Understanding the Opportunity Size and the Profit Pools in the Indian Health Insurance Landscape

Abstract

Despite the government initiatives around insurance and financial awareness driving greater adoption a majority of Indian healthcare spend is out of pocket. And while out of pocket spending has been gradually coming down from the 63% in FY16 to 50% now, it is still substantially above both developed and developing markets peers. [China 34%, Indonesia 27%, USA 10.7%, UK 13.5%]. To make things worse, healthcare inflation has been on a tear in India, with spending going up ~6% every year compared to a sub 1.5% increase in our peer set. The combination of high out of pocket spending and high healthcare inflation makes the average Indian, especially the folks at the bottom of the pyramid extremely vulnerable at the time of a health emergency in the family, with hospitalisation costs being one of the major drivers of pushing lower income Indians back into poverty.