Page 169 - India Insurance Report 2023- BIMTECH

India Insurance Report - Series II 157

Health Insurance, the Common Man

and the Regulator

- Alamelu TL
18 Principal Advisor, International Financial Services Centres Authority

1. The Genesis of Health Insurance

The origins of Health Insurance can be traced to 1948 when the Employees State Insurance Act,
which can be said to be the first formal “Insurance Scheme” for the social security of workers and
covered a vast range of health-related contingencies, was promulgated. Subsequently, in 1954, the Central
Government Health Scheme provided comprehensive health coverage, and as the name indicates, was
meant for Central Government employees. After the nationalization of the general insurance industry
in 1971, Medical and Sickness insurance was offered by the four public sector companies to corporates
covering their employees. It was a marketing tool to get the attractive property business, with health
insurance contributing an insignificant revenue to the insurers’ business.

2. The Common Man and Health Insurance

The common man, under the above circumstances, needed to be a workman or a central government
employee or be lucky enough to work with an employer who could negotiate a medical insurance
cover! Therefore, it was a good beginning when the voluntary commercial health insurance policy for
the public was introduced by the General Insurance Corporation (GIC) in 1986. The four public sector
companies offered a commonly designed product under the aegis of GIC. From 1986 to 2000, the growth
of medical insurance was tardy as the procedure to get the claims was cumbersome. There was this lack
of awareness of this insurance coverage amongst the common man.

3. Regulatory Set Up and Health Insurance

With the liberalization of the insurance industry in the year 2000, the insurance market was thrown
open to private players. Also, the Insurance Regulatory Authority was established with the twin objectives
of protecting the policyholders as well as developing the insurance industry.

Health insurance began a new journey from being a minuscule part of the miscellaneous portfolio
of a general insurer to finding a separate place in the Insurance Act of 1938 and being specifically defined.
Health insurance has emerged as a distinct line of business with nearly 35% share in the premium pie
(excluding Personal Accident and Travel insurance, which are included in the definition of ‘Health