The steep rise in the cost of treatment and growing awareness have led to an increase in the average sum insured under retail health insurance policies.

The average sum insured, which was typically between ₹2-3 lakh till two-to-three years back, has increased to ₹5-10 lakh. There has also been an increase in the number of consumers buying retail health cover over and above the group policy offered by employers.

According to a recent study by Policybazaar.com Product & Innovation Centre, nearly 40 per cent of Indians purchasing health insurance online prefer a minimum cover of ₹5 lakh. The study took into account the buying behaviour of over 10,000 consumers across 20 States.

“Healthcare costs are rising at an astronomical rate. Today, any lifestyle disease treatment costs anywhere between ₹3-10 lakh in a decent private hospital in urban areas. As such, a ₹2-lakh average health cover bought two-three years back, has become a ₹5-lakh cover today,” Vaidyanathan Ramani, Head, Product and Innovation, Policybazaar, told BusinessLine .

According to him, growing awareness, rise in treatment costs, and higher disposable income will push consumers to opt for higher coverage, moving forward.

Policybazaar, for instance, has witnessed a steady rise in the share of consumers going in for higher sum insured of ₹5 lakh and above in the last three years. In FY16, nearly 38 per cent of its consumers bought policies below ₹5 lakh, and only 24 per cent bought policies above ₹5 lakh; however, in FY18, more than 32 per cent bought policies above ₹5 lakh, while only about 28 per cent opted for less than ₹5 lakh sum insured.

“The situation is in stark contrast to the usual practice about five-to-seven years ago when people did not care to buy health insurance early on in their jobs,” said Subramanyam Brahmajosyula, Head, Underwriting and Reinsurance, SBI General.

HDFC Ergo General Insurance has been receiving a lot of queries and subsequent conversions from group policy holders, either for retail top-up plans, or for individual cover for a higher sum insured.

“The central government’s focus on health insurance providing for free coverage of up to ₹5 lakh per family from the economically weaker sections will not only help improve insurance penetration among that section of people, but will also make more people aware about the need for health insurance,” said Anurag Rastogi, member of executive management, HDFC Ergo.

Continuity of coverage

According to Sanjay Datta, Chief, Underwriting and Claims, ICICI Lombard, corporates have been refraining from taking higher sum insured. This has been pushing more employees to top up such covers. The average sum insured under group policy hovers around ₹1-2 lakh.

“Individuals prefer taking a retail health cover over and above group policy, as it comes in handy when someone shifts to another organisation, which may or may not provide such a facility. Moreover, a person superannuating may find it difficult to take a retail policy at that age, as it will be more expensive. So, having an individual cover gives continuity of coverage,” said Datta.

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