Health insurers should introduce zone based pricing as one approach towards increasing penetration, says Mr Ashish Mehrotra, Managing Director & CEO of Max Bupa Health Insurance.
In an interview with BusinessWorld, he said: “Why should customers living in smaller towns pay the same premium as those living in the metros where medical costs are much higher? We, at Max Bupa, have introduced this concept of zone-based pricing. I am sure more and more companies will get into this kind of pricing mechanism.”
He noted that over the last 5-7 years, the health insurance industry in India had grown at a CAGR of 20%, indicating that the mindset of people — young an old — towards health insurance is changing. There is increased participation in Tier 2 and 3 towns, where people have typically not been open to insurance products.
He said: “The question is no longer whether to buy a health insurance product but for how much. That is critical especially since nearly 62% of treatment expenses in India are out of pocket.”
He said: “The conversation on health insurance is gradually shifting from ‘Why do I need health insurance?’ to ‘What kind of health insurance do I need and how much sum insured do I need?’ This is an exciting time to be in the health insurance industry as the overall regulatory sentiments are in the best interests of customers and insurers. Growing health and wellness awareness among consumers is the key driver for the uptake of health insurance in India.”
He said that he is confident that the National Health Protection Scheme announced last month by Finance Minister Arun Jaitley in the FY2019 Budget will increase penetration especially in the smaller towns. The scheme, details of which are yet to be announced, aims to provide health cover to 500 million people in the country.