The Covid-19 second wave has brought home the brutal reality that India remains underserved by health insurance. Those who had to be hospitalised for severe Covid treatment had to deal with bills running into lakhs or sometimes even tens of lakhs, wiping out life savings and forcing many families to borrow loans.

Roughly two-thirds of Indians do not have any health insurance cover, according to a Bloomberg report. About 60 per cent of total health expenditure in India is people paying out of their own pockets. This is why hospitalisation for any treatment can be financially devastating for millions of Indians – a 2018 study by the Public Health Foundation of India found that out-of-pocket health spending pushed 55 million people into poverty in the previous year.

Perhaps the most important lesson from the pandemic is that when it comes to health risks, even the young are not spared. Far too many millennials in the 21-30 age group – many of them working professionals – learnt this lesson first hand and realised that their opinions towards health cover were wrong.

The lesson is particularly tragic for the reason that even a large insurance cover for younger people with age on their side is typically priced very low. On the other hand, the majority of them are also in the early stages of their career and often do not earn enough to spend on health insurance, anyways considered a discretionary expenditure. Surprisingly, many of them also erroneously assume that group health covers provided by their employers are sufficient to cover their healthcare needs.

Part of the problem is a general inhibition towards insurance and risk mitigation that is deeply ingrained in our culture – one just has to observe how many people ride two-wheelers without helmets, cars without wearing seatbelts, or move around without masking themselves appropriately during the ongoing pandemic. Many also see health and other types of insurance as an avoidable cost rather than as a cover for their financial well-being. Then it is the paperwork involved - even those who have made up their mind to go for insurance often get put off by a hugely complex new customer onboarding process followed by many insurers.

On its part, the insurance industry regulator IRDAI in recent years has taken a slew of measures to stoke insurance adoption – it has allowed insurers to collect premiums in monthly or quarterly instalments and validate health insurance policy proposal forms through digital means in place of physical signatures. IRDAI has also asked all hospitals to provide cashless payments, and further asked insurers to standardise exclusions and include telemedicine in their insurance policy.

The insurance sector has always been agile in embracing customer-friendly innovations. With the ball now in its court, they were quick to embrace digitalised insurance workflows for both sales and claims settlement.

The pandemic has also changed the buying behaviour of customers and in an industry dominated by intermediaries, we are now seeing an acceptance to buy insurance online with the rise of all-digital insurance providers like Vital, Digit, and Acko – through much-simplified sales and onboarding processes and highly affordable plans. Vital for example offers a monthly subscription for a health cover that works just like Amazon’s Prime with added wellness benefits. This is more so important for inducing millennials who prefer the convenience and a frictionless user experience.

Still, insurers need to do more. An important insight we picked early on is given that while people until 35 years of age typically have only a fraction of hospitalisation claims as compared to the older ones, they spend more on fitness, general wellness, and basic health expenses. What we realised is they need integrated health and wellness solutions that go beyond hospitalisation cover and unless these are made part of the cover, there will always be hesitance because of delayed gratification.

Once we recognise that educating the young about health insurance is perhaps the biggest barrier to its higher adoption, it becomes evident that the industry needs to invest much more in generating awareness. It may even be prudent for the industry players to come together, pool in resources, and run a mass-media educational campaign similar to the eminently successful ‘Mutual Funds Sahi hai’ campaign that the Association of Mutual Funds in India (AMFI) has been running.

The last few years have no doubt been hard for the general insurance industry, of which health insurance is a part. This year’s Economic Survey revealed that insurance penetration in the non-life (general) segment declined from an already abysmal 0.97 per cent in 2018 to 0.94 per cent in 2020. The global average penetration for the non-life segment stood at 3.88 per cent in 2019. With the pandemic triggering rapid uptake of health insurance, it is now incumbent upon the industry players to continue the momentum and work towards increasing health cover penetration – particularly among the young.

The author is the Co-Founder and CEO, Vital

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