The National Health Protection Scheme (NHPS), which would be the world's largest government healthcare programme, will be a game changer for India's health industry and generate substantial growth in insurers' premiums, S&P Global Ratings said yesterday.
The insurance sector is slated to get a boost once the NHPS, announced in the 1 February Budget, is implemented as it reflects the government's intent to expand the country's protection umbrella, and could have far-reaching implications for the domestic insurance sector, the international credit rating agency said.
"We believe the proposal has the potential to be a game changer for the health industry based on its sheer coverage size and scope," S&P said. "An effectively executed National Health Protection Scheme (NHPS) will bring coverage to 40% of the population and generate substantial growth in health insurers' premiums and increased cross-selling opportunities," it added.
The scheme is to provide medical cover of up to INR500,000 (US$7,775) to over 10 crore poor and vulnerable families.
"We expect insurers to introduce a range of new products with health coverage to capitalise on increased tax incentives amid rising medical inflation," S&P added.
In addition, the Budget proposal to merge three public-sector insurance companies should reduce competition and facilitate improved underwriting discipline in the domestic market, says the rating agency. The three insurers–United India Insurance, National Insurance and Oriental Insurance–together account for 30% of the non-life insurance market in India.