Bupa Finding Their Feet in India
By Marius | Published November 15, 2011
India’s nascent health insurance industry may finally be turning the corner with the news that foreign joint-venture investors in the market could at last be generating significant returns on their activity in the populous South Asian country.
In the 10 years since India’s insurance market first allowed private and international sector involvement, total insurance penetration across the country has doubled, with the domestic protection industry overtaking several more developed markets in the process. There has been a considerable rise in insurance coverage, with both the number of life insurance and non-life insurance policies increasing many times over, and combined premium income is now projected to reach between US$350 to US$400 billion in India by 2020. Health insurance, in particular, has become as one of the country’s fastest growing business lines, accounting for 20.8 percent of the overall market in 2010. With total expenditure on healthcare, through both Indian government schemes and private sector activity, expected to exceed US$200 billion by 2015, even more significant opportunities for the country’s health insurance sector will likely emerge. A recent IRDA ruling, which permits health insurance portability, has further provided private companies with the impetus to tap into India’s healthcare protection needs.
In their third quarter statement released this week, Max Bupa Health Insurance posted sales of Rs 21.9 million (US$4.37 million) worth of gross written premiums through to September 30, 2011. These figures were up 268 percent on the Rs 5.9 million (US$1.17 million) reported during the corresponding period last year. The private health insurance company, which became active in 2010 as a 76:24 joint venture between local firm Max India Ltd. and UK-based healthcare giant Bupa, added an additional 40,000 policyholders onto their books during the summer months, taking their number of active policies in India to near 100,000 since the standalone business commenced operations. Bupa would likely now look to increase their involvement with Max Bupa but under current industry regulations, Indian insurance companies are forbidden to offer more than a 26 percent maximum stake to foreign business partners when their joint venture operation is first incorporated.
Overall Max Bupa Health Insurance has done well as one of the newer entrants into India’s health insurance business, collecting Rs 356 million (US$7.1 million) in premiums so far this year, a 335 percent increase on the Rs 8.2 million (US$1.6 million) premiums reported for 2010. The joint venture insurer now has a presence in nine large cities in India and has established a robust healthcare provider network, featuring over 700 hospitals across the country. The company, which began with an equity commitment worth Rs 7 billion (US$140 million) from its joint venture partners, now expects to break-even on their initial investment by their fifth year of operations, 2015.
Max Bupa has been able to effectively distinguish themselves from their competitors in India by introducing innovative new coverage options and service plans to the market. In a country where the average sum insured by health cover has traditionally been around Rs 200,000 (US$400), Max Bupa has been able to capture the emerging middle class demand and ability to pay for greater service, with policy covers ranging from Rs 1,500,000-5,000,000 (US$3,000 to US$10,000). In line with India’s rapid macroeconomic development over the past decade, there has now emerged a sizeable segment of the population who want the most robust healthcare coverage options money can buy. Furthermore, as the average Indian consumer spending power improves, healthcare inflation and medical costs are rising rapidly in tow, and this forces even more people to address long term coverage concerns and to consider policies with a higher sum insured. Max Bupa has been amongst the first to recognize and capitalize upon this trend. Indeed, the company was the first in India to offer more robust health insurance products with cover exceeding Rs 1,500,000, and upon seeing its success many other companies have since followed suit.
Max Bupa are now aiming to report Rs 700 million (US$14.25 million) worth of new business premiums in India by the end of the fiscal year 2012. To help achieve these goals, the insurer has been working with banks, post offices, and other administrative branches to expand their distribution network and better engage with the rural and largely underinsured masses across India. Max Bupa has, until now, offered and promoted their insurance products through agents, telemarketing, direct sales or online channels. However, in order to reach the more remote areas of the country, gaining access to more entrenched business networks, like community banks and post offices, becomes important. The company is also working to further diversify their insurance product portfolio. In the third quarter, India’s insurance industry regulator The Insurance Regulatory and Development Authority of India (IRDA) approved two more Max Bupa products, Employee First Classic & Health Companion, which will come to the market shortly.
It is not only the protection and savings aspects that Bupa is concerned with in India, but also the general state of health in the country. According to their recently released international healthcare and lifestyle survey, Bupa found that around 40 percent of Indians could be classified as unhealthy, while one out of every 10 surveyed was obese. It is ironic perhaps that the rapid development of the national economy, the same thing that is enabling more citizens to spend on and insurance, is driving more middle class people in India to neglect their health and wellbeing due to the now ever more demanding hustle of everyday life. Indeed, over half of the Indians polled by Bupa in August thought that their work life was preventing them from exercising more and making healthier lifestyle choices overall. Of these respondents, it is the 25-34 age-group that will lose the most productivity due to medical illness in the coming years and they will need adequate insurance to address this. According to Bupa, diabetes and heart disease are the most common health concerns across all India.
Max Bupa has responded to this study with a new website: www.YourHealthFirst.in. On the site the company offers lifestyle and fitness advice, designed to support policyholders and encourage them to improve their health for both themselves and their beneficiaries. Efforts likes this will no doubt help Bupa establish an even stronger position in India, a market that will further expand as economic conditions strengthen. Bupa now intend to build upon this momentum and further develop their international medical distribution network, expanding the scope and rage of their operations in the Asia Pacific region in particular.
Insurance Companies Mentioned
Max Bupa Health Insurance is a 74:26 joint venture between Max India Limited and UK-based Bupa. Bupa is a leading private healthcare provider with more than 10 million customers worldwide and over 60 years experience in the health sector. The Max India Group has expertise in both health and insurance related services including hospitals, clinical research and life insurance.
Bupa is a leading international healthcare provider, offering personal and corporate health insurance, workplace health services and health assessments. The insurer today has ten million customers in over 190 countries, and over 52,000 employees around the world.As a provident association Bupa has no shareholders, because of this it uses its profits to invest in healthcare and medical facilities around the world. Bupa has operations around the world, principally in the UK, Australia, Spain, New Zealand and the US, as well as Hong Kong, Thailand, Saudi Arabia, India, China and across Latin America.