance intermediary. Reward for insurance agent or an insurance
intermediary who generate up to 50% of their revenue from insurance is however capped at 30% of the commission
or remuneration paid to insurance agents or insurance intermediaries. The commission or remuneration to be paid
to an insurance agent or an insurance intermediary shall be decided by the insurer based on its Board approved
policy.
Health Insurance (General & stand-alone Health Insurers) - Reg 5c
S. No Line of Business Commissions/Remuneration
1 Health-Individual* 15%
2 Health-Group (Employer-Employee only)- Annual 7.50%
3 Health-Group (Non Employer-Employee groups – not formed solely for availing insurance as defined in IRDAI Group Guidelines of 14th July, 2005) – Annual
15%
158
4 Health – Group (credit linked up to 5 years) 15%
5 Health-Govt Scheme
As specified in the Government Scheme/ Notification else as per Health - Group (Employer Employee only) - Annual segment
*- Individual includes annual premium, 3 years single premium, 3 years regular premium.
Source – IRDAI and CRISIL Research
Insurance Ombudsman Rule 2017
The insurance ombudsman was created by GOI to handle complaints of aggrieved insured persons. Claimants who
could not get their complaints addressed by insurers may get in touch with Ombudsman relevant to their states.
Any person who has grievances against an insurer can approach an Insurance Ombudsman for redressal of any
grievances arising out of insurance policies.
Key highlights of Insurance Ombudsman for customers -
159
Source – IRDAI and CRISIL Research
Insurance Ombudsman Rule , 2017
17 Insurance Ombudsman in
different locations.
No fees / Charges
required to be paid
No lawyer needed ;
Insurer shall comply with the award within 30
days.
Award any compensation
up to loss suffered and
not exceddingRs. 30 Lacs
160
Peer Benchmarking
The Peer set considered is:
SAHI Public Health Insurers Private Health Insurers
Star Health Insurance & Allied Insurance
The New India Assurance Bajaj Allianz General Insurance
CARE Health Insurance National Insurance HDFC Ergo General Insurance
Max Bupa Health Insurance The Oriental Insurance ICICI Lombard General Insurance
HDFC Ergo Health Insurance United India Insurance SBI General Insurance
Aditya Birla Health Insurance TATA AIG General Insurance
Manipal Cigna Health Insurance Cholamandalam MS General
Insurance
Reliance General Insurance
Note:
1. Apollo Munich Health Insurance is merged with HDFC Ergo Health Insurance.
2. HDFC Ergo Health Insurance merged with HDFC Ergo General Insurance in FY 21; hence, performance of FY 21 and FY22 for HDFC
Ergo General Insurance includes HDFC Ergo Health Insurance as well.
3. Religare Health Insurance is now known as CARE Health Insurance.
4. Company wise premium numbers may differ from reported numbers, as these are provisional numbers from GI council
In this chapter, CRISIL Research has analysed the operational performance and key financial indicators of the top
six standalone health insurance players, four public sector general insurance players and top seven private sector
general insurance companies. These 17 entities together account for 93% of health insurance premium collected by
the industry during FY21.
Star Health Insurance is the largest private company in health insurance with 16% market share
New India Assurance is the largest player in the health insurance sector, accounting for ~18% of the gross direct
premium collected by the industry in FY21. Star Health Insurance, the largest private company in health insurance,
had a market share of ~16% during this period. The top 5 players put together had a market share of 63%; Star
Health Insurance is the only SAHI player among top five health insurance companies considering health insurance
premium of both general insurers and SAHI players.
Star Heath Insurance is the only SAHI Company among top five companies considering both health
insurance premium of general insurance companies and gross written premium of SAHI companies
161
Note: Market share is based on gross premium of FY 21 Source: GI Council Segmentwise report, CRISIL Research
Star Health Insurance has witnessed an increase of 4.9 percentage points in its market share between fiscal 2018
and fiscal 2021. HDFC Ergo General also saw its market share expand during this period due to merger of HDFC
Ergo Health Insurance with it. In the first half of FY22, New India Assurance saw a significant increase in its market
share.
Gross Written Premium (overall health insurance) – Market share and Growth
Type
of
Player
Gross Direct Premium Income
(Rs Million ) Market share (%)
CAG
R
FY18
-
FY21
FY18 FY19 FY20 FY 21 H1
FY22 FY18 FY19 FY20 FY 21
H1
FY22
New India Assurance Public 69,959 82,412 93,818 1,07,238 78,469 18.9% 18.4% 19.2% 18.4% 21.2% 15%
Star Health SAHI 40,317 52,718 67,079 92,039 51,319 10.9% 11.8% 13.7% 15.8% 13.9% 32%
United India Public 56,060 53,570 53,298 62,402 31,892 15.1% 12.0% 10.9% 10.7% 8.6% 4%
National Insurance Public 53,291 58,900 52,776 55,492 33,257 14.4% 13.2% 10.8% 9.5% 9.0% 1%
Oriental Insurance Public 35,764 40,444 46,343 47,419 34,836 9.7% 9.1% 9.5% 8.1% 9.4% 10%
HDFC Ergo General Private 9,742 12,542 15,743 37,335 18,369 2.6% 2.8% 3.2% 6.4% 5.0% 14%*
HDFC Ergo Health SAHI 15,662 19,873 23,598 NA NA 4.2% 4.4% 4.8% NA NA
ICICI Lombard Private 18,488 22,672 26,952 26,392 17,868 5.0% 5.1% 5.5% 4.5% 4.8% 13%
CARE Health SAHI 9,320 16,112 21,513 23,101 15,192 2.5% 3.6% 4.4% 4.0% 4.1% 35%
Bajaj Allianz Private 13,695 22,062 20,869 20,746 19,601 3.7% 4.9% 4.3% 3.6% 5.3% 15%
Max Bupa Health SAHI 7,433 9,145 11,776 16,660 12,243 2.0% 2.0% 2.4% 2.9% 3.3% 31%
New India Assurance, 18%
Star Health, 16%
United India, 11%
National Insurance,
10%Oriental Insurance, 8%
HDFC Ergo General, 6%
ICICI Lombard, 5%
CARE Health, 4%
Bajaj Allianz, 4%
Max Bupa Health, 3%
SBI General, 2%
Aditya Birla Health, 2%
TATA AIG General, 2% Reliance
General, 2%
162
SBI General Private 4,726 5,134 7,425 12,563 7,016 1.3% 1.1% 1.5% 2.2% 1.9% 39%
Aditya Birla Health SAHI 2,304 4,234 7,555 11,658 6,943 0.6% 0.9% 1.5% 2.0% 1.9% 72%
TATA AIG General Private 4,043 6,313 8,354 10,702 6,207 1.1% 1.4% 1.7% 1.8% 1.7% 38%
Reliance General Private 7,373 10,189 14,218 8,872 5,997 2.0% 2.3% 2.9% 1.5% 1.6% 6%
Manipal Cigna Health SAHI 3,265 4,688 5,673 7,445 4,335 0.9% 1.0% 1.2% 1.3% 1.2% 32%
Cholamandalam MS
General Private 2,607 2,737 3,169 4,287 2,010 0.7% 0.6% 0.6% 0.7% 0.5% 18%
Note: NA = Not available; (*) CAGR growth is for merged entity (HDFC Ergo General and HDFC Ergo Health); HDFC Ergo General FY21 and
FY22 numbers include HDFC Ergo Health’s data as well, post-merger; Cholamandalam MS General includes premium includes only for health
insurance retail and group as government health insurance premium is not meaningful
Source: GI Council Segmentwise report, CRISIL Research
SBI General is the largest player in Personal Accident and Overseas insurance market
Personal Accident and Overseas insurance accounts for 8% of health insurance business; SBI General Insurance
leads this segment with 16% market share in FY21, followed by New India Assurance with 12% market share. Among
SAHI players, CARE is the largest player in the personal accident and overseas insurance market with market share
of 4.7% in FY21, followed by Star Health with market share of 2.8%.
Gross written Premium (Personal Accident and overseas) – Market share and Growth
Type
of Player
Gross Direct Premium Income (Rs Million )
Market share (%) CAG
R FY18
-FY21 FY18 FY19 FY20 FY 21
H1 FY22
FY18 FY19 FY20 FY 21 H1
FY22
SBI General Private 4,670 6,101 8,330 8,660 3,268 9.2% 9.8% 14.2% 16.3% 9.0% 23%
New India Assurance
Public 4,773 5,388 3,653 6,171 9,653 9.4% 8.7% 6.2% 11.6% 26.5% 9%
HDFC Ergo General
Private 6,115 7,190 6,867 5,481 2,974 12.0% 11.6% 11.7% 10.3% 8.2% -
10%* HDFC Ergo Health
SAHI 1,513 2,071 1,618 NA NA 3.0% 3.3% 2.8% NA NA
United India Public 2,471 4,391 5,398 4,930 2,342 4.9% 7.1% 9.2% 9.3% 6.4% 26%
ICICI Lombard Private 6,265 7,018 6,369 3,822 2,281 12.3% 11.3% 10.9% 7.2% 6.3% -15%
CARE Health SAHI 1,596 2,143 2,377 2,497 1,588 3.1% 3.5% 4.1% 4.7% 4.4% 16%
Cholamandalam MS General
Private 2,137 2,874 3,062 2,482 1,134 4.2% 4.6% 5.2% 4.7% 3.1% 5%
Oriental Insurance
Public 5,043 5,502 2,423 2,415 1,624 9.9% 8.9% 4.1% 4.5% 4.5% -22%
TATA AIG General
Private 3,202 4,881 3,186 2,305 1,117 6.3% 7.9% 5.4% 4.3% 3.1% -10%
Bajaj Allianz Private 3,236 3,908 3,880 2,272 1,219 6.4% 6.3% 6.6% 4.3% 3.3% -11%
National Insurance
Public 3,172 1,719 1,953 2,229 1,472 6.2% 2.8% 3.3% 4.2% 4.0% -11%
Star Health SAHI 1,294 1,408 1,462 1,495 679 2.5% 2.3% 2.5% 2.8% 1.9% 5%
163
Aditya Birla Health
SAHI 128 734 1,165 1,348 693 0.3% 1.2% 2.0% 2.5% 1.9% 119%
Max Bupa Health SAHI 112 325 653 848 247 0.2% 0.5% 1.1% 1.6% 0.7% 96%
Reliance General Private 737 1,079 1,153 678 552 1.5% 1.7% 2.0% 1.3% 1.5% -3%
Manipal Cigna Health
SAHI 199 160 89 110 82 0.4% 0.3% 0.2% 0.2% 0.2% -18%
Note: NA = Not available; (*) CAGR growth is for merged entity (HDFC Ergo General and HDFC Ergo Health); HDFC Ergo General FY21 and
FY22 numbers include HDFC Ergo Health’s data as well, post-merger
Source: GI Council Segmentwise report, CRISIL Research
Star Health Insurance is largely focused on the retail health business and is the market leader amongst
private and SAHI insurers
Within the Health insurance umbrella, Star Health Insurance is focused largely on the retail segment, as reflected in
the fact that close to 90% of its premiums come from this segment, which is much higher than any of its peers. ICICI
Lombard and Tata AIG General have seen decline in Retail Health Insurance business over the last couple of years.
Gross Written Premium – Product mix (FY 21)
Note: HDFC Ergo General FY21 number include HDFC Ergo Health’s data as well, post-merger.
Source: GI Council Segmentwise report, CRISIL Research
Star Health Insurance is the market leader in Retail Health insurance business, almost 3 times the size of the
next player
89% 81% 73% 69% 68%53% 48% 39% 38% 38%
28% 27% 27% 24% 22% 16%
11% 19% 27% 30% 32%47% 52%
56% 54% 53% 72% 66% 71% 72%
39%60%
0% 0% 0% 0% 0% 0% 0% 5% 7% 9%0%
0%0% 4%
40%22%
0% 0% 0% 1% 0% 0% 0% 0% 1% 0% 0% 7% 2% 0% 0% 2%
0%10%20%30%40%50%60%70%80%90%
100%
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164
Star Health Insurance is the market leader in the Retail Health insurance business, with the company accounting for
over 31% of the gross premiums collected by the industry in FY21. Premium garnered by it during this period was
over three times higher than its closest competitors, New India Assurance and HDFC Ergo. Furthermore, the
company has gained significant market share, as reflected in the increase in its market share from 19.8% of industry
gross premium in FY18 to 31.1% in FY21.
Retail Health insurance business – Market share and Growth
Type
of Player
Retail Business Premium (Rs Million)
Market share (%) CAGR FY18 -FY21
FY18 FY19 FY20 FY21 H1
FY22 FY18 FY19 FY20 FY21
H1 FY22
Star Health SAHI 36,291 46,789 58,658 82,075 44,364 19.8% 22.8% 28.6% 31.3% 31.6% 31%
HDFC Ergo General
Private 7,804 5,388 6,263 27,236 13,703 4.3% 2.6% 3.1% 10.4% 9.8%
14%* HDFC Ergo Health
SAHI 10,803 13,920 17,203 NA NA 5.9% 6.8% 8.4% NA NA
New India Assurance
Public 21,423 23,386 23,670 25,997 12,992 11.7% 11.4% 11.5% 9.9% 9.3% 7%
National Insurance
Public 14,935 16,343 17,380 20,830 10,774 8.2% 8.0% 8.5% 7.9% 7.7% 12%
Oriental Insurance
Public 14,075 15,270 15,599 18,579 8,575 7.7% 7.4% 7.6% 7.1% 6.1% 10%
CARE Health SAHI 6,165 8,690 11,431 16,190 9,669 3.4% 4.2% 5.6% 6.2% 6.9% 38%
United India Public 10,160 10,577 12,140 13,646 6,635 5.5% 5.2% 5.9% 5.2% 4.7% 10%
Max Bupa Health SAHI 6,342 7,367 8,694 13,555 9,652 3.5% 3.6% 4.2% 5.2% 6.9% 29%
Bajaj Allianz Private 5,303 6,088 6,920 8,035 4,169 2.9% 3.0% 3.4% 3.1% 3.0% 15%
ICICI Lombard Private 10,806 9,678 5,852 7,357 4,141 5.9% 4.7% 2.9% 2.8% 3.0% -12%
Aditya Birla Health
SAHI 769 1,983 3,496 5,590 3,162 0.4% 1.0% 1.7% 2.1% 2.3% 94%
Manipal Cigna Health
SAHI 2,199 2,665 3,123 3,936 2,168 1.2% 1.3% 1.5% 1.5% 1.5% 21%
SBI General Private 991 1,758 2,879 3,514 1,654 0.5% 0.9% 1.4% 1.3% 1.2% 52%
TATA AIG General
Private 2,578 4,427 1,759 3,156 2,121 1.4% 2.2% 0.9% 1.2% 1.5% 7%
Cholamandalam MS General
Private 2,193 2,295 2,361 2,479 1,363 1.2% 1.1% 1.2% 0.9% 1.0% 4%
Reliance General Private 734 863 998 1,432 821 0.4% 0.4% 0.5% 0.5% 0.6% 25%
Note: NA = Not available; (*) CAGR growth is for merged entity (HDFC Ergo General and HDFC Ergo Health); HDFC Ergo General FY21 and
FY22 numbers include HDFC Ergo Health’s data as well, post-merger
Source: GI Council Segmentwise report, CRISIL Research
Star Health has gained largest market share in accretion in Retail health premium in FY21
Considering accretion in retail business premium (calculated as total retail premium during a period minus total retail
premium during the same period of the previous year) as well, Star Health is the market leader in the retail segment,
accounting for 41% during fiscal 2021. Star Health Insurance was followed by Max Bupa which accounted for 8.4%
of accretion in retail business premium in fiscal 2021.
165
Accretion in retail health business premium (FY 21) – Market share
Type of Player
Retail Business (Rs million) Market share (%) New Retail
Business (Rs million)
Q1 FY21
Q2 FY21
Q3 FY21
Q4 FY21
Q1 FY22
Q2 FY22
Q1 FY21
Q2 FY21
Q3 FY21
Q4 FY21
Q1 FY22
Q2 FY22
FY21
Incremental
Market Share
Star Health SAHI 14,054 21,254 20,031 26,737 20,130 24,234 28.2%
30.6%
32.4%
32.7%
30.6%
32.6%
23,418 40.5%
HDFC Ergo General
Private 1,593 1,922 6,285 8,654 6,407 7,296 3.2% 2.8% 10.2%
10.6%
9.7% 9.8% 3,770 6.5%
Max Bupa Health
SAHI 2,591 3,309 3,033 4,622 4,573 5,079 5.2% 4.8% 4.9% 5.6% 6.9% 6.8% 4,862 8.4%
CARE Health
SAHI 3,110 4,241 3,727 5,111 4,455 5,213 6.2% 6.1% 6.0% 6.2% 6.8% 7.0% 4,759 8.2%
HDFC Ergo Health
SAHI 3,761 5,020 NA NA NA NA 7.5% 7.2% NA NA NA NA NA NA
National Insurance
Public 4,035 4,932 5,212 6,650 5,275 5,499 8.1% 7.1% 8.4% 8.1% 8.0% 7.4% 3,450 6.0%
Oriental Insurance
Public 3,611 5,742 4,309 4,917 4,250 4,326 7.2% 8.3% 7.0% 6.0% 6.5% 5.8% 2,980 5.1%
New India Assurance
Public 5,372 6,912 6,024 7,691 6,386 6,606 10.8%
10.0%
9.7% 9.4% 9.7% 8.9% 2,327 4.0%
Aditya Birla Health
SAHI 1,196 1,511 1,160 1,723 1,552 1,610 2.4% 2.2% 1.9% 2.1% 2.4% 2.2% 2,094 3.6%
United India
Public 2,939 3,437 3,186 4,084 3,175 3,460 5.9% 5.0% 5.2% 5.0% 4.8% 4.6% 1,507 2.6%
ICICI Lombard
Private 1,483 1,904 1,740 2,231 1,906 2,234 3.0% 2.7% 2.8% 2.7% 2.9% 3.0% 1,505 2.6%
TATA AIG General
Private 639 778 704.2 1,035 980 1,141 1.3% 1.1% 1.1% 1.3% 1.5% 1.5% 1,398 2.4%
Bajaj Allianz
Private 1,551 2,298 1,745 2,441 2,029 2,140 3.1% 3.3% 2.8% 3.0% 3.1% 2.9% 1,115 1.9%
Manipal Cigna Health
SAHI 818 1,074 902 1,142 991 1,177 1.6% 1.5% 1.5% 1.4% 1.5% 1.6% 813 1.4%
SBI General
Private 559 967 900 1,088 616 1,038 1.1% 1.4% 1.5% 1.3% 0.9% 1.4% 634 1.1%
Cholamandalam MS General
Private 524 858 442 1083 538 825 1.0% 1.2% 0.7% 1.3% 0.8% 1.1% 545 0.9%
Reliance General
Private 316 414 257 444 409 412 0.6% 0.6% 0.4% 0.5% 0.6% 0.6% 433 0.7%
Note: NA = Not available; Accretion in Retail Health Business is calculated as total retail premium during FY21 minus total retail premium during
FY20; (*) Accretion in Retail Business is for merged entity (HDFC Ergo General and HDFC Ergo Health); HDFC Ergo General Q3FY21, Q4FY21
and Q1 FY22 numbers include HDFC Ergo Health’s data as well, post-merger
Source: GI Council Segmentwise report, CRISIL Research
New India Assurance, United India and Oriental Insurance are largest players in group insurance business
In the group insurance business, New India Assurance, National Insurance and Oriental Assurance are the largest
players with a market share of 28%, 11% and 10% respectively in gross premiums collected in FY21. Amongst SAHI
players, Star Health Insurance has seen an increase of around 1.5 percentage point in its market share in the group
Health insurance business between FY18 and FY21; its market share stood at 3.6% in FY21. Amongst private
players, ICICI Lombard has gained maximum share from 4.0% to 6.9% of overall group Health insurance business
during this period.
166
Group Health insurance business – Market share and growth
Type of player
Group Business (Rs million) Market share (%) CAGR
FY18-
FY21
FY18 FY19 FY20 FY21 H1
FY22 FY18 FY19 FY20 FY21
H1 FY22
New India Assurance
Public 39,725 45,899 63,957 76,972 54,517 22.0% 22.4% 25.3% 27.7% 28.5% 25%
National Insurance
Public 33,561 21,043 19,793 29,594 21,155 18.6% 10.3% 7.8% 10.7% 11.1% -4%
Oriental Insurance
Public 21,391 23,397 27,238 26,605 21,239 11.9% 11.4% 10.8% 9.6% 11.1% 8%
United India Public 33,130 32,268 32,507 24,085 15,978 18.4% 15.7% 12.9% 8.7% 8.4% -10%
ICICI Lombard Private 7,304 12,918 21,082 19,035 13,728 4.0% 6.3% 8.3% 6.9% 7.2% 38%
Bajaj Allianz Private 7,863 12,284 11,552 11,270 7,907 4.4% 6.0% 4.6% 4.1% 4.1% 13%
SBI General Private 3,735 3,376 4,545 9,050 3,929 2.1% 1.6% 1.8% 3.3% 2.1% 34%
Star Health SAHI 4,026 5,938 8,381 9,963 6,955 2.2% 2.9% 3.3% 3.6% 3.6% 35%
HDFC Ergo General
Private 1,938 6,148 6,215 10,091 4,666 1.1% 3.0% 2.5% 3.6% 2.4%
14%* HDFC Ergo Health
SAHI 4,859 5,849 6,370 NA NA 2.7% 2.9% 2.5% NA NA
TATA AIG General
Private 1,465 1,886 6,596 7,545 4,086 0.8% 0.9% 2.6% 2.7% 2.1% 73%
CARE Health SAHI 3,104 4,854 5,952 6,911 5,523 1.7% 2.4% 2.4% 2.5% 2.9% 31%
Reliance General
Private 3,732 5,660 5,808 5,430 3,959 2.1% 2.8% 2.3% 2.0% 2.1% 13%
Aditya Birla Health
SAHI 1,535 2,251 4,060 6,069 3,782 0.9% 1.1% 1.6% 2.2% 2.0% 58%
Manipal Cigna Health
SAHI 1,066 2,023 2,550 3,509 2,167 0.6% 1.0% 1.0% 1.3% 1.1% 49%
Max Bupa Health
SAHI 1,048 1,743 3,082 3,105 2,591 0.6% 0.8% 1.2% 1.1% 1.4% 44%
Cholamandalam MS General
Private 413 442 864 1,808 648 0.2% 0.2% 0.3% 0.7% 0.3% 64%
Note: NA = Not available; (*) CAGR growth is for merged entity (HDFC Ergo General and HDFC Ergo Health); HDFC Ergo General FY21 and
FY22 numbers include HDFC Ergo Health’s data as well, post-merger
Source: GI Council Segmentwise report, CRISIL Research
United India Insurance has 57% market share in government Health insurance business
Public General insurance players dominate government health insurance business. United India had the highest
market share of 57% in FY21 followed by United India Insurance at 12%. Amongst non-public insurance players,
Reliance had the highest market share of 3.3% in FY21, while Bajaj Allianz has gained some market share in recent
years. Other players like Star Health Insurance, Max Bupa, ICICI Lombard, and HDFC Ergo have not exhibited any
interest in catering to the government segment.
Government Health insurance business – Market share and growth
Type
of player
Government Business (Rs million) Market share (%) CAGR FY18-FY21 FY18 FY19 FY20 FY21
H1 FY22
FY18 FY19 FY20 FY21 H1
FY22
United India Public 12,770 10,725 8,623 24,671 9,279 40.5% 18.0% 17.0% 57.0% 24.4% 25%
167
National Insurance
Public 4,795 21,514 15,234 5,068 1,328 15.2% 36.0% 30.0% 11.7% 3.5% 2%
New India Assurance
Public 8,811 13,127 6,262 4,359 10,960 28.0% 22.0% 12.0% 10.1% 28.8% -21%
Reliance General
Private 2,908 3,666 7,412 2,010 1,217 9.2% 6.2% 14.7% 4.6% 3.2% -12%
Bajaj Allianz Private 530 3,690 2,396 1,441 7,525 1.7% 6.3% 4.8% 3.3% 19.8% 40%
Oriental Insurance
Public 298 1,877 3,563 2,235 5,023 0.9% 3.0% 7.0% 5.2% 13.2% 96%
HDFC Ergo Health
SAHI 0 104 26 NA NA 0.0% 0.2% 0.1% NA NA
NA* HDFC Ergo General
Private 0 1,007 168 8 0 0.0% 1.7% 0.3% 0.0% 0.0%
Star Health SAHI 0 0 41 0 0 0.0% 0.0% 0.1% 0.0% 0.0% NA
CARE Health SAHI 51 2,568 4,130 0 0 0.2% 4.4% 8.2% 0.0% 0.0% -100%
Max Bupa Health
SAHI 43 35 0 0 0 0.1% 0.1% 0.0% 0.0% 0.0% NA
Aditya Birla Health
SAHI 0 0 0 0 0 0.0% 0.0% 0.0% 0.0% 0.0% NA
Manipal Cigna Health
SAHI 0 0 0 0 0 0.0% 0.0% 0.0% 0.0% 0.0% NA
ICICI Lombard Private 379 75 17 0 0 1.2% 0.1% 0.0% 0.0% 0.0% -100%
SBI General Private 0 0 0 0 1433 0.0% 0.0% 0.0% 0.0% 3.8% NA
TATA AIG General
Private 0 0 0 0 0 0.0% 0.0% 0.0% 0.0% 0.0% NA
Cholamandalam MS General
Private 0 0 NM NM 0 0.0% 0.0% 0.0% 0.0% 0.0% NA
Note: NM = Not meaningful; NA = Not available; (*) CAGR growth is for merged entity (HDFC Ergo General and HDFC Ergo Health); HDFC Ergo
General FY21 number include HDFC Ergo Health’s data as well, post-merger
Source: GI Council Segmentwise report, CRISIL Research
Star Health Insurance has issued the highest number of policies in FY21
In terms of number of policies, ICICI Lombard was the market leader accounting for 27% of the policies issued in
FY20, followed by Star Health Insurance with market share of 15%. However, in FY21, ICICI Lombard has seen
significant reduction in number of policies from 8 million to 0.7 million. Star Health Insurance has become the market
leader in terms of number of policies issued in FY21. This position largely reflects the company’s focus on retail
health segment; Star Health has issued ~6.4 million retail health policies in FY21, accounting for a ~27% market
share in retail health policies issued during this period.
Number of policies issued and its growth
Type of Player
Number of Policies Market Share
CAGR FY18-FY21
(in Thousands)
FY18 FY19 FY20 FY21 Q1
FY22 FY18 FY19 FY20 FY21
Star Health SAHI 3,090 3,734 4,463 6,399 1,446 13.80% 12.40% 15.00% 26.83% 27%
Bajaj Allianz Private 1,133 2,281 2,911 3,550 659 5.10% 7.60% 9.80% 14.89% 46%
TATA AIG General Private 821 2,270 3,058 349 97 3.70% 7.50% 10.30% 1.46% -25%
168
Oriental Insurance Public 1,306 1,235 1,194 2,430 295 5.80% 4.10% 4.00% 10.19% 23%
New India Assurance
Public 1,788 1,732 1,709 1,919 477 8.00% 5.80% 5.80% 8.05% 2%
HDFC Ergo General
Private 724 831 989 1,965 470 3.20% 2.80% 3.30% 8.24% 9%
HDFC Ergo Health SAHI 809 1,063 1,207 NA NA 3.60% 3.50% 4.10% NA
National Insurance Public 1,786 1,727 1,555 1,511 NA 8.00% 5.70% 5.20% 6.34% -5%
CARE Health SAHI 438 770 1,003 1,226 281 2.00% 2.60% 3.40% 5.14% 41%
ICICI Lombard Private 7,895 11,476 8,130 747 145 35.30% 38.10% 27.40% 3.13% -54%
Max Bupa Health SAHI 310 360 822 788 275 1.40% 1.20% 2.80% 3.30% 36%
SBI General Private 419 648 568 639 90 1.90% 2.20% 1.90% 2.68% 15%
Aditya Birla Health SAHI 76 186 310 496 133 0.30% 0.60% 1.00% 2.08% 87%
United India Public 1,257 1,207 1,103 1,120 NA 5.60% 4.00% 3.70% 4.69% -4%
Manipal Cigna Health
SAHI 177 216 226 289 70 0.80% 0.70% 0.80% 1.21% 18%
Cholamandalam MS General
Private 91 112 124 251 41 0.00% 0.00% 0.00% 1.05% 40%
Reliance General Private 249 272 312 171 53 1.10% 0.90% 1.10% 0.72% -12%
Note – Market share calculated on the basis of analysed companies only; HDFC Ergo General FY21 and FY22 numbers include HDFC Ergo
Health’s data as well, post-merger; (*) ICICI Lombard FY21 numbers are as per NL 38 - https://www.icicilombard.com/docs/default-source/public-
disclosures/2020-2021/fy/nl_38-fy-2020-21.pdf; (**) CAGR growth is for merged entity (HDFC Ergo General and HDFC Ergo Health)
Source: Company NL fillings, CRISIL Research
Number of Policies (Retail business)
Type of
Player
Number of Policies (Retail) Market Share CAGR
FY18-
FY20 FY18 FY19 FY20 FY18 FY19 FY20
Star Health SAHI 3,083,551 3,727,348 4,456,341 21.9% 19.0% 26.0% 20%
New India Assurance Public 1,710,267 1,619,170 1,590,510 12.1% 8.3% 9.3% -4%
National Insurance Public 1,799,378 1,718,608 1,549,984 12.8% 8.8% 9.0% -7%
HDFC Ergo Health SAHI 807,249 1,060,612 1,204,122 5.7% 5.4% 7.0% 22%
ICICI Lombard Private 1,008,917 4,227,624 1,166,709 7.2% 21.6% 6.8% 8%
Oriental Insurance Public 1,061,765 1,034,779 1,002,612 7.5% 5.3% 5.8% -3%
United India Public 1,082,880 1,042,255 960,698 7.7% 5.3% 5.6% -6%
Max Bupa Health SAHI 309,718 695,500 820,924 2.2% 3.6% 4.8% 63%
CARE Health SAHI 435,079 687,999 802,915 3.1% 3.5% 4.7% 36%
HDFC Ergo General Private 628,381 997,623 775,036 4.5% 5.1% 4.5% 11%
Bajaj Allianz Private 511,678 515,858 566,983 3.6% 2.6% 3.3% 5%
SBI General Private 415,704 754,750 562,266 3.0% 3.9% 3.3% 16%
Aditya Birla Health SAHI 74,137 184,823 309,006 0.5% 0.9% 1.8% 104%
Manipal Cigna Health SAHI 176,458 228,788 248,341 1.3% 1.2% 1.4% 19%
TATA AIG General Private 164,986 185,634 157,348 1.2% 0.9% 0.9% -2%
169
Reliance General Private 76,660 85,887 95,140 0.5% 0.4% 0.6% 11%
Cholamandalam MS
General Private 56,758 52,345 48,084 0.4% 0.3% 0.3% -8%
Source: IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding Travel -Domestic/Overseas and Personal
Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
Number of persons covered under Retail Health Insurance Business
Type of
Player
No of persons covered (in
Thousands) Market share (%) CAGR FY18-
FY20 FY18 FY19 FY20 FY18 FY19 FY20
Star Health SAHI 7,990 9,585 11,475 24.0% 22.8% 26.5% 20%
New India Assurance Public 4,469 4,194 4,030 13.4% 10.0% 9.3% -5%
National Insurance Public 3,164 3,851 3,793 9.5% 9.2% 8.8% 9%
HDFC Ergo Health SAHI 2,081 2,718 3,104 6.3% 6.5% 7% 22%
Oriental Insurance Public 3,143 3,008 2,887 9.4% 7.2% 6.7% -4%
SBI General Private 490 880 2,627 1.5% 2.1% 6.1% 132%
United India Public 3,645 2,578 2,371 11.0% 6.1% 5.5% -19%
Max Bupa Health SAHI 824 1,700 2,002 2.5% 4.0% 4.6% 56%
HDFC Ergo General Private 1,073 1,738 1,933 3.2% 4.1% 4.5% 34%
CARE Health SAHI 984 1,494 1,818 3.0% 3.6% 4.2% 36%
ICICI Lombard Private 1,304 4,918 1,766 3.9% 11.7% 4.1% 16%
Bajaj Allianz Private 1,127 1,838 1,600 3.4% 4.4% 3.7% 19%
Aditya Birla Health SAHI 151 395 666 0.5% 0.9% 1.5% 110%
Manipal Cigna Health SAHI 390 526 580 1.2% 1.3% 1.3% 22%
TATA AIG General Private 298 336 290 0.9% 0.8% 0.7% -1%
Reliance General Private 188 203 215 0.6% 0.5% 0.5% 7%
Cholamandalam MS General Private 154 144 133 0.5% 0.3% 0.3% -7%
Source: IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding Travel -Domestic/Overseas and Personal
Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
Star health has maintained its pricing close to Industry average
Type of
Player
Average Ticket size per policy Average Ticket size per policy
(Individual) (Family Floater)
FY18 FY19 FY20 FY18 FY19 FY20
CARE Health SAHI 15,490 15,118 16,019 12,368 9,733 11,884
HDFC Ergo Health SAHI 14,996 14,734 15,621 10,571 10,135 11,573
TATA AIG General Private 9,975 11,769 14,935 6,438 6,211 8,630
Oriental Insurance Public 13,094 13,926 14,649 10,046 10,504 11,123
170
Star Health SAHI 10,344 12,348 14,298 16,169 12,982 7,003
Manipal Cigna Health SAHI 13,098 13,003 14,075 11,736 10,054 11,184
Aditya Birla Health SAHI 13,819 13,691 13,925 7,533 7,678 8,532
Bajaj Allianz Private 10,152 12,861 13,300 8,856 12,006 10,671
United India Public 11,757 12,443 13,293 9,109 9,132 12,342
New India Assurance Public 10,604 12,503 13,053 13,100 14,996 15,356
Reliance General Private 10,973 11,928 12,673 6,875 6,901 7,418
National Insurance Public 6,556 8,019 12,251 9,909 10,439 10,854
Max Bupa Health SAHI 20,477 11,741 11,807 20,476 7,440 7,529
ICICI Lombard Private 15,829 15,473 11,176 9,839 1,743 2,924
SBI General Private 9,585 9,607 9,362 2,033 1,833 4,365
HDFC Ergo General Private 8,965 7,785 9,232 18,323 2,634 5,646
Cholamandalam MS General Private 5,444 5,635 7,218 7,180 7,641 8,122
Industry Average Industry 10,801 11,879 13,362 10,918 6,624 9,131
Source: IRDAI Handbook on Indian Insurance Statistics 2019-20 (Table 72: Health Insurance (excluding Travel -Domestic/Overseas and Personal
Accident) Number of Policies, Number of Persons Covered & Gross Premium), CRISIL Research
Considerable variations in health policy pricing across players
Further, to analyse the variations in pricing prevalent in the market, we have compared the current pricing across
players for two cohorts (based on the disclosures in the plan product brochures available on the respective company
websites:
Individual – Rs 0.5 million cover for 35 years old person for standard health policy offered by respective
companies
Family floater policy – Rs 0.5 million cover for a 35 years old married person which also covers spouse and
one child for standard health policy offered by respective companies
As can be seen from the table below, the pricing for an individual policy as per the cohorts defined above varies
between Rs 5,122-9,524, with the average being Rs 6,808. Similarly, for a family floater policy of the defined cohorts,
the pricing is in the range of Rs 7,706-17,529, with the average being Rs 12,356.
Variations on current pricing across players
Health Insurance
companies Products
Type of
Player
Pricing* for
Individual plan
Aditya Birla Health Activ Health Platinum Plan (Essential
and Enhanced) SAHI 6,149
Bajaj Allianz Health Guard (Gold and Platinum) Private 9,524
171
CARE Health CARE Advantage SAHI 7,004
Cholamandalam
MS General
Chola Healthline (Value, Freedom,
Enrich and Privilege) Private 9,102
HDFC Ergo
General MY:HEALTH SURAKSHA Private 7,410
ICICI Lombard Ihealth Private 6,034
Manipal Cigna
Health
ProHealth Insurance (Protect, Plus
and Accumulate) SAHI 8,798
Max Bupa Health Reassurance SAHI 6,523
National Insurance National mediclaim policy Public 5,953
New India
Assurance Mediclaim policy Public 5,122
Oriental Insurance Mediclaim insurance policy Public 5,847
Reliance General Health Gain Private 6,933
SBI General Retail Health Insurance Policy Private 6,272
Star Health Medi classic (Basic and Gold) SAHI 6,749
TATA AIG General Medicare (Basic and Premier) Private 6,051
United India Health policy Public 5,450
Note: (*) Based on disclosures in the product brochures available on the website as of mid-March 2021; For Individual - price is calculated for 35
years old person for cover of Rs.0.5 million for standard health policy offered by respective companies; For the companies which have multiple
categorisation like Gold, Platinum, Plus and etc., the price has been considered as average of all the categorisation offered under standard policy
Source: Company websites, CRISIL Research
Health Insurance
companies Products
Type of
Player
Pricing* for
Family floater
plan
Aditya Birla Health Activ Health Platinum Plan (Essential
and Enhanced) SAHI 13,762
Bajaj Allianz Health Guard (Gold and Platinum) Private 15,271
CARE Health CARE Advantage SAHI 10,451
Cholamandalam
MS General
Chola Healthline (Value, Freedom,
Enrich and Privilege) Private 15,837
HDFC Ergo
General Health Suraksha Private 12,967
ICICI Lombard Ihealth Private 10,951
Manipal Cigna
Health
ProHealth Insurance (Protect, Plus
and Accumulate) SAHI 17,529
Max Bupa Health Reassurance SAHI 15,092
National Insurance National parivar mediclaim policy Public 10,046
172
New India
Assurance Mediclaim policy Public 8,662
Oriental Insurance Mediclaim insurance policy Public 7,706
Reliance General Health Gain Private 8,844
SBI General Retail Health Insurance Policy Private 12,544
Star Health Medi classic (Basic and Gold) SAHI 12,543
TATA AIG General Medicare (Basic and Premier) Private 15,106
United India Health policy Public 10,382
Note: (*) Based on disclosures in the product brochures available on the website as of mid-March 2021; For Family Floater – Price is calculated
for 35 years old married person of Rs.0.5 million which also covers Spouse and one child for standard health policy offered by respective
companies; For the companies which have multiple categorisation like Gold, Platinum, Plus and etc., the price has been considered as average
of all the categorisation offered under standard policy
Source: Company websites, CRISIL Research
Star Health Insurance is more focused on Individual Agents business whereas New India Assurance is more
focused on direct business
For the top six SAHI players’, around 60% of business in FY21 came from Individual agents but the share is higher
for Star Health Insurance at 79% of business. On the other hand, public sector health insurers have more focus on
direct business channel, especially New India Assurance for whom 47% of business comes through direct business.
SBI, Aditya Birla, HDFC and ICICI have leveraged their banking channels to sell health insurance policies with these
channels accounting for 28%, 35%, 13% and 8%, respectively, of Health insurance premiums in FY21. Other players
like Max Bupa, TATA AIG General, CARE Health and Manipal Cigna are also utilising bancassurance channel by
having tie-up with leading public and private sector banks.
Distribution Mix for FY 21
173
Note – (*) Distribution mix is calculated on overall business as these companies do not report distribution mix for Health insurance segment
separately; HDFC Ergo General FY21 number include HDFC Ergo Health’s data as well, post-merger.
Source: Company NL fillings, CRISIL Research
Share of gross premium coming from Individual Agents
Type of Player
Business through Individual Agents
FY18 FY19 FY20 FY21 Q1 FY22
Star Health SAHI 76% 78% 76% 79% 77%
United India* Public 49% 54% 50% 46% NA
CARE Health SAHI 30% 29% 30% 41% 39%
National Insurance* Public 40% 41% 41% 43% NA
Oriental Insurance* Public 49% 39% 39% 41% 35%
Max Bupa Health SAHI 45% 41% 36% 38% 34%
Manipal Cigna Health SAHI 25% 25% 27% 27% 26%
New India Assurance Public 36% 32% 19% 23% 13%
TATA AIG General* Private 24% 20% 22% 23% 20%
HDFC Ergo Health SAHI 51% 50% 55% NA NA
HDFC Ergo General* Private 11% 10% 9% 20% 22%
Bajaj Allianz* Private 20% 21% 20% 18% 20%
Aditya Birla Health SAHI 15% 18% 15% 15% 15%
Reliance General* Private 26% 20% 16% 14% 10%
ICICI Lombard* Private 12% 11% 11% 12% 11%
SBI General* Private 6% 1% 6% 7% 9%
79
41 38
1527 23
46 43 41
12 18 14 207
23
1
2
20 22
35 17
1
20 2
810
3
1328
14
27
0
3 512
5
0
1 3 1
33
4
5 1 2
41
726 16 29
27
35
17 20 2451 42
30
28 2842
250 1
0
0
0
00 0 0
0 0
0
0 0
0
09 919
924
41 28 33 30 18 25
4228 35
11
62 0 0 0 0 0 6 1 3 9 2 7 6 09
0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Individual Agents Corporate Agents-Banks Corporate Agents -Others Brokers Micro Agents Direct Business Others
in %
174
Cholamandalam MS General*
Private 2% 1% 1% 1% 1%
Note – NA = Not Available; (*) Distribution mix is calculated on overall business as these companies do not report distribution mix for Health
insurance segment separately; HDFC Ergo General FY21 and FY22 numbers include HDFC Ergo Health’s data as well, post-merger
Source: Company NL fillings, CRISIL Research
Share of gross premium coming through direct business
Type of Player
Business through Direct Business
FY18 FY19 FY20 FY21 Q1 FY22
Reliance General* Private 42% 39% 43% 42% 39%
Oriental Insurance* Public 25% 33% 36% 30% 33%
New India Assurance Public 44% 45% 55% 41% 49%
SBI General* Private 24% 12% 39% 35% 14%
National Insurance* Public 32% 30% 26% 33% NA
United India* Public 24% 25% 29% 28% NA
Bajaj Allianz* Private 0% 23% 25% 25% 22%
HDFC Ergo Health SAHI 14% 15% 11% NA NA
HDFC Ergo General* Private 40% 34% 32% 28% 15%
Manipal Cigna Health SAHI 12% 11% 15% 24% 23%
Max Bupa Health SAHI 26% 22% 20% 19% 20%
ICICI Lombard* Private 38% 28% 17% 18% 26%
TATA AIG General* Private 24% 26% 16% 11% 13%
CARE Health SAHI 11% 23% 28% 9% 12%
Star Health SAHI 17% 14% 10% 9% 9%
Aditya Birla Health SAHI 7% 10% 11% 9% 11%
Cholamandalam MS General*
Private 28% 22% 5% 6% 9%
Note – NA = Not Available; (*) Distribution mix is calculated on overall business as these companies do not report distribution mix for Health
insurance segment separately; HDFC Ergo General FY21 and FY22 numbers include HDFC Ergo Health’s data as well, post-merger
Source: Company NL fillings, CRISIL Research
Share of gross premium coming through corporate agents – Banks
Type of Player
Business through Corporate Agents - Banks
FY18 FY19 FY20 FY21 Q1 FY22
Aditya Birla Health SAHI 10% 25% 27% 35% 32%
SBI General* Private 46% 40% 32% 28% 23%
Cholamandalam MS General*
Private 27% 28% 33% 27% 19%
175
Max Bupa Health SAHI 14% 18% 21% 22% 16%
CARE Health SAHI 26% 20% 16% 20% 16%
HDFC Ergo Health SAHI 16% 17% 16% NA NA
Manipal Cigna Health SAHI 13% 18% 20% 17% 14%
HDFC Ergo General* Private 20% 18% 16% 13% 14%
TATA AIG General* Private 8% 8% 10% 14% 10%
Bajaj Allianz* Private 17% 12% 12% 10% 11%
ICICI Lombard* Private 7% 8% 11% 8% 6%
Reliance General* Private 3% 3% 4% 3% 3%
United India* Public 3% 3% 3% 2% NA
Star Health SAHI 1% 1% 2% 2% 3%
Oriental Insurance* Public 1% 2% 2% 2% 2%
New India Assurance Public 2% 2% 2% 1% 1%
National Insurance* Public 2% 1% 0% 0% NA
Note - NA = Not Available; (*) Distribution mix is calculated on overall business as these companies do not report distribution mix for Health
insurance segment separately; HDFC Ergo General FY21 and FY22 numbers include HDFC Ergo Health’s data as well, post-merger
Source: Company NL fillings, CRISIL Research
Star Health Insurance has highest number of Individual Agents
Star Health Insurance has more than 460 thousand Individual Agents’ network in India as of March 2021, which is
highest among SAHI players followed by CARE Health, which had 157 thousand Individual Agents as of the same
date.
Number of Individual Agents and Individual Health insurance premium per Individual Agent
Number of Individual Agents Retail Health insurance premium
per Individual Agent (Rs. Thousands)
FY18 FY19 FY20 FY21 CAGR FY18-FY21
FY18 FY19 FY20 FY21 CAGR FY18-FY21
Star Health 238,240 283,829 359,341 4,62,502 25% 133 147 146 177 10%
HDFC Ergo Health 49,481 72,747 98,072 NA NA 176 152 141 NA NA
Max Bupa Health 25368 31,540 39,998 68,290 39% 134 124 113 198 14%
CARE Health 55,520 85,544 124,340 1,56,669 41% 59 61 58 103 21%
Manipal Cigna Health
21,490 27,655 34,335 41,935 25% 40 44 45 94 33%
Aditya Birla Health 15,825 18,811 25,059 38,756 26% 23 48 54 42 52%
Note: NA = Not Available
Source: IRDAI Annual reports, GI Council Financial Highlights, CRISIL Research
176
Business concentration in states
Max Bupa Health has 39% of its premium in FY21 being contributed from its top 3 states, which is lower than the
corresponding number for other players in the industry. Star Health ranks 3rd amongst players considered with ~43%
premium contributed from its top 3 states. This can be atttributed to its focus on the retail segment only, wherein the
business is relatively well distributed geographically compared to the group business. Players like Bajaj Allianz,
United India and SBI General have more than 40% of business from one state viz. Maharashtra, reflecting the
infuence of Mumbai on the group business premiums.
Geography mix –
Statewise for FY 21
Type of
Player MH TN KR DL GJ WB KL HR UP TL
Aditya Birla Health SAHI 39% 4% 10% 11% 6% 3% 2% 4% 5% 3%
Bajaj Allianz Private 47% 3% 8% 7% 10% 4% 1% 1% 1% 3%
CARE Health SAHI 28% 3% 9% 8% 10% 4% 1% 7% 7% 6%
Cholamandalam MS
General Private 27% 31% 5% 6% 11% 3% 3% 3% 1% 3%
HDFC Ergo General Private 20% 5% 10% 10% 11% 6% 2% 6% 9% 6%
ICICI Lombard Private 40% 7% 7% 15% 6% 3% 1% 4% 4% 5%
Manipal Cigna Health SAHI 23% 6% 15% 5% 5% 4% 4% 6% 5% 8%
Max Bupa Health SAHI 17% 4% 8% 13% 5% 3% 4% 9% 9% 6%
National Insurance Public 28% 7% 12% 16% 6% 15% 2% 1% 1% 1%
New India Assurance Public 38% 12% 15% 4% 6% 3% 2% 5% 3% 5%
Oriental Insurance Public 32% 13% 11% 6% 10% 2% 1% 3% 9% 5%
Reliance General Private 27% 5% 12% 11% 7% 3% 11% 1% 1% 4%
SBI General Private 46% 3% 3% 3% 3% 6% 2% 2% 5% 2%
Star Health Insurance SAHI 22% 13% 8% 6% 2% 5% 8% 6% 6% 6%
TATA AIG General Private 34% 7% 9% 7% 8% 5% 2% 1% 5% 7%
United India Public 45% 20% 8% 4% 4% 3% 3% 2% 1% 5%
Note: MH: Maharashtra, TN: Tamil Nadu, KR: Karnataka, DL: Delhi, GJ: Gujarat, WB: West Bengal KL: Kerala, HR: Haryana, UP: Uttar
Pradesh, TL: Telangana
Source: Company NL fillings, CRISIL Research
CARE Health closed ~100% of claims in one month
CARE Health has closed ~100% of claims in FY21 in one month followed closely by ICICI Lombard that settled 99.7%
of claims made during this period within a month. However, public players have lagged in terms of claims payment;
177
Oriental Insurance and National Insurance have settled between 45-50% of the claims made in FY21 within one
month.
Ageing of Claims and number of claims paid
Type of player
FY 21
1 month 1-3
month 3-6
month 6-12
months > 1
Year
No. of claims paid
CARE Health SAHI 100.0% 0.0% 0.0% 0.0% 0.0% 3,06,809
ICICI Lombard Private 99.7% 0.3% 0.0% 0.0% 0.0% 3,37,814
Star Health Insurance SAHI 94.4% 5.2% 0.3% 0.1% 0.0% 8,47,064
HDFC Ergo General Private 85.4% 12.8% 1.5% 0.3% 0.0% 3,05,769
Bajaj Allianz Private 96.8% 3.1% 0.2% 0.0% 0.0% 6,97,972
Manipal Cigna Health SAHI 99.5% 0.4% 0.0% 0.0% 0.0% 2,20,145
Reliance General Private 97.1% 2.4% 0.4% 0.1% 0.0% 6,49,933
Max Bupa Health SAHI 96.8% 3.1% 0.1% 0.0% 0.0% 1,24,978
Cholamandalam MS General
Private 88.1% 9.8% 1.9% 0.2% 0.0% 73,589
SBI General Private 98.7% 1.0% 0.2% 0.0% 0.0% 1,03,735
New India Assurance Public 67.5% 23.4% 5.2% 3.5% 0.4% 32,91,572
United India Insurance Public 71.0% 25.9% 2.0% 0.8% 0.3% 36,27,956
TATA AIG General Private 58.2% 21.6% 10.3% 7.7% 2.3% 74,005
Aditya Birla Health SAHI 96.6% 3.1% 0.2% 0.1% 0.0% 96,854
Oriental Insurance Public 48.9% 36.2% 10.3% 2.8% 1.8% 8,82,593
National Insurance Public 45.1% 49.3% 3.4% 1.3% 0.9% 13,49,053
Note: NA = Not Available
Source: Company NL fillings, CRISIL Research
Star Health Insurance has the lowest expenses as proportion of gross premium amongst the SAHI players
Star Health Insurance has the lowest expenses as a proportion of its gross premium amongst SAHI players in FY21.
On an overall business basis, SBI General had the lowest expenses as a proportion of gross premium of 19% in
FY21.
Expense as proportion of gross premium
Expenses as proportion of Gross Premium
FY 18 FY 19 FY 20 FY 21 Q1 FY22
SAHI Players
Star Health Insurance 33% 32% 29% 29% 29%
HDFC Ergo Health 34% 37% 38% NA NA
CARE Health 53% 40% 37% 41% 40%
178
Max Bupa Health 50% 49% 46% 44% 42%
Manipal Cigna Health 78% 72% 62% 55% 47%
Aditya Birla Health 94% 83% 72% 62% 52%
Non-SAHI players (Considering Overall Insurance business)
SBI General 25% 21% 21% 19% 32%
ICICI Lombard 23% 21% 27% 29% 25%
New India Assurance 22% 24% 21% 25% 18%
Bajaj Allianz 21% 24% 25% 23% 27%
Reliance General 23% 21% 22% 24% 23%
HDFC Ergo General 21% 21% 23% 25% 29%
National Insurance 27% 24% 35% 32% NA
TATA AIG General 29% 27% 30% 32% 29%
Oriental Insurance 29% 24% 31% 32% 30%
Cholamandalam MS General
25% 27% 31% 34% 39%
United India 21% 24% 25% 30% NA
Note: NA = Not Available; HDFC Ergo General FY21 and FY22 numbers include HDFC Ergo Health’s data as well, post-merger; Expense as
proportion of Gross Premium = (Total Operating Expenses+Gross Comission)/ Gross Written Premium
Source: Company NL fillings, CRISIL Research
Star Health’s overall claim ratio remained under control during FY18-FY20, but it increased in FY 21
Aditya Birla Health Insurance has the lowest claim ratio amongst the peer set (55% in FY 21), followed by Max Bupa
and CARE Health with claim ratio of 59%. The claims ratio for all public sector insurers, except New India Assurance,
was greater than 100% in FY21, indicating that these players made losses on underwriting Health insurance policies.
Star Health Insurance’s overall claim ratio hovered between 62-66% during FY18-FY20, but it increased to 94% in
FY 21.
Claim ratio (for Health Insurance)
Type of Player
Claim Ratio (Group)
Claim Ratio (Retail)
Claim Ratio (Overall)
FY18 FY19 FY20 FY18 FY19 FY20 FY18 FY19 FY20 FY21 Q1
FY22
Aditya Birla Health SAHI 133% 82% 64% 13% 35% 41% 95% 62% 54% 55% 108%
CARE Health SAHI 84% 77% 80% 35% 38% 45% 57% 60% 63% 59% 110%
HDFC Ergo Health SAHI 83% 81% 98% 59% 60% 67% 68% 68% 78% NA NA
Manipal Cigna Health
SAHI 59% 79% 67% 44% 54% 59% 48% 64% 63% 62% 111%
Max Bupa Health SAHI 22% 34% 35% 54% 67% 62% 50% 54% 56% 59% 91%
179
Star Health Insurance
SAHI 99% 87% 112% 58% 59% 60% 62% 63% 66% 94% 91%
National Insurance Public 125% 115% 104% 106% 104% 104% 117% 104% 103% 101% NA
New India Assurance
Public 113% 111% 109% 80% 74% 74% 104% 99% 100% 95% 135%
Oriental Insurance Public 111% 121% 101% 86% 89% 101% 102% 108% 102% 114% 157%
United India Public 118% 115% 107% 84% 109% 101% 111% 112% 102% 106% NA
Bajaj Allianz Private 100% 102% 95% 66% 68% 68% 87% 90% 85% 82% 120%
Cholamandalam MS General
Private 30% 31% 41% 98% 104% 85% 39% 39% 46% 116% 279%
HDFC Ergo General Private 100% 121% 99% 51% 62% 77% 67% 82% 85% 85% 168%
ICICI Lombard Private 89% 94% 93% 58% 65% 62% 78% 85% 84% 89% 173%
Reliance General Private 110% 94% 91% 106% 96% 92% 114% 98% 94% 96% 174%
SBI General Private 45% 63% 76% 21% 25% 26% 41% 54% 58% 79% 119%
TATA AIG General Private 86% 105% 79% 53% 56% 57% 67% 86% 72% 71% 117%
Note: NA = Not Available; HDFC Ergo General FY21 and FY22 numbers include HDFC Ergo Health’s data as well, post-merger; Claims ratio =
Net Claims Incurred / Net Premium Earned
Source: Company NL fillings, CRISIL Research
Bajaj Allianz and SBI General are the only players to generate underwriting profit in FY 21
Combined ratio is a critical factor to judge the profitability of any non-life insurance company. Any ratio above 100%
indicates insurer is spending more than net premium earned in commission, expenses and claims payment to
insured. In FY21, only few players in the business were able to control their overall cost and keep combined ratio
below 100%, and thereby report an underwriting surplus or profit. These players were Bajaj Allianz and SBI General
(overall insurance business). Amongst SAHI players, for whom the underwriting profit refers only to the Health
insurance business (unlike General insurers where combined ratio for only Health insurance business is not
available); CARE Health had the lowest combined ratio of 95% in FY21. Star Health consistently made underwriting
profits upto FY20, but in FY21, it made losses due to increase in the claim ratio post Covid.
Combined ratio and underwriting surplus
Combined ratio Underwriting surplus (Rs million)
FY18 FY19 FY20 FY21 Q1
FY22 FY18 FY19 FY20 FY21 Q1 FY22
SAHI Players
Star Health Insurance 93% 93% 93% 122% 121% 496 1,188 1,549 (17,316) (4,160)
Max Bupa Health 104% 107% 104% 104% 134% (252) (792) (785) (1,280) (1,550)
CARE Health 103% 98% 100% 95% 145% (712) (370) (381) (24) (2,371)
HDFC Ergo Health 102% 101% 117% NA NA (758) (705) (3,129) NA NA
180
Manipal Cigna Health 130% 138% 127% 119% 159% (1,217) (1,960) (1,625) (1,686) (1,132)
Aditya Birla Health 190% 149% 138% 125% 159% (2,031) (2,305) (2,635) (2,841) (1,460)
Non-SAHI players (Considering Overall Insurance business)
Bajaj Allianz 92% 97% 101% 97% 103% 2,928 175 (105) 2,368 147
ICICI Lombard 100% 99% 100% 100% 121% (2,309) (1,696) (1,052) (1,919) (5,082)
SBI General 68% 95% 94% 96% 126% 5,928 828 748 169 (1,258)
HDFC Ergo General 97% 99% 103% 103% 125% (182) (779) (1,778) (2,350) (3,237)
TATA AIG General 103% 108% 110% 103% 110% (2,821) (4,853) (4,232) (5,004) (994)
New India Assurance 111% 124% 116% 375% 114% (25,243) (52,427) (41,048) (36,964) (10,910)
Reliance General 107% 112% 110% 113% 111% (3,953) (4,619) (3,727) (6,543) (1,368)
Cholamandalam MS General
101% 105% 107% 107% 121% (1,260) (2,252) (2,475) (2,871) (1,003)
United India 121% 137% 132% 123% NA (25,422) (50,237) (43,985) (32,175) NA
National Insurance 149% 145% 161% 121% NA (56,170) (44,564) (57,594) (28,545) NA
Oriental Insurance 119% 135% 141% 131% 152% (19,234) (37,706) (45,148) (34,290) (13,439)
Note: Combined ratio = ((Total operating expenses + Net commission paid)/ Net written premium + (Net claim incurred / Net premium earned));
Underwriting surplus = Net premium earned – Total operating expenses – Net commission paid – Net claim incurred
Source: Company NL fillings, CRISIL Research
Five private players retain less than 75% of business in FY21
Retention ratio indicates business retained by insurance companies with themselves and not transferred through re-
insurance. In FY21, public players have retained more than 80% of Health insurance businesses with them. Most
SAHI players have retained more than 70% of their businesses, whereas amongst private players, only ICICI
Lombard and Cholamandalam MS have retained more than 70% business with themselves.
Retention ratio
Type of Player Retention Ratio
FY 18 FY 19 FY 20 FY 21 Q1 FY 22
Manipal Cigna Health SAHI 94% 95% 95% 95% 95%
National Insurance Public 69% 63% 61% 87% NA
New India Assurance Public 79% 79% 78% 82% 77%
Oriental Insurance Public 83% 79% 77% 84% 79%
United India Public 70% 83% 77% 84% NA
HDFC Ergo Health SAHI 84% 85% 77% NA NA
Max Bupa Health SAHI 78% 77% 77% 77% 76%
CARE Health SAHI 74% 69% 67% 77% 79%
Aditya Birla Health SAHI 94% 94% 80% 77% 77%
Cholamandalam MS General
Private 78% 76% 77% 76% 73%
181
Star Health Insurance SAHI 77% 76% 76% 76% 94%
ICICI Lombard Private 62% 64% 71% 75% 65%
TATA AIG General Private 68% 74% 63% 69% 62%
Bajaj Allianz Private 71% 70% 63% 70% 60%
HDFC Ergo General Private 47% 50% 49% 52% 54%
Reliance General Private 62% 92% 52% 50% 53%
SBI General Private 49% 54% 52% 49% 57%
Note: NA = Not Available
Source: Company NL fillings, CRISIL Research
CARE Health is the only SAHI player to have healthy ROE in FY 21
All the large general insurers offering health insurance enjoy healthy ROE with support from other business segments
aiding profitability. Star Health Insurance had a ROE of ~15% in FY20 but it has taken a hit in fiscal 2021 largely due
to significant changes in its accounting policies with respect to reserving and reinsurance treaties thus impacting
profitability. CARE Health reported ROE in the range of 8-11% during each of the last three fiscals ending FY21; it
was the only SAHI player having a healthy ROE during the year. Players such a National Insurance and United India
Insurance are struggling to generate return from the business.
Return on Equity and Dividend pay-out ratio
Type of Player
Return on equity Dividend pay-out ratio
FY 18 FY 19 FY 20 FY21 Q1
FY22 FY 18 FY 19 FY 20 FY 21
National Insurance Public -
28.00% -
39.90% -
225.90% -13.48% NA - - - -
HDFC Ergo General Private 31.70% 20.50% 28.40% 21.08% -1.09% 36.10% - - 36.08%
SBI General Private 25.60% 19.90% 20.80% 21.98% 2.60% - 1.30% 5.20% 3.96%
ICICI Lombard Private 17.80% 19.20% 21.00% 21.32% 1.81% 9.50% 42.90% 32.10% 12.34%
Bajaj Allianz Private 23.00% 16.20% 18.50% 20.20% 4.56% - - 13.30% -
Cholamandalam MS General
Private 20.20% 12.90% 9.80% 16.2% 1.45% - - - -
TATA AIG General Private 11.10% 6.20% 15.80% 15.75% 5.83% - - - -
Reliance General Private 12.40% 14.30% 15.70% 10.94% 3.48% 4.60% 7.20% - -
United India Public 10.80% -
24.40% -40.80% -25.38% NA - - - -
New India Assurance Public 5.90% 1.50% 4.30% 4.91% 0.23% 16.90% - - -
CARE Health SAHI -2.90% 8.80% 8.90% 10.70% -
12.40% - - - -
Oriental Insurance Public 12.70% 2.60% -21.60% -26.64% -7.96% - - - -
Max Bupa Health SAHI 2.50% -5.10% -5.80% -3.93% -8.33% - - - -
Star Health Insurance SAHI 16.50% 14.50% 15.50% -35.46% -4.92% - - - -
182
Manipal Cigna Health SAHI -
16.60% -
20.60% -13.50% -10.08% -7.46% - - - -
HDFC Ergo Health SAHI 2.50% 1.80% -11.50% NA NA - - - NA
Aditya Birla Health SAHI -
59.80% -
46.90% -27.30% -16.18% -8.43% - - - -
Note: Return on equity = Profit after tax/ average net worth of current year end and current year beginning; Dividend pay-out ratio = (Dividend
distribution tax + Proposed final dividend + Interim dividend paid)/Profit after Tax; (*) Return on equity = Profit after tax/ average net worth of
current year end; ROE and dividend pay-out ratio is calculated on overall basis; HDFC Ergo General FY21 and FY22 numbers include HDFC
Ergo Health’s data as well, post-merger
Source: Company NL fillings, CRISIL Research
New India Assurance has the highest Gross Yield in FY21
Public health insurers like New India Assurance and National Insurance have the highest yield in the industry;
however, their NPAs are also relatively higher. Investment in relatively low risk assets has resulted in zero NPAs for
players like Star Health, SBI General, Aditya Birla, CARE Health, Manipal Cigna Health, TATA AIG General and
ICICI Lombard as of March 2021.
Gross NPA and Gross Yield on Investment
Type of Player
Gross NPA Gross Yield (%)
FY18 FY19 FY20 FY21 Q1
FY22 FY18 FY19 FY20 FY21
Q1 FY22*
Aditya Birla Health
SAHI 0.00% 0.00% 0.00% 0.00% 0.00% 7.00% 8.00% 8.00% 7.82% 6.96%
CARE Health SAHI 0.00% 0.00% 0.00% 0.00% 0.00% 8.00% 8.00% 8.00% 7.00% 6.80%
HDFC Ergo General
Private 0.00% 0.00% 0.00% 1.62% 1.53% 8.20% 8.00% 8.20% 7.50% 6.80%
ICICI Lombard Private 0.00% 0.00% 0.00% 0.00% 0.00% 8.80% 8.60% 7.60% 7.50% 9.32%
Manipal Cigna Health
SAHI 0.00% 0.00% 0.00% 0.00% 0.00% 8.00% 8.00% 9.00% 5.04% 7.12%
SBI General Private 0.00% 0.00% 0.00% 0.00% 0.00% 8.00% 6.40% 6.80% 8.13% 9.68%
Star Health SAHI 0.00% 0.70% 0.00% 0.00% 0.00% 8.00% 8.00% 7.00% 7.13% 6.86%
TATA AIG General
Private 0.00% 0.00% 0.00% 0.00% 0.00% 7.90% 7.20% 7.20% 6.82% 9.86%
Bajaj Allianz Private 0.00% 0.30% 0.90% 0.76% 0.75% 7.90% 6.80% 7.80% 7.63% 8.40%
National Insurance
Public 1.80% 1.40% 1.20% 1.13% NA 17.00% 13.40% 9.00% 9.97% NA
New India Assurance
Public 0.30% 0.60% 1.60% 1.38% 1.32% 15.00% 15.00% 16.00% 13.00% 9.20%
Reliance General Private 0.00% 0.40% 2.10% 1.26% 1.22% 8.10% 7.90% 8.90% 8.83% 7.81%
United India Public 0.40% 1.30% 2.10% 1.85% NA 15.00% 11.00% 10.00% 8.33% NA
Oriental Insurance
Public 0.20% 2.10% 2.30% 2.23% 2.05% 21.80% 16.60% 19.20% NA 8.51%
Cholamandalam MS General
Private 0.00% 2.20% 3.80% 1.46% 1.45% 8.90% 7.90% 9.10% 7.59% 6.59%
Max Bupa Health SAHI 0.00% 7.30% 8.20% 4.95% 5.29% 2.00% 8.00% 7.00% 6.66% 6.28%
HDFC Ergo Health
SAHI 0.00% 4.80% 6.00% NA NA 8.00% 7.00% 8.00% NA NA
183
Note: NA = Not Available; Gross NPA’s calculated/Reported as per NL-30 public disclosure of respective companies; (*) Annualised yield
Source: Company NL fillings, CRISIL Research
Star Health Insurance has highest investment assets among SAHI players
Reliance General has the highest investment to net worth ratio in FY21; however, in absolute terms, New India
Assurance has the highest investment of more than Rs 650 billion as of the same period. Among SAHI players, Star
Health Insurance has the highest investment amount of more than Rs 68 billion, which is more than twice of second
largest SAHI player.
Total investment (in million rupees) and Investment to net-worth ratio
Type
of Player
Total Investment assets (Rs million) Investment to net worth ratio (in times)
FY19 FY20 FY21 Q1 FY22 FY18 FY19 FY20 FY21 Q1 FY22
National Insurance
Public 2,36,922 2,20,521 2,92,797 NA 4.4 8.5 25.7 3.9 NA
United India Public 3,16,567 2,79,307 3,39,321 NA 3.3 4.6 31.3 4.9 NA
Reliance General Private 94,017 1,08,216 1,30,334 1,34,646 5.7 6.0 6.2 6.3 6.2
Cholamandalam MS General
Private 75,961 90,785 1,10,605 1,11,876 4.9 5.2 5.8 5.8 5.8
HDFC Ergo General
Private 91,040 1,15,018 1,66,430 1,71,618 4.6 4.7 4.9 5.1 5.3
TATA AIG General
Private 1,00,505 1,18,931 1,61,769 1,74,657 4.2 4.9 5.4 4.7 4.5
Oriental Insurance
Public 2,47,141 2,06,733 2,39,848 2,56,363 1.9 2.4 5.7 3.1 3.4
ICICI Lombard Private 2,22,308 2,63,267 3,08,922 3,20,747 3.4 3.9 4.6 3.8 3.8
SBI General Private 63,566 74,270 95,780 87,083 3.4 3.5 3.5 3.4 3.0
Bajaj Allianz Private 1,67,864 1,83,046 2,24,774 2,30,317 3.1 3.3 3.2 3.0 2.9
CARE Health SAHI 13,017 17,757 26,350 27,204 1.6 1.9 2.3 2.3 2.4
HDFC Ergo Health
SAHI 14,670 18,902 NA NA 1.9 2.4 2.0 NA NA
Star Health Insurance
SAHI 30,301 42,900 68,367 83,004 2.1 2.0 2.2 1.6 1.9
New India Assurance
Public 5,91,902 5,13,788 6,63,582 7,20,833 1.4 1.5 1.9 1.3 1.3
Max Bupa Health SAHI 8,156 6,643 16,216 17,024 0.7 0.8 0.6 1.2 1.1
Aditya Birla Health
SAHI 4,887 8,410 12,465 12,483 0.6 0.7 0.8 0.9 0.8
Manipal Cigna Health
SAHI 5,360 6,053 8,021 7,969 0.5 0.6 0.6 0.6 0.6
Note: NA = Not Available; Investment to net worth ratio = Investment-fair value change account/ Net worth; HDFC Ergo General FY21 number
include HDFC Ergo Health’s data as well, post-merger
Source: Company NL fillings, CRISIL Research
184
Net claim outstanding to net earned premium ratio and Solvency ratio
Solvency ratio helps to understand the insurers’ ability to absorb risk arising from claims. Hence, IRDAI requires
insurers to maintain a solvency ratio of at least 1.5 times. As on FY21, solvency ratio of Bajaj Allianz was highest
amongst the peer set analysed at 3.5 times. Among SAHI players, Care Health and Star Health Insurance have the
highest solvency ratio of 2.5 and 2.2 times, respectively, as of FY21, which is significantly higher than minimum
solvency ratio requisite. The solvency ratio for National Insurance and United India in FY20 fell well below the required
limit of 1.5 times; however, there was some improvement in the solvency ratio for these players in FY21 due to
infusion of capital.
Private insurers comfortably placed in respect of solvency ratio
Note: NA = Not Available; Net claim outstanding to net earned premium ratio = Net claim outstanding at the end of year/net premium earned;
Solvency ratio = Available solvency margin/ required solvency margin; HDFC Ergo General FY21 number include HDFC Ergo Health’s data as
well, post-merger
Source: Company NL fillings, CRISIL Research
Type
of Player
Net claim outstanding to net earned premium ratio
Solvency ratio (in times)
FY18 FY19 FY20 FY21 FY18 FY19 FY20 FY21 Q1
FY22
Bajaj Allianz Private 21% 19% 15% 29% 2.8 2.6 2.5 3.5 3.4
ICICI Lombard Private 40% 36% 37% 43% 2.1 2.2 2.2 2.9 2.8
Manipal Cigna Health
SAHI 15% 12% 12% 15% 2.1 2.2 1.9 2.1 1.6
Star Health Insurance
SAHI 8% 11% 12% 19% 1.8 2.0 1.9 2.2 1.7
CARE Health SAHI 15% 13% 17% 22% 1.6 1.6 1.6 2.5 1.8
TATA AIG General
Private 19% 27% 26% 37% 1.7 1.6 1.8 2.2 2.3
SBI General Private 26% 33% 35% 26% 2.5 2.3 2.3 2.0 2.1
New India Assurance
Private 17% 16% 15% 19% 2.6 2.1 2.1 2.1 2.0
Aditya Birla Health
SAHI 15% 13% 12% 18% 1.7 1.6 1.8 1.8 1.6
HDFC Ergo General
Private 26% 23% 30% 36% 2.1 1.8 1.9 1.9 1.7
Cholamandalam MS General
Private 12% 14% 12% 28% 1.6 1.6 1.6 2.1 1.8
Reliance General
Private 32% 32% 33% 47% 1.7 1.6 1.5 1.7 1.7
Max Bupa Health
SAHI 11% 16% 15% 25% 2.1 1.8 1.8 2.1 1.7
HDFC Ergo Health
SAHI 15% 13% 15% NA 1.7 1.6 1.7 NA NA
Oriental Insurance
Public 22% 19% 20% 23% 1.7 1.6 0.9 1.5 1.5
United India Public 28% 20% 19% 27% 1.5 1.5 0.3 1.0 NA
National Insurance
Public 26% 19% 23% 23% 1.6 1.0 0.02 1.2 NA
185
Star Health Insurance is in expansionary mode
In FY 21, premium per office is highest for Manipal Cigna at Rs 139 million per branch. Star Health Insurance has
relatively lower premium per branch as compared to other SAHI players; this could be attributed to the significant
expansion in its number of branches across country. Star Health Insurance leads the market in terms of opening new
branches from FY 18. As of FY 21, New India Assurance has maximum number of offices whereas among non-public
players, Amongst SAHI players, Star Health has maximum number of offices in India. Players like ICICI and HDFC
have lower offices due to higher presence through the banca channel.
Premium per branch
Type of
Player
Premium per office No of Office
opened/closed Number of
offices
FY21 FY18 FY19 FY20 FY21 FY18 FY19 FY20 FY21
Manipal Cigna
Health SAHI 162 194 115 139 0 4 24 4 51
HDFC Ergo Health SAHI 83 43 93 NA 48 28 8 NA NA
Max Bupa Health SAHI 193 176 164 112 2 10 15 59 114
HDFC Ergo General Private 53 63 57 123 -1 15 7 74 203
CARE Health SAHI 94 103 95 112 13 37 45 2 158
Aditya Birla Health SAHI 37 67 74 97 50 1 19 10 90
Star Health
Insurance SAHI 74 90 91 97 68 26 115 162 737
ICICI Lombard Private 52 70 74 84 4 12 8 3 276
Bajaj Allianz Private 62 82 90 82 7 1 -42 17 202
SBI General Private 41 43 60 90 0 3 10 14 137
Reliance General Private 52 73 89 55 -1 3 0 -7 129
TATA AIG General Private 24 28 37 49 2 55 -8 -5 200
New India
Assurance Public 26 30 38 46 16 -77 -103 -78 2,214
United India Public 19 24 24 29 6 -52 -33 -54 1,999
Cholamandalam MS
General Private 27 28 7 23 -18 -1 0 6 141
National Insurance Public 21 18 20 36 -255 -8 -211 -86 1,437
Oriental Insurance Public 18 20 27 29 8 -8 -257 -47 1,631
Note: Premium per office = Net premium earned (Health insurance business) / Total number of active branch at the end of year; HDFC Ergo
General FY21 number include HDFC Ergo Health’s data as well, post-merger
Source: Company NL fillings, CRISIL Research
Among non-public insurers, Star Health Insurance has highest manpower strength
186
Star Health Insurance has the highest manpower strength as compared to SAHI and private players. New India
Assurance and United India Insurance have even higher manpower strength as compared to Star Health Insurance,
but these companies are also present in other segments within the general insurance umbrella. In terms of hospital
network, only two SAHI players and one private player has more than 10,000 hospitals network, which are Star
Health Insurance, CARE Health and HDFC Ergo, as per the publicly available disclosures.
Manpower Strength
(March 2021) Network of hospitals
New India Assurance 15,249 2,598
United India 12,839 2,551
Star Health Insurance 14,273 10,200+
Oriental Insurance 10,524 3,855
National Insurance 10,537 2,541
CARE Health 10,014 15,500+
Bajaj Allianz 6,937 6,500+
ICICI Lombard 8,962 6,500+
HDFC Ergo General 6,410 10,000+
TATA AIG General 6,560 6,200+
SBI General 4,514 6,000+
Max Bupa Health 3,949 5,000+
Reliance General 3,467 7,300+
Aditya Birla Health 3,490 8,000+
Manipal Cigna Health 2,048 6,500+
Cholamandalam MS General
784 9,000+
Note: Network of hospitals data is taken from company website on September 15, 2021. For Bajaj Allianz, ICICI Lombard, HDFC Ergo and
Cholamandalam MS General data is taken from Annual report FY21
Source: GI Council financial highlights, Company websites and company reports
Comparison of senior management experience of SAHI Players
Senior management often bring with them several years of relevant experience and strong perspective in their
respective roles. They play a pivotal role in shaping up the focus areas, growth plans, and key result areas for an
organisation as also putting in pace strategies for mitigating any risks that the organisation may face. In case of
health insurance business, senior management plays key role in terms of strategic focus areas like channel
management, claim processing, underwriting norms or other digital initiatives, which enables the organisation to
remain competitive in the market. Besides, senior management also play a vital role in shaping organizational culture.
However, having more number of senior executives can also increase the cost of the company, which in turn can
also impact profitability.
187
CRISIL Research has analysed number of members of senior management, experience in current organisation and
the total industry experience of leadership team across SAHI players.
As per our assessment, amongst SAHI, Star Health Insurance has the largest number of senior management
personnel. Furthermore, the average experience of senior management personnel with the organisation as well as
at overall level is higher for Star Health Insurance compared to other players. On the other hand, Max Bupa has the
lowest average experience at current organisations of ~2 years.
Players
Gross written
premium* (Rs
Billion) –FY20
Senior managem
ent personnel
Average experienc
e with current
organisation
Average total
experience
Number of
employee FY21
Senior management as a %
of employee
Star Health 92.0 21 10 28 14,273 0.15%
CARE Health 23.3 11 9 22 10,014 0.11%
Max Bupa 16.7 14 2 21 3,949 0.35%
Manipal Cigna 7.5 11 4 21 2,048 0.54%
Aditya Birla Health 11.7 10 4 22 3,490 0.29%
Note: (*) Excluding PA and Travel insurance; senior management data is considered as per NL-34 filings; The average experience in current
organisation and average total experience is calculated as per data available of senior management personnel
Source: Company NL fillings, Company websites, CRISIL Research
189
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