Indian retail health insurance market could be worth US$25 billion by 2028
However, only 60 million individuals in India are covered by any health insurance policy
A report by Indian investment banking franchise Avendus Capital claims the country’s retail health insurance segment has the potential to become a US$25 billion market in the next five years.
Catalysts for growth have been identified as the low penetration of healthcare insurance – only 60 million people in India, out of a population of over 1.3 billion – combined with Covid-19 leading to a rise in awareness, as well as product innovation and rising disposable income.
The report also said there has been keen investor interest over the past few years and insurance coverage is expected to reach around 250 million individuals by 2028.
The health insurance sector in India has grown at a rapid pace during 2022, becoming the largest non-life insurance segment in the market.
Anshul Agarwal, Managing Director and Co-Head, Consumer, Financial Institutions Group (FIG) & Business Services, Avendus Capital, said: “Retail health insurance will continue to be one of the most exciting segments within the overall non-life insurance space.
“Its unique characteristics such as high persistency of around 90 per cent, pricing power, relatively low loss ratio and headroom for growth due to low penetration would see significant investments being done in this space to capture incremental market share.”
Significant regulatory steps have been taken over the years to attract foreign investors and Standalone Health Insurers (SAHIs). The report stated that SAHIs have disrupted the market, capturing over 50 per cent of market share, and are expected to be the biggest beneficiaries of growth in the sector.
“SAHIs have established a dominant presence in the retail health segment. Awareness of health insurance post-Covid has acted as a strong catalyst,” said Snigdha Khemka, Director, Consumer, Financial Institutions Group (FIG) & Business Services, Avendus Capital. “Given that the distribution of retail health is primarily individual agent driven, SAHIs’ single product focus and distribution arbitrage over multi-line insurers provide them with a significant competitive advantage.”
The Insurance Regulatory and Development Authority of India (IRDAI) brought in new reforms to achieve the target of ‘Insurance for all’ by 2047.