An industry seemingly untouched by innovation in India, health insurance is a space left wide open for the intrepid. Health insurance addresses a huge financial vulnerability, yet has a penetration of only 0.16% in India.
Since privatization about a decade ago, the experience of buying health insurance has not gotten any easier or more interesting. Given that it makes sense to have a multi-payer model, why do most Indians still take the risk and incur enormous out-of-pocket expenses? Almost 70% of medical costs are still borne out of pocket. This gap translates to approximately 57 billion dollars.
Some borrowed-innovation has happened in the form of online aggregators and price comparison models, but the consumer still needs a hand-holding session for conversion, which either happens on the phone or face-to-face.
Here is our take on some of the challenges and associated opportunities within this space:
- Regulatory Constraints: Health Insurance is and should be regulated, but not to the point of discouraging new ideas. While IRDA has made some concessions for the big fish, such as to pilot a new product without prior approval, it still does not leave much room for startups. Therefore, there are hardly any new players beyond the Policybazaars and Coverfoxes today. And interesting plays such as Affordplan are skirting health insurance entirely.
- One Size Fits All Plans: A customer’s need as head of a family of four is vastly different from that of a college grad joining the next big startup. Yet, the plans have minimal contextualization. The recommendations are purely cover-based. Talk to an agent who will explain the same 1-2 policies in simple terms with some context, and then place your signature on a few pages. Repeat and renew every year.
- Unclear Claim Process: When it comes to placing claims, there are all sorts of arcane fine prints that you probably didn’t read that you may or may not have to fear. Also one of the primary reasons why offline conversion is preferred is an irrational belief that the agent can help get the claim processed faster. There is little credibility in toll-free numbers of the insurance companies themselves.
- Product Designed for Offline Purchase: Waiting periods, NCBs, restore options, floater exceptions, critical illness covers, top-ups, etc. associated with health insurance are not straightforward enough to fit online selling channels. First time buyers especially would be overwhelmed at options and lack of standardization across different plans.
- Lack of Tech/Design Innovation: Every single user is subject to the exact same buying experience. Basically, the offline process is simply being converted online, with some efficiency gains by nothing more. Initiating a purchase of health insurance is a task that you set aside a great deal of time and mental space for, and it is unsurprising that most would rather not.
All insurers seem to be going after the same demographic of people with families or who have witnessed an emergency. They have no choice but to get insured. Millennials in early to mid-twenties – where a premium is placed on financial independence and meaningful life – don’t even think about health insurance.
Why does buying insurance have to be dreary and dull? Why can’t it be cool and fun? Where are Lemonades and Oscars of India? We have some experience with health insurance products, and we’re putting our expertise on the next frontier – a health insurance buying experience that does not feel like insurance-buying at all.
Watch this spot. We’ve got it covered.