Like life insurers, general insurers should be allowed to sell long-term products, why can’t we sell health for, let’s say, 10 years? MD and CEO, Bajaj Allianz General Insurance

What necessitated the launch of the state-wise health insurance?

One of my ambitions is that every Indian should be insured. When you consider, say, health insurance, there’s a NITI Aayog report that says about 10 crore Indians go below the poverty line because they can’t afford health expenditure. I’ve been pushing health insurance for all for quite some time now. I’m very happy that a government scheme for below poverty line, and another for above 70 years, has come, but still there are 30-40 crore Indians who are not covered, and insurance should be there in tier 2/3 towns also. To reach out to them, initially, we tried to go through distribution, but did not see much change. Then we thought maybe the product has to be more associated with people in the areas where we are trying to sell and thought of making region-specific products.

It’s not one product, but multiple products specific to those regions, in their languages, with product names people can associate with, instead of one product for the whole country. So, it’s a significant shift from the way insurance companies create and launch products. Normally, companies create one product and bring in its translations. Our ambition is to cover the uninsured and increase penetration in tier 2 and 3 towns and cities. That was the thought behind putting this together.

Is your focus on tier 2/3 cities due to saturation in urban areas and metros?

“General insurance should be allowed to sell long-term plans” One thing about insurance, whether good or bad, is that it has not reached the saturation state at any level. In urban areas, the problem is of huge inadequate insurance. Even if somebody has a Rs.3 lakh cover today, it’s insufficient. In urban centres, the problem is how to ensure people realise that adequacy of cover has moved up. So the problem-solution for urban areas is different, such as how to have covers that are more encompassing or have global covers. We have more than 30 health products, not just one. We try to customise for all levels and understand the problem that we’re trying to solve. I don’t think in India we can say any product has reached saturation.

Look at third-party motor insurance, which is mandatory as per law, and we know close to half are still uninsured. So the problem statement for our industry is not saturation. It is trying to solve the reason people don’t have insurance, and try and come out with solutions for it. That is our endeavour.

So you’re trying to align with Irdai’s vision of ‘insurance for all by 2047’?

Let’s understand ‘insurance for all’ because I’ve worked very closely with the regulator on this. The reason why I’ve been pushing the idea of insurance for all at all levels is that we do not realise the economic cost to the country.

If you look at the catastrophic losses, say, the Sikkim or Uttarakhand floods, these have slowed down our economic growth by 2% (of GDP growth). I’ve called it the leaking bucket theory, in which I say that we are happy with 6-7% growth, but technically, our country is growing at 10-11%. We’re not plugging a leaking bucket, so we are 6-7% despite the leak, which is not so in the developed market. The GDP growth rate, after a hurricane in, say, Florida, is actually better because rebuilding is happening and insurance penetration is 95%. Money starts coming in and goes to economic activity. In India, the state goes backwards. As many as 25% of SMEs (small and medium enterprises) and MSMEs (micro, small and medium enterprises) that are hit by this become bankrupt and can’t come back. The problem is severe.

So when you talk of insurance for all, it’s not a fancy slogan from an insurance perspective. It’s a necessity for our country to become ‘viksit Bharat’ or to reach a developed state, and plug the leakages in economic growth. It has much bigger ramifications than the way we look at it. Insurance for all actually has a big role to play. We don’t have social security and somebody has to step into that place. I think the insurance industry is stepping into that space. It contributes to the economic growth of the country and we need to see how to work with the government through public-private partnership to ensure that we are able to achieve this at a much faster pace.

When we talk about penetration being a necessity, does it also translate to adequacy of insurance?

These are two different problem statements that we try to club. First, everybody should have some cover. That’s the first statement. The second statement is, if the cover is adequate or not, and how to make it adequate. So we have to keep working on all fronts, not treat them as an either-or choice.

With life insurers entering the health space and bringing out combined products, will it impact your business?

No. I have been pushing for more insurance coming to India. Now, obviously for me, the country comes first. The more the merrier because it pushes up the penetration level. I’m not worried about more players coming in, be it life or general, but whatever we do, there should be a fair, level playing field for all. So let’s say life comes into health. Now they already have a health business, but the approval is for long-term health.

The regulator has classified life industry as a long-term business, and general insurance has been categorised as a business in which the products and designing are on a short-term basis. When you buy life for 20 years, you can also get health policy along with it. Life is allowed to sell health. So this is again a misnomer that they are not allowed to sell, but health is more long-term health. Now, they want to enter short-term health. Our demand is that if we allow this to happen, then general insurance should be allowed to sell long-term products. Why can’t we sell health for, let’s say, 10 years? Why can’t we also look at automobiles for 10 years?

So our business will continue to do well. The more the merrier means more awareness is created. There’s so much to do. There are 40 crore uninsured and adequacy of cover is not there. Even if you pump in, say, 100 more companies, no company will suffer from the perspective of not being able to do business. It will possibly be good because that will bring in more innovation and push people to do better, but here the context is different. The context is that if life is allowed to sell short-term policies, why should general insurance not be allowed to sell long-term policies?

When we talk of Bima Vistaar and other life-health combo products, do you think they dilute the efficacy of each product?

What you should first think is if people have any insurance product or not. If someone doesn’t have anything to eat and you are able to provide a basic, minimum meal, then the question should be if you should provide a basic meal or provide a full, adequate, wholesome meal immediately.

If you look at Bima Vistaar, the basic idea is to be able to reach the panchayat level. Nobody’s talking about the urban level. At the panchayat level, what is the insurance sale? Do people have any kind of cover? If the answer is ‘no’, then it’s solving a problem at that level. So we should encourage such initiatives that solve the problem at that level and then work to sell on top of that.

Is Bima Sugam likely to impact business positively given the significant inroads digital channel is making, or will agency continue to play a more important role?

In 2009 or 2011, de-intermediation was the favourite buzzword in all businesses and people were saying that all intermediaries will disappear. I had said that insurance intermediaries will play a big role and as a company we will keep investing and building distribution. People questioned it, but today my statement has come out right. Globally, nowhere has the agents’ business been reduced or finished, be it the US, Europe, or anywhere else. The large companies are still becoming larger.

Why should it be so when you have e-commerce moving at such a rapid pace, and why would I make such a statement 15 years back? If you ask anybody in the world if they have made an effort to buy insurance on their own, and the answer is no, then direct-to-customer will never become truly big. This is because it means somebody has to approach you, spend time with you, to make you understand insurance, and then you’ll buy it. Till the customer does not start looking for insurance on his own, intermediation will be there.

So will Bima Sugam disrupt agents? The answer is no. It has no intention of disrupting and will become an enabler even for distribution. If you are a distributor, through Bima Sugam you can get your customers to go through all the products and services. So, it becomes an enabler and a powerful tool for all distributors. Second, will it only be a place where you can seek products? No, it has a much deeper thought process behind it. It will also be a place where you can look for common KYC, have a government interface as a neutral body. There’s power to plug into different databases for the benefit of consumers and offer more transparency. Don’t look at Bima Sugam as a marketplace for products. It will provide amazing services, enable distributors, allow a lot of access to databases because of its neutrality. I think somewhere people have mistaken it to be only a distribution platform, which is not the case.

Health insurance has always been a push product, not a pull product. While a push came from Covid, is it again becoming a pull product? Is the market plateauing?

It’s all about human psychology, not the product. In human psychology, if any fear subsides, the recall typically disappears within 10-15 days. After the Covid-19 pandemic, there was a resurgence a month ago, but did anyone even wear a mask? So, fundamentally, when you saw a spike, it was on the basis of fear. The fear has gone and it’s back to normal. There’s no spike. Fear creates a spike.

The second point is that when Covid happened, each insurance company had a product on Covid on their websites. It had no underwriting, which meant that anybody could buy the product irrespective of their age. It was the simplest product you could buy with three clicks and the premium was about `100. This means that whatever people said about insurance complication was demolished. Now, how much did it sell? Did the entire country buy it? Did the servers collapse? That is why, if this was the case, insurance should have sold like crazy. It doesn’t. It still requires distribution. At that time also, Covid cover sales happened through distributors.

Will the government’s recent bid to introduce standardised billing for hospitals lead only to transparency or also reduce overcharging? Do the hospitals require a regulator?

The government has the National Health Claims Exchange and we’ve got all insurance companies on it. Hospitals must also come on board. I’ve been asking the government why hospitals can’t come on board. Why can’t you bring more transparency? Insurance companies have shown their intent. They have gone all out and locked themselves in. There has to be a similar move from hospitals also to come on board. Is it time to have hospital regulators? That’s the question I’ve been asking for many years now. Even the Supreme Court has asked for transparency on rates and I haven’t seen any progress on it.

Insurance is still costly for senior citizens despite Irdai’s efforts. Should we have a mandatory health contribution fund?

The solution is very simple. We already have a government health scheme, which covers all and has a premium of Rs.3,000-4,000 a year, which is hardly anything. So for anybody who wants to plug into that can access it by paying the premium.

It’s a very simple solution and it should be made mandatory for all employers to cover all employees, and pay in that pool, which is so reasonable and well-priced. It’s a question of math, and coming together and accessing it.

RAPID FIRE

Q.If you could alter your career choice, what would it be?
I’ve always been driven by curiosity. So if it weren’t insurance, I would have loved to be a scientist.
Q.If you could go back to pre-pandemic days, what change would you make in your insurance/investment portfolio?
Honestly, none.
Q.If you could be Irdai chief for a day, what insurance change would you make?
I would mandate that any retail insurance product with a loss ratio below 60% undergo a price correction so that the benefit is passed on to the customer.
Q.A good book you would recommend...
Autobiography of a Yogi by Paramahansa Yogananda.
Q.What is the one thing you would use Generative AI for?
I would use it to improve both personal and organisational efficiency.