Interview

Insurance sector to get healthier : K. C. Mishra, Director, National Insurance Academy, Pune

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What is NIA’s main focus with respect to its training, consultancy and research activities?
NIA promotes, develops and nurtures research and consultancy activities on an institutional and individual basis. Areas of study include accounting, life insurance, general insurance, healthcare management, reinsurance, business economics, banking, investment, turnaround management, financial controls, risk management, regulatory provisions, human resource and organizational behavior, information system, marketing, operation & technology management and strategy & organization.

NIA follows an interventionist approach to help influence practice through its consulting and research. The conference, workshops, seminars and training programmes provide NIA opportunity to update the concepts. This helps NIA to offer the latest solution package to organizations.

Apart from NIA’s own in-house publications like Bimaquest, Dnyanajyoti Research Series (DJRS), research monograms and working papers, NIA encourages its faculty members to undertake various research studies.

NIA encourages its faculty members and research associates to undertake commercially viable, stand alone or institutional action research projects, publish them in referred journals and present the concepts at national and international seminars. NIA has a cadre of research associates, two thirds of them drawn from the insurance industry and one-third from NIA’s own core professionals. Research and consultancy are components of faculty performance benchmark.

National Insurance Academy was established with the objective of promoting & providing education and training in insurance and allied subjects to persons employed in insurance sector. The Academy endeavours to achieve this core objective by designing & conducting relevant and need-based programmes for officers of insurance industry. The curricula of these programmes are meant to impart not only insurance knowledge but also to develop managerial skills, self-development & the ability to face challenges.

How does India compare with the rest of the world in terms of health insurance coverage?
India has mostly short-term health indemnity product. In the far east, they have return linked insurance product (RLIP), which helps in arresting moral hazard, scales up fast and the idea of a return makes it a quasi-investment product. In the USA and other western countries, they have cashless and managed-care products. The method of coverage is Pay for Performance (P4P). In Europe, the method is care management; the products here are mostly for long term care and wellness centred. India is experimenting a hybrid system. Most products are indemnity driven. Life Insurers in particular are experimenting with long term care products. Micro-insurers are following a maxim of Pa4aP rather than P4P. Pa4aP stands for Physical assistance for affordable Premium.

What is the size and scope of the health insurance industry in India and what do you think of the need and scope of micro-insurance for health specifically?
Current premium volume of Health Insurance is around INR 3500 crore for short-term policies. This excludes term indemnity policies sold by Life Insurers, which is insignificant at this point of time. The Insurance Regulatory and Development Authority (IRDA) expects the health insurance business to be the second-largest premium earner for insurance companies after motor insurance within the next three years. IRDA expects the sector to grow larger than fire insurance business after complete de-tariffing on 1st January 2008. Until now only two companies have been operating in the segment on a stand-alone basis.

Experts vary in opinion about potential size of Health Insurance market. To attain world average of Health expenditure, India needs 80 billion USD of health allocation. Assuming 20% of the expenditure is the potential allocation for ex-ante preparedness through insurance route, Indian Health Insurance volume measured in terms of premium should be targeted at INR 64000 crore. But there is need for substantial structural changes to achieve this desirable magnitude of performance. Estimation suggests only 1% of the market has been tapped so far. In the medium term of three years, even with present effort the market may reach INR 15000 crore. In the past, growth of health insurance has been very sluggish, right from its formal introduction in the eighties. But in the last few years the cumulative average growth rate attained has been 37%.

Micro-insurance in health sector should be best done as a provider-centred model, but the current attempt is full service model, which is not cost effective and highly fraught with moral hazard. Micro-insurance has not assumed any significant volume at present but going by IRDA norms, the companies should have a short term target of INR 300 crores and medium term target of INR 2500 crores by scaling up rapidly in next three years.

How has the entry of private companies altered the health insurance landscape in the country?
Star Health and Allied Insurance has been in the business for some time and now the latest entrant is Apollo DKV Health Insurance. There is a host of new products with unique classification features thanks to the innovation of new companies. The products are rationalized depending on market dynamics. Loss prevention measures are augmented as in diabetic products recently introduced by ICICI concern. Even public sector companies have repositioned their products to be more sustainable.

Do you foresee some possibilities of public private partnerships (PPPs) in the health insurance sector?
Public Private Partnership is already happening in most health plans. Of the four major constituents of health insurance namely health insurers, physical service providers, Third Party Administrators and most importantly the target group, which is potentially almost universal, there is intuitive appeal of PPP.

Whether the target group is individualized or institutionalized, the other three constituents can have several permutations and combinations in the absence of any national combination policy of the type envisaged in Medicaid plus choice program in USA.

What measures do you think should be undertaken by the government to bring more people under the ambit of insurance cover?
Government as facilitator and regulator with developmental responsibilities has to disperse the physical provider network, particular to rural recesses. There has to be inter-regulator coordination. At present there is no coordination between IRDA, Medical and paramedical councils, health ministry and Hospital regulators or drug controllers. The government has to also facilitate in areas like creating standard operating protocols for treatment, health awareness, tele-medicine, coding and classification of diseases, morbidity investigation, cleaning the data by a system of medical informatics and use of multiple imputation of lapse IT packages.

Development of a national health data bank and information exchange for payers and providers is often considered as a pre-requisite to standardise health insurance sector. What has been the move from government and/or industry towards such facility?
IRDA is making slow but steady effort to create a morbidity investigation bureau. There is still slower and reasonably unsteady effort to scale up the data bank. This area needs attention by augmenting the supervisory expertise. Data infrastructure is one of the biggest obstacles, but unfortunately, this is a man-made obstacle as India has several channels for data harnessing. Only there is lack of hard work and devotion for completion of the job on hand.

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