The Indian economy is one of the fastest growing in the world. It continues to outperform many Western countries and is home to numerous global brands and outsourced businesses. The number of expats living in India has been rising steadily and the region is becoming increasingly important for the international private medical insurance (iPMI) industry.
“There is an increasing flow of expats to India, largely driven by the entry of global brands, outsourced business, resources coming from the Eastern bloc and Russia in search of work, and relocation of key personnel for general management,” says Dr Dennis Sebastian, regional director-health at RGA Reinsurance Company Middle East.
The standard and delivery of healthcare in India is very different to most expats’ home countries. Expats are able to access state-funded healthcare facilities, but given the fact that India has one of the lowest spends on public healthcare in the world and is still a developing nation, the standard of care can be very poor.
“Some hospitals suffer from a shortage of equipment and with a remit to serve the masses, standards in these local facilities are unlikely to meet with Western expectations,” says James Cooper, sales director at iPMI provider William Russell.
Expats in rural areas or remote tourist destinations need to plan for emergency evacuation and personal transportation. It is also recommended that they have emergency cash available in case they do need to have treatment at a rural medical centre as these facilities may not accept credit or debit cards.
“That said, these local government-run hospitals only account for around 25% of the medical facilities within India, as the majority of healthcare is administered via private hospitals or charities,” says Cooper.
Many of the private hospitals are located within the large cities, where the vast majority of expats will be based. Most medical facilities in places such as Delhi, Mumbai, Chennai, Kolkata and Bangalore will offer a Western standard of care with English-speaking practitioners and World Health Organisation recognition.
However, expats still need to err on the side of caution. Andrew Apps, director at iPMI provider ALC Health, says it is important not to confuse the word private with what people consider to be private in the West. There is little legislative control in setting up private clinics, which has resulted in significant discrepancies where specialists and equipment are not always available.
“The quality of private healthcare in India varies enormously from place to place and in many cases is simply a reference to a charge being made for services given rather than a reflection of the quality of those services,” says Apps. “As a result, the expatriate needs to be very careful about where they seek medical care, with whom and for what. As one commentator recently reported, there may be as many as ‘a million unregistered, untrained medical providers’ touting for business in India, which makes for a worrying picture.”
Another point to consider is that although medical care in India is cheaper than, say, the US, it is not free. Nic Brown, European sales director at iPMI provider Aetna, says that even for emergency care, patients may be required to pay a deposit prior to admission or before a procedure is carried out. In this instance, having a medical insurance policy in place is essential.
“In some life-critical cases a doctor on duty may allow a treatment to commence without payment, but this is unusual and is up to the doctor’s discretion,” says Brown. “If a hospital is on an insurance company’s network, the company’s approval or authorisation is enough for treatment to commence, eliminating the need to deal in cash at a hospital or having to worry about the payment in an emergency situation.”
Expats should look at taking out insurance cover with either a reputable local company or with an international insurance provider which will offer the option to seek treatment in their home country or elsewhere. International providers have experienced a steady increase in the number of enquiries from India and they say the uptake of iPMI is gradually growing.
“With such a disparity in healthcare provision, the importance of iPMI is growing quickly not just for expats but also for the wealthier local national who has become more demanding and requires the option to access medical treatment outside of India,” says Apps. “But any iPMI provider looking East needs to understand the market. The numbers may be great, but so can the headaches.”
Controlling claims costs
One of the biggest problems facing insurers wishing to enter the Indian market is controlling the cost of claims. Apps says that although charges are often lower than in Europe, the lack of workable network arrangements is causing costs to rise fast as the market grows. Some UK insurers operate through India-based subsidiaries which have local knowledge. For example, Aetna’s Brown says its subsidiary Indian Health Organisation has developed relationships with over 10,000 doctors, specialists, diagnostic labs and hospitals to try and get the best value for its members.
“Indian Health Organisation aims to create the biggest network of high quality, easily accessible doctors in India and to make a high standard of healthcare more affordable for the general population,” he says.
Insurers are also adopting various ways to curb fraudulent claims, according to a recent newsletter on the Indian health insurance market by Towers Watson. These include surprise doctor visits from the insurer to patients in hospitals and homes, fraud monitoring by way of scrutinising insurance proposals and claims, and using the support of external agencies in suspicion of fraud. Other counter-fraud steps like sharing claims data and blacklisting hospitals that submit inflated bills are also in place.
Opportunities for brokers
As the Indian economy grows and becomes even more reliant on the private sector to provide medical care, the opportunities for brokers could be huge. However, brokers will face a lot of legislative hurdles if they wish to operate in the country. In order to obtain a licence they must be approved by the Insurance Regulatory and Development Authority, which has a very strict set of rules.
“Setting up shop in India is a minefield of bureaucracy and open to abuse,” says Apps. “Getting a local, reliable partner is a must and they need a great deal of patience. With a wide range of health insurance companies to choose from, brokers need to look carefully at how claims are handled, where and by whom.”
The health insurance industry in India is fairly new and the regulatory environment is evolving. But as more expats move to the country, particularly in the energy, infrastructure, financial services and retail sectors, the demand for international medical cover will undoubtedly grow.
India – the facts
Population – 1.241 billion (2011, The World Bank)
GDP – $1.848 trillion (2011, The World Bank)
GDP growth – 6.8% in 2011 (The World Bank)
Tenth largest economy in the world by nominal GDP (2011, International Monetary Fund)
Main industries – textiles; chemicals; food processing; iron and steel; cement; mining; petroleum; software; coal; fertilizer
Healthcare in India
- For a country of one billion, India spends only 1% of its GDP on health, translating into $35 per capita. In France and Japan, spending is 10.4% and 8% respectively.
- The amount the private sector spends on healthcare in India equals 4.3% of GDP.
- A significant portion of the population receives inadequate or no healthcare; 25.7% are living below the poverty line in rural India.
- Approximately 75% of all healthcare infrastructure is concentrated in urban areas, where only 27% of the total population of India resides.
- Poor diet, lack of exercise and an increase in alcohol abuse has led to an unprecedented rise in urban people suffering from lifestyle diseases in the past five years, according to recently published figures. Levels of diabetes have more than doubled in the last few years and, according to the National Health Survey, 75% of the general population experiences at least “some stress or a lifestyle disease” every two weeks.
Source: Birender Ahluwalia, director of sales and distribution, Max Bupa
Health insurance companies in India
There are four specialist health insurance companies operating in India: Max Bupa (a joint venture between Bupa and Indian company Max India), Apollo Munich, Star Health Insurance and Religare. Some UK providers have subsidiaries in India; Aetna, for example, operates through its subsidiary Indian Health Organisation, which has over 200,000 members across 25 cities.
“From being almost non-existent a decade ago, health insurance is the second largest business after motor insurance for the non-life industry,” says Birender Ahluwalia, director of sales and distribution at Max Bupa. “However, in comparison to many other markets, health insurance in India is under-penetrated and most of the expenditure in health is self funded by households. The changing regulatory environment, growing healthcare needs and changing demographic scenario make health insurance one of the most promising sectors in India.”