HEALTH INSURANCE OUTPACES MOTOR INSURANCE IN INDIA

Propelling growth at a faster pace, the Health Insurance Line of Business, has created history by acquiring largest market share in Non-Life Insurance space in India. The Pandemic while marred the business growth in Motor LOB by over 19% till July in this fiscal year, the Health LOB maintained its growth at more than 10% to acquire the top position with 32.7% market share leaving Motor LOB behind at 30.3% of General Insurance market in India.

Health Insurance gains largest market share in India
Particulars	Health		Motor		Total Non-Life
	Jul-20	Mar-20	Jul-20	Mar-20	Jul-20	Mar-20
Premium: Rs in Crore	18415	51638	17049	69208	56542	189302
Growth	10.4%	13.4%	-19.2%	7.3%	1.6%	11.7%
Market Share	32.7%	27.3%	30.3%	36.6%	100.0%	100.0%

(Source: G.I. Council of India)

Automobile sector was witnessing a slowdown even before the COVID-19 outbreak and its market share dropped from 38% to 36.6% in March 2020. Its revenue in ‘Own Damage’ segment was virtually without any growth. Despite business continuity efforts by most of the players of the industry the decline of more than 19% impacted this LOB severely and it lost its position to Health Insurance LOB. Disruption will stay for some time at least and demand revival will not be easy for the general insurers. Domestic commercial vehicles may witness the continued slump this year. The private car segment may pickup post lockdown as people may avoid public transport and will follow social distancing norms.

On the other hand, India’s Commercial Health Insurance Segment is experiencing high growth owing to increased awareness in current pandemic situation and also because of standardized products with customized health coverage launched this year. Continued growth supported with awareness may help this LOB to consolidate its leading position beyond any threat by Motor LOB by the end of this fiscal.

HEALTH INSURANCE IN INDIA
	Retail	Group	Government	OMP	Total
July 2020 Premium       ( Rs in Cr)	7421	10057	883	55	18415
Growth	31%	11%	-43%	-85%	10%
Market Share	40%	55%	4.70%	0.30%	100%
March 2020 Premium ( Rs in Cr)	20514	25283	5027	814	51638
Growth	12%	23%	-14.80%	1.40%	13.40%
Market Share	39.5%	49.0%	10.0%	1.5%	100.0%

(Source: G.I. Council of India)

COVID-19 posed challenges before general insurers and standalone health insurers but at the same time it provided opportunities to them. The rising costs of medical treatments and health catastrophes are now well recognized and a value is seen in health insurance products. The Regulator has also responded to pandemic situation in time and when it was observed that insurers are settling health insurance claims within four corners of their contracts and observing the protection gap in available products the Regulator mandated Corona specific products to address these protection gaps. The corona product is mandatory for insurers, however it is for a shorter and limited period. The product is standardized and insurers are allowed only to discover price as per their actuarial prudence. When these products were launched the proposers were surprised with the wide gap in prices of standard ‘Corona Kavach’ policies. The time will test the assumptions of the actuarial wisdom of various insurers for such prices. Media reports suggest that protection of Rs one lac for insured in age bracket of 25-30 years is marketed at price range of Rs 215- 434 by Oriental Insurance whereas for same sum insured and for the same age band the Star Health is charging approximately 5 times higher premium in range of Rs 1000- Rs 1350/- For a five lac cover for same age band the price discovered by Oriental is in range of Rs 636- 1286 whereas the Star Health’s product is available in range of Rs 3831- Rs 5,172/-

Corona Kavach is a standard product which every insurer has to sell as per the mandate of the Regulator from July 10, 2020. Price is the only differential. The product has perceived great value in no time after its launch and it is believed that in a month up to 14^th of August 2020 more than 7.5 lac policies of Corona Kavach have been sold by stand alone health insurers and general insurers covering more than 12.86 lives and the industry generated extra premium of more than Rs 215 crore. The fear factor created value in the product and its sale will continue to grow despite the fact that the product is limited period single risk policy. However, this will propel exponent growth of this LOB. The Health Insurance has acquired the top position in Non-Life space and it is going to retain it for a longer period.

Vinay Verma

(The writer is Deputy General Manager in Oriental Insurance but the views expressed here are purely in his personal academic views)