VANTAGE POINT

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India: National Health Protection Scheme to be launched on 25 Sep

Aug 16, 2018

Prime Minister Narendra Modi yesterday announced his flagship project, Ayushman Bharat or National Health Protection Scheme, will be launched on 25 September.

"The healthcare initiatives of the government will have a positive impact on 50 crore Indians," Mr Modi said, announcing the scheme during his Independence Day speech yesterday.

Dubbed ‘Modicare’ and touted as the world’s largest health protection scheme, Ayushman Bharat aims to cover over 100m poor families (about 500m beneficiaries) and provide health cover of up to INR500,000 ($7,090) per family per year. The scheme was initially announced by then finance minister Arun Jaitley in his Budget speech in February this year.

Premiums under the medical insurance scheme will be paid for by the government, shared between the central and state governments in proportions per Ministry of Finance guidelines. The scheme may be implemented by buying group cover from insurance companies or in a trust model.

As many as 23 states (out of a total of 29 states and seven Union territories) are understood to have decided to adopt the trust model, reports Times of India. This indicates that there will be limited opportunity for insurers.

Mr G Srinivasan, who stepped down as chairman of New India Assurance last month, said, “A trust, which will get the money allotted for the premium, will take over the job of the insurance company. If there is a shortfall in funds allocated, the government — probably the state government — will have to make good as there is no entity that takes on the risk like in an insurance model.”

However, a handful of the 23 states are adopting a hybrid model where they would buy insurance for a small amount of up to INR50,000 per family as against a cover of INR500,000 under the scheme.

Source: Asia Insurance Review



India : Govt's crop insurance plan turns profitable for insurers

Aug 14, 2018

The government-backed crop insurance scheme Pradhan Mantri Fasal Bima Yojana (PMFBY) has turned profitable in the first quarter of FY2019 (April to June 2018) after bleeding for two years. Better pricing coupled with low claims have led to underwriting profits in crop insurance.

Launched in 2016, the PMFBY loss ratio for most insurers was 140-145% in the first year.

The agriculture ministry’s data showed PMFBY had a sum insured amount of INR1,900bn ($27bn) and premium volume of INR243.5bn in FY2018. In the fourth quarter too, losses stayed in the range of 120-130%, reports Moneycontrol.

Since the crop cycle of kharif (monsoon crop) and rabi are seasonal, the first few months of calendar year 2018 saw losses on the rise again. However, towards May 2018 when the pricing stabilised and technology was being used in a widespread manner for crop-yield determination, the loss situation has changed.

For instance, the country's largest general insurer New India Assurance’s crop insurance portfolio had an underwriting profit of INR439.8m in 1QFY2019 compared to a loss of INR78.9m a year ago.

As the central government plans to increase coverage of PMFBY to 50% of total crop area in FY2019, insurers say that this will spread the risks across a wider base and will help lower losses further over the next three quarters of the current fiscal year ending 31 March 2019.

Source: Asia Insurance Review



India : Life and non-life markets to soar in next decade

Aug 13, 2018



Both the life and non-life insurance sectors in India can grow in excess of 15% a year for the next 10 years, according to Mr Santosh Singh, Head of Research at Haitong Securities India.

He said that India is in a growth phase with one of the largest consumption bases in the world and its economy can remain in the growth phase for may be 10-15 years.

He told The Economic Times: “My expectation is we might see around 20% sort of GWP growth for the industry for at least five years and may be 15% for at least 10 years. That should be the number we should be looking at for the general insurance industry.

He added that there are two or three stories playing within general insurance. One story is penetration, and the second is that a lot of general insurance business is dependent on GDP growth and capital formation.

“If that remains slow, then a big portion of the general insurance industry will not grow faster,” he said. He added, in his personal view, that within general insurance, it is health insurance which is going to grow much faster than any other class of business. In health insurance, where there is a huge under-penetration, there is likely to be a fast growing segment.

He said: “On the life side, a lot is dependent on savings...but again, there is huge under-penetration on the annuity and morbidity sides of the business.”

Source: Asia Insurance Review



India : Regulator moves to ensure continuity of benefits for policyholders who switch insurers

Aug 13, 2018

A panel on innovations in insurance and insurance technology and related regulatory aspects, formed by the IRDAI, has recommended portability of customer data when a policyholder moves from one insurer to another.

This will come in handy in the case of short-term products in non-life and health insurance. From a customer’s point of view, this ensures the continuity of benefits,which are based on data, such as no-claim bonus, disease or medical history.

An agency such as the Insurance Information Bureau of India could create the required mechanism for a repository to capture industry data related to insurance customers/policies, reports Hindu Business Line.

The committee has also suggested that insurers may be allowed to capture data as per their product requirements, and they should mention all data elements they wish to capture as part of their product filing procedure with the regulator.

However, to ensure standardisation of data capture across insurers for the creation of a repository of generic data to benefit all, the basic standard data elements could be worked upon by the General and Life Insurance Councils, it added. Stating that technology “could disrupt insurance business model and the insurer landscape”, the working group said big technology firms, with their technological and analytical advantage, will squeeze out traditional insurers.

The regulator, too, needs to reassess the existing guidelines to ensure that customers are adequately protected. “As the risk profile changes, it would be necessary to ensure that regulatory framework continues to adequately capture it,” the committee said.

The IRDAI is currently examining these recommendations, and is likely to issue its decisions soon.

Source: Asia Insurance Review



Lack of awareness, affordability and low understanding hampers health insurance growth

Aug 10, 2018

The IRDAI is pushing for simpler products and greater usage of technology to increase the number of people covered by health insurance plans.

“Low risk awareness, lack of affordability and low understanding of insurance products—these are some of the reasons why health insurance has not picked up so well even though the growth rate is high for the higher income group as a whole,” said Mr Subhash Chandra Khuntia who became IRDAI chairman in May. He was speaking at the Health Insurance Summit organised last week by the Confederation of Indian Industry.

“There should be simplification and rationalisation of health insurance products so that they are understood by the common people,” he said.

The IRDAI moves aim too to make the central government's ambitious Ayushman Bharat-National Health Protection Mission (AB-NHPM) more accessible.

The insurance regulator will work with health insurance companies under the public-private partnership model to implement AB-NHPM, popularly known as Modicare named after Prime Minister Narendra Modi.

“With the increase in life expectancy in the country, the need for improving insurance penetration and coverage is paramount,” Mr Khuntia said.

“The focus should be to make the process online, enhance use of technology, and increase awareness and understanding about insurance products.”

Standardised and simple products under AB-NHPM would reduce cost, increase efficiency and expand the coverage of the health insurance sector, he said.

AB-NHPM aims to cover around 100m families comprising about 500m people.

Source: Asia Insurance Review



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