Appollo pricing

Market-driven pricing to evolve for health cover’
Insurers moving towards risk adequate premiums
“We will use some of the existing practices from the US and Europe and customise it to Indian needs.”Mr C. Chandra Shekhar
Mr C. Chandra Shekhar
Phalguna Jandhyala
New Delhi, Oct. 11 The Insurance Regulatory and Development Authority (IRDA) expects the health insurance business to be the second-largest premium earner for companies after motor insurance within the next three years.
The regulator expects the sector to grow larger than fire insurance business after complete detariffing. Until now only two companies have been operating in the segment on a stand-alone basis. The latest entrant is Apollo DKV Health Insurance. In a conversation with Business Line, Mr C. Chandra Shekhar, Chief Marketing Officer of Apollo DKV, expressed his views on the sector in India.
How is the health insurance sector shaping up in India?
What we are seeing in the health insurance segment is an intense period because lot of players are now introducing new products. The market is in a growth phase and has witnessed a CAGR of over 35 per cent in the last couple of years. The growth is expected to sustain over the next three to five years. What is heartening to note is there is an attempt by players to start what is known as the risk adequate premium. One of the banes of the segment in the past was that pricing was inadequate and was getting grossly cross subsidised by other portfolios.
But now with detariffing , the results are very apparent. More needs to be done on the firming up of the process to be risk adequate for every nature of insurance. There is also a correction happening between the portfolios and we expect it to firm up in the next one year and market-driven pricing like what exists in the telecom sector will evolve.
How is the future for the segment?
In the next one year, we expect the market to become mature. We also expect more stand-alone players in the segment. This is really good, as there is enough room for everyone; only 2 per cent of the market has been tapped so far. According to estimates, the health segment will be around Rs 15,000 crore in the next seven years from the present level of Rs 3,500 crore.
How different is the segment in Europe and the US?
In India, the products have to be renewed annually, but in Europe they have long-term care plans. The US market is similar to what we have in India, but at the same time they offer much more comprehensive covers like outpatient products.
The US concept is based on managed care. There is a lot of involvement in offering health insurance as a solution. India will do well to adopt some of their strategies.
Is Apollo DKV looking at a similar model?
We at Apollo plan to resonate a couple of ideas using our sector-specific health care expertise. Our current plans will be to make our brand promise of wellness evident in the initial products. Though they might be contemporary, the difference will be in terms of service.
For example, we are building up capability to make an individual health risk assessment on every proposal which comes to us. After this, we will send an individual prescription of awareness to the individual to follow. So we will use some of the existing practices from the US and Europe and customise it to Indian needs.