Buying a policy at the point of retirement is too late, says Cigna TTK Health MD

Health Insurance in India offers significant potential for growth, given the low market penetration and the continuous increase in medical costs. Cigna TTK Health Insurance Company, one of the leading standalone health insurers, is growing its business at a rapid pace in this environment. New business premiums grew at 84 per cent last year and are expected to grow at that pace this year too. It collected premiums of a little over ₹300 crore in calendar 2017 and expects to top ₹400 crore this calendar year. On the verge of completing its fourth year of operations in March 2018, the company expects to break even by the sixth year of its operations. Cigna TTK has been a retail-focussed player with 95 per cent of its business coming from that segment. It may redress the imbalance slightly with a greater thrust towards corporate business in the next few years. Last year also saw a change at the shareholders’ level with the Manipal Group taking over TTK’s share and Cigna increasing its stake to 40 per cent from 26 per cent. Excerpts from an interview with the company’s MD and CEO Sandeep Patel:

Why is there such a low level of penetration of health insurance in India so far despite the potential?

The reason for this is that there is a one-size-fits-all approach to selling health insurance. One size doesn’t fit all. Our needs are different compared to each other or with someone sitting in another smaller city or village. The way I perceive risk or the way I perceive cost is different.

Then why are we selling the same thing to everyone? We need to adjust our products to their needs. So affordability and personalisation are the buzzwords for us.

Do customers need incentives to buy what is essential?

People need to see value — something that goes beyond pure risk protection. In life insurance, for instance, they see it as a savings product and feel they are getting something back. Whereas in health insurance, they feel that they have to get sick and hospitalised in order to get something back.

So, building value into the product is important. For instance, when you buy our policy, 1 per cent of the premium is immediately available to use as outpatient benefit or as loyalty points for the future. You can get another 10 per cent benefit by doing healthy things — exercise and earn points, say, for 10,000 steps every day. So, when you come for renewal, you see value.

Health was a push product a few years ago. Now it is becoming a pull product because customers are beginning to experience many things. The age of the population plays a part. We are still a young country. Only the old are thinking of insurance for health. The young think they are invincible. Besides, the average consumer does not know whether he has enough coverage or not. Even those who work in corporate environments must know that they are not covered when they are retired or when they are out of work.

Going for a policy at the point of retirement is too late. Your premiums will be high later. Remember also that if you have pre-existing conditions, you may not get coverage or that condition will get loaded on to the premiums and it will cost you much more.

The reality is that if you plan to buy it only when you need it, you may not get it. It opens you up to risk when you are least prepared. If you start young, it will be much lesser. And if you eat healthy and exercise, you can avoid problems.

How do you segment your customers on the basis of their risk profile?

There is a pyramid of risk. We have people in four buckets: first, those who are healthy; second, those who are vulnerable or at risk; third, those who are ‘chronic’; and fourth, those who are ‘acute’.

The people who are healthy are those who have woken up with a smile and in good health and with no problems. Those who are in the risky category or those who have high stress, those who smoke, are overweight and without exercise. Their profile is riskier than the average. Many people fall into that bucket.

The third, chronic, would be those who are living with some conditions like hypertension or diabetes or some other problems. And the ‘acute’ category is somebody who lands up in hospital — often without knowing why.

Our study shows that the acute population is small and at the top of the risk pyramid. The chronic segment is a little bigger, risk is next and healthy is the largest segment at the base of the pyramid.

If I can keep my healthy segment ‘healthy’, keep the risky segment ‘aware’ and the chronic segment ‘managed’, then my acute segment goes down. Then costs come down and so premiums also become controlled and affordable. That is the logic behind offering incentives to customers to remain healthy.

Which channels contribute the most to your premium?

Our direct online business contributes a sliver now — roughly about 5 per cent — although that is growing and we have a strategy to increase that. Retail brokers bring in about 20 per cent and the balance 75 per cent comes in equally between bancassurance and agency.

Will rating of hospitals make a difference to the customer? Who will do it?

Let me give you some anecdotal viewpoints from our operations elsewhere. In many countries, hospitals are required by regulation to release mortality rates as part of quality matrices. You can also get costs for different types of surgeries and procedures. So the customer can choose based on the data. That’s not available here. No hospital here releases that information.

Quality is not merely keeping the floors clean and mopped. There is a lot of minutiae — regarding the kind and quality of equipment, frequency of use and many other details. That will happen with accreditation such as JCI.

It will take time. It comes down to governance. When your right to information extends that far — when you give people right to see mortality rates — that’s when you will start seeing change.

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