Trusts Between Hospitals & Insurers Can Come From Sunlight: Krishnan Ramachandran

In an exclusive conversation with Shivam Tyagi, BW Healthcare World, Krishnan Ramachandran, MD and CEO of Niva Bupa Health Insurance speaks on the growth of health insurance sector in the year 2022, outlook for 2023, finding the missing middle, trust deficit between hospitals and insurers and bringing on more services under the standard health insurance policies

How do you think the health insurance industry has evolved over the last couple of years, and specifically, how do you think 2022 was?

The last two years have been simultaneously the most challenging and exciting for the health insurance industry. Challenging due to Covid and exciting owing to the permanent shift in awareness of the need of health insurance products. Many parts of insurance have been about push, but the one that I think is increasingly consumer driven and is pulled is health insurance.

So we have seen that trajectory play out more so for health insurance and certainly for our company in 2022. 2022 has been a year where the industry has seen unprecedented growth, as an example, in FY 21-22, we actually grew 60 percent as a company. And in FY 22-23 it does look like that we will grow roughly by 45 percent as a company. 2022 has also been the year where health insurance firmly entrenched itself as the largest growing segment in non life and the largest you know, in terms of growth as well as in terms of size. So in terms of size, it is 35 to 37 percent of the whole non life industry. And it continues to be the fastest growing segment.

What do you think 2023 will look like when we see growth in the industry?

I do personally think that we will continue to see high growth rates in the health insurance industry. And many of the trends that were accelerated by Covid will be sustained specifically in the health insurance industry and in the context of Niva Bupa. One of them is awareness. I think, permanency around awareness and shifts in consumer demand for health insurance are getting more and more established.

Number two is the trend around embracing technology. For example, we have permanently moved to a hybrid method of working as an insurance company and also technology to do with the distribution or servicing. We expect that by the time we close 2022, more than 15 percent of our claims will be auto adjudicated meaning without human touch and this is

great for customer experience because it eliminates the friction and the waiting and the associated anxiety.

Today we are in a position to service more than 60 per cent of our policyholders entirely digitally. Today, more than 50 per cent of our policies get issued with zero human touch entirely digitally, and more than 85 per cent get renewed without human touch entirely digitally. So I think the secular trend around technology adoption will continue as we move ahead.

What are the ways by which we can find the missing middle, the population which does not have any health insurance cover?

So the missing middle exists as it is not yet into the fold of private health insurance and is not yet taken care of by the government. Estimates vary, but the Niti Ayog report suggests that that could be as large as 300 million Indians, and I think four things need to be done at the country level, to find the missing middle. First is to create more awareness. I think this segment is still not aware of the willingness to pay a risk premium for protection.

Second, is affordability. I think on the private side, we do need to come up with products that are more affordable to this segment. Third, is assurance. I still think our perception is more framed by the few claims that get rejected as opposed to the vast majority of claims that get paid. As an example, the industry settled 25-26,000 crores worth of claims on account of COVID. But how much of this is known by the public in the country? How much of this has been captured by the media? because that's how trust builds and this missing middle is at a point where they still perhaps don't trust that health insurance will work for them when it needs to. And I think the answer is it does. And we need to get this story out.

And the last one, which is the fourth A, is about access. I think while we have a massive access as an industry, especially through banks, taken together for example, as a company, we have access to distribute through more than 40,000 bank branches. Getting the banks to distribute more, getting other methods of distribution and increasing access in general so that we are able to get these products to these customers.

There's a trust deficit that exists between health insurance companies and hospitals. Why do you think this exists in the first place, and how do you think we can exclude it?

I think trust between hospitals and insurers can come from sunlight, what I mean by sunlight is dramatically higher levels of transparency between both of us, right, so today, for example, on tariffs it's important to have transparency around. From a customer standpoint,

if he is going to get treated in hospital ABC, what is the likely cost outgo in many situations, patients, and we don't necessarily have a fix on that. So transparency around costs.

Second is, medicine is art and science. So let's bring more science into medicine specifically when it comes to protocols. I think the healthcare industry must submit itself to say that look, if it's, for example, Covid, this is the protocol for treatment. These are the care pathways, and this is what we are going to follow. So then there's a basis for dialogue between hospitals and insurers. Today that basis does not exist for most part.

As an example the WHO has standards around dengue, when should one get admitted? What are the conditions? For example, platelet count, fever, etc, for admission? We find that many hospitals don't submit themselves to these protocols. So I believe the second aspect to improving trust between hospitals and insurance is to have more transparency and practice of evidence based medicine protocols and so on and so forth. And the last one I will point out is technology. I think from our side, we are very committed to using technology as an industry. We need the hospital industry to reciprocate. And I do know that in time they will.

What are the checkboxes for health insurance companies to include OPD services, home healthcare services or robotic surgeries under an umbrella standard umbrella policy?

I think, to your point on bringing on board more services. In my mind, a critical aspect is the GST. I think one of the single most important reasons why outpatient products have not been launched at scale in our country is the fact that we have 18 per cent GST on insurance and healthcare is GST exempt. So when I go out there to build an outpatient product, I am straightaway working against 18 per cent. It has been an important ask from us that we should bring this 18 per cent GST down. So that we are able to ensure that health insurance is affordable in general, but specifically that we are able to cover more and more of the services that you described under health insurance.

Second important aspect is, for many of these outpatient services, it is high frequency but low value in terms of transactions. Today with healthcare being as fragmented as it is and with technology adoption in healthcare being relatively lower in general . I think it's extremely important for us to have underlying technology in order to deal with high frequency and low value transactions in a way that is administratively efficient. So we do need work around technology for us to be able to meaningfully offer the range of outpatient services that you refer to.


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