India – Medical Insurers Tighten Cost Levers

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Health insurance companies have begun examining medical insurance products as “group healthcare” policies to corporates are proving to be a drain leading to huge losses.

This in turn has led many insurance companies to resort to retail sales. According to an official with Oriental Insurance, the company is actively pursuing retail health insurance and not chasing corporate accounts.

Link to the article:


There is a lot going on in this article and in India’s health insurance sector.  None of which is a surprise. 

Ok, much of it appears to be a surprise to some key players.

The main issue investors and insurance company leaders need to recognize is that in modern healthcare financing, utilization management is key.

Without active, tactical plans to direct utilization, patients will maximize their self-interests.  And as a patient, this behavior is perfectly normal.

But as an insurance company executive, unfettered patient self-interest (e.g. access) is a quick trip to insolvency, even though it is not in conflict with their mission,

We strongly disagree with the National Insurance official who states, “Health insurance is one of the areas of concern for general insurance companies as the claim ratio is often over 100%.”

Though the velocity of risk is near 1, any company that runs a loss-ratio over 100% should be closed.  Over 90% and the executive management should be changed.

We’re a big fan of India’s health insurance market, and more so its life market.  This article really illustrates a market working through various growth issues.  Experimenting with product development tailored to the unique nature of India’s population(s) is great.  But with seasoned leadership from the likes of BUPA, many of India’s companies do not have the luxury of time…..HK

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On April 26, 2009

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