Private health insurers plan to offer cheaper cover, looking at smaller markets

CHENNAI: With increased penetration of government health insurance schemes like RSBY ( Rashtriya Swasthya Bima Yojana) coupled with private hospitals building capacity across the country, health insurers are also looking at smaller markets.

Private health insurer, Star Health is at present piloting a Rs 1 lakh sum insured cover with an annual premium of Rs 1,000 across a few districts in Tamil Nadu and Kerala. "The increased penetration of healthcare facilities has resulted in lesser movement of patients to metros at least for routine procedures. If a person chooses to get a procedure done in a metro, the entire sum insured is wiped out very soon. On the other hand, the same policy can be better utilized if the same procedure is possible back in his home town," V Jagannathan, CMD, Star Health and Allied Insurance said.

And while a differentiated product offering may help insurers get volumes initially, officials state a growing population plus demand for quality health care is pushing insurers to look at such markets. "Today, customers from smaller towns and cities want an open product with minimal exclusions with many not minding to pay additional premium for the same," Renuka Kanvinde, associate VP at Bajaj Allianz General Insurance said.

With banks allowed to tie-up with one standalone health insurer, penetration is expected to rise. "For mono line companies, it is not feasible to open branches in locations with limited potential as it takes them minimum four to five years to break even," Antony Jacob, CEO, Apollo Munich Health Insurance said. Nearly, 30% of the company's customer base resides in such locations.

Even recent entrants are finding takers from the mini metros and other regions. For instance, Cigna TTK Health Insurance is seeing good traction in Aurangabad, Kochi, Indore and Kanpur.