Power of Product Analysis
Why health insurance products are not able to penetrate the market as expected in India?
Health Insurance products that are sold by insurance organizations might not suit some (most) individual needs. Especially, the products that are sold in emerging markets like India which are designed only for a certain segment of the population. Why?
In India, there is a difference in the quality of healthcare provided between rural and urban areas as well as between public and private.
Why health insurance products are not able to penetrate the market as expected in India?
These might be some of the reasons:
Lack of awareness: Most of them do not have knowledge or awareness of health insurance products.
Lack in comprehending the benefits: Most of them do not understand the concept of pay now and avail later dictum on these products (usually it is pay now get now or get now and pay later mindset).
Lack of support: No encouragement or adage from the private sector nor backing from the Government to inspire to buy the products.
Lack of guidance: Most of them do not get any help or assistance in understanding the available health insurance products. Most of the Insurance products are sold either through nationalized banks or private banks or private organizations (hospitals through online) which are too busy to encourage or to assist and explain in detail the value of having health insurance.
Lack of availability: Health insurance products are not readily available to buy. At least there aren’t any kiosks like the ubiquitous presence of cell phone kiosks or shops. Though, health insurance products are much more important personally for the families and nationally for the country.
Economic disparity: There are many economic layers in a country like India. Usually, the health insurance products are sold to or targeted on the educated upper-middle class to higher-level economic strata. For this segment usually, the employers might be providing the insurance or they can pay from their own pockets for the health insurance, or else if the need arises when there is no health insurance they can afford the hospital charges.
Product Complexity:
Health insurance products come with a lot of verbiages, which is very daunting to understand for a common population in a country like India. Though, according to the 2011 census, India managed to achieve a literacy rate of 74.04% (OXFAM, India). However, the literacy rate is not directly proportional to the product understanding and awareness, considering the Insurance products verbosity.
Providing multiple products:
Health insurance organizations provide too many products along with too many options, that are, very confusing for the general public to understand. Also, these products come with a lot of constraints and conditions. For example, they come with a lot of “If’s”’, “But’s” and “No’s” along with age restrictions and pre-diagnosed issues.
Product Pricing:
Pricing the product is also a major task because of multiple economic layers and also with all the above-said restrictions and conditions. These products are usually planned and priced around the constraints and conditions of an individual or a family. For example, these products are mostly targeted on the basis of 4 family members and also depending on age (ex: the higher the age) the more the premium and lesser the available choices.
Tax Policy:
Currently, there is a GST of 18% on health insurance products in India. (Most of the luxury goods are taxed from 18% and above) That means if the health insurance product premium cost is for 15,000 Rs. for an insured amount of 700,000 Rs. If we add the GST which is 18%, the total product cost might come to 17,700 Rs. Although some can avail of a tax deduction on this, most cannot as they might not come under the tax net or slab.
What would be the solution for this?
Here the objective should be that every individual or family should have health insurance in case of a need or an emergency.
On creating awareness on health insurance benefits and making these products easily available for the public
Solution: Ubiquitous presence of kiosks in urban and rural (Tier I and Tier II cities) for the public to understand the importance of insurance products and sell the idea (products) of having health insurance to individuals and families. Also, at the same time guiding the general public on what products to buy according to their purchasing power and also on how to and when to avail as when needed according to their products bought. These kiosks have to be available to the general public to clarify (help) any questions further on their claims or any disputes that might arise.
On reducing the product complexity
Solution: Use less verbosity or verbiage on these products. Strip most of the “If’s, But’s, No’s”, constraints, conditions, and restrictions on these products. Make it simple to understand for the general public. The product should be less confusing at the same time having wide choices to opt the insured amounts. The focus should be on the economic situation and purchasing capacity of the individual and families.
On Product pricing:
Solution: Pricing of the product also should be based on the economic level. As discussed above these products are mostly designed and priced based on the educated upper-middle class to higher-level economic strata. Hence, provide the products on an affordable price range as per the economic level.
On the Government side:
Solution: The government is doing its best from their side. However, proper encouragement, awareness, and adage should be provided to buy health insurance products. Government can also boost the PPP (Public-Private-Partnership) insurance method going ahead. At the same time to encourage the buyers, the government should remove the 18% GST on the health insurance products. Why? Having an insurance product is not a luxury but it is a necessity to possess by every individual and family.
It is in the government’s hands to see that the nation is secured through health insurance by providing for every individual or family. Governments’ motto shall be that wealth of the nation is in the health of the nation.
Hence, empower the public with health insurance products that might be suitable and beneficial to the general public to increase the value of the individual and the nation.
Note: The content in the above writings is purely based on my general observation(s) on the health insurance products in India. For any comments and questions, you can reach me at suparna.guddanti@gmail.com.