Apollo's insurance plan banks on unique model

Apollo Hospitals’ joint venture with German company Deutsche Krankenversicherung (DKV) will tap into the nascent health insurance market in India. Penetration of health insurance in India is abysmal at 1.2%, and about 80% of health expenses are borne directly by patients. Existing players are having a field day as a result, with premium income growing by 47% in the quarter ended June’06, making health insurance the fastest growing segment in the non-life insurance sector.


The Apollo-DKV JV will begin operations in FY’08, with Apollo Hospitals holding 20%, its associates 54% and DKV 26%. Apollo’s nationwide hospital network and DKV’s experience in the private health insurance industry gives them an edge over other players. Apollo has a company that is also in the third party administration business. The Apollo Hospitals Group has over 7,000 beds in 38 hospitals, a chain of nursing and hospital management colleges and diagnostic clinics across India.

Apollo DKV Insurance Company will offer comprehensive cover products, out-patient products and hospital cash policies. While health insurance is a fast-growing segment, it is not profitable due to lack of control over costs, resulting from lack of standardisation of treatment charges at hospitals.

The Apollo-DKV JV could overcome that disadvantage by minimising the conflict of interest between an insurer and the hospital, one trying to lower costs of settling claims and the other trying to maximise revenue growth. Bridging the gap between health insurance and the delivery of health care is what the JV seeks to achieve. Its success could lead to a new model for the health insurance industry, though finding a network as vast as that of Apollo will be difficult.