REINSURANCE AND HEALTH INSURANCE: CHANGING PARADIGMS AND CHALLENGES
As the insurance in India enters the second phase post liberalisation of the sector in 2000, Reinsurance and Health Insurance are not only crucial but would most likely drive the insurance business in India. In the Insurance 2.0 phase, the Government of India has launched the Ayushman Bharat Yojana - National Health Protection Mission. Health insurance in India is all set for a revolution, especially in rural India. The Insurance Regulatory and Development Authority of India (IRDAI) has made it mandatory for insurance companies to adhere to the Order of Preference for Reinsurance contracts. In order to discuss the challenges and changes in Reinsurance and Health Insurance in India, the Birla Institute of Management Technology (BIMTECH) in association with Swiss Re organised the BIMTECH Insurance Colloquium 2018 at the Mumbai Cricket Association (MCA) Recreation Centre in Mumbai on October 5, 2018. In his Welcome Address, Dr. Anupam Varma, Deputy Director and Dean - Academics, BIMTECH mentioned that the insurance industry in India has been growing at more than 20 percent year-on-year, but he felt that the growth is fraught with enormous challenges. In the Inaugural Session, Mr. G.N. Bajpai, Former Chairman, LIC and SEBI, articulated the transformation of Indian economy. “The economy has evolved from Normative to Agricultural and the current Information Economy.The future will see Biotech and Info-Biotech Economy, followed by the Cosmic Economy. As we go into living in Space, human bodies and minds will change and so will the insurance risks involved.” Going from Macro to Micro-Economics, Mr. Sakate Khaitan, Senior Partner - Khaitan Legal Associates, said, “The Order of Preference is the burning issue in Reinsurance right now. Insurance penetration in India remains low and the world is looking at Asia and especially India for growth in the insurance sector.” Mr. Khaitan further said that Incentivisation of Insurance is as much the need of the hour as better Regulation, Taxes, Infrastructure and Workforce. Prof. Pratik Priyadarshi, BIMTECH moderated the panel discussion on Reinsurance Sector: Changing Paradigms vis-a-vis Order of Preference. The panelists debated at length the pros and cons of the above initiative of the government. Mr. Ritesh Kumar, MD & CEO, HDFC Ergo General Insurance said that the Order of Preference was needed for orderly conduct of business. Otherwise who is going to take the credit risk and bear the catastrophic losses, he questioned. Another prominent speaker and insurance expert Mr. C.B. Murali said that Order of Preference is a shortterm issue, adding that cyber risk is among the top three risks in the world. Mr. Pankaj Tomar, Chief Underwriting Officer, Axa Re, opined that the Order of Preference needs to be considered with other aspects like solvency regulation, retrocession, capped businesses, and corporate governance issues. The Insurance Brokers Association of India (IBAI) has opposed the Order of Preference and rightly so, said Reinsurance Guru Mr. K.L. Naik.We need the freedom of choice between Indian and international reinsurers in order to bear catastrophic losses, he said. Mr. Sanjay Datta, Chief Underwriting, Reinsurance & Claims, ICICI Lombard, said that while the dream of developing India as a regional hub of reinsurance is great, we need to develop local capacity and not export risks. Prof.(Dr.) Abhijit K Chattoraj moderated a panel discussion on Health Insurance: Government initiatives, Challenges and Implications. In his opening remarks, he mentioned that the health system in India suffers from Inverse Care.The Ayushman Bharat initiative, if implemented properly, could reverse this trend. Dr. Denny John, Evidence Synthesis Specialist, Campbell Collaboration revealed that before Ayushman Bharat, India only had ‘hospitalisation insurance’. Dr. John highlighted that predictive analysis is the need of the hour in health insurance and so is product innovation in preventive care. There is a need for an institute like the UK’s National Institute for Health and Care Excellence (NICE) to regulate clinical practices and protocols in India. Mr. Ankur Kharbanda, CEO, West Zone, Apollo Munich Health Insurance, said that the Insurance model would stand the test of time and emerge stronger. The Trust Model lacks risk management expertise of the insurance model. Mr. G.L.N. Sarma, CEO, Hannover Ruck SE - India, said that technology will be a big driver in health insurance, as all the states will now come under one umbrella of the Rs. 5 lakh cover bracket to implement Ayushman Bharat. Mr. R.S. Naik, Senior VP, Star Health Insurance, agreed with the moderator that there is no standardisation in Pre-Authorisation and this needs to be sorted out in the Ayushman Bharat initiative. Mr. Sagar Sanyal, Director, Technical Services, Zoom Insurance Brokers spoke on how rural penetration of insurance is minimal, to which Dr. Chattoraj said that rural India has the paying capacity but the insurance companies are not reaching them. They need to tie-up with local hospitals or healthcare structures of the government in order to penetrate the rural market. Mr. Kharbanda agreed that there is money in the rural areas but no awareness about health insurance. He said that his company has started one-man offices and digital offices in rural areas, and also the Roshni project to train women paramedics.