Page 170 - India Insurance Report 2023- BIMTECH

158 India Insurance Report - Series II

Insurance’ in the Insurance Act, 1938), having overtaken motor insurance, hitherto the largest segment
in the general insurance business.

The role of the Regulator in the development of this segment of insurance, along with guarding the
interests of policyholders through various amendments in the Insurance Act, Regulations and Guidelines,
has been crucial. The concept of health insurance has seen quite a change from the way it was packaged,
sold, and the claims settled initially.
The premium underwritten in 1986, the year in which health insurance was introduced and the
‘Mediclaim’ policy was made available to the common man, was Rs 25 crores. Upon opening up of the
industry, the premium swelled to Rs 1370 crores in 2003-4 in just three years. This fast-paced development
did not go unnoticed by the regulator, who realized that such growth could complement traditional
segments like Property in a big way. The regulator, too, was optimistic about the concept of a Stand-
Alone Health Insurer (SAHI) as this meant a focused way to bring the entire population under the
insurance net quickly. The first SAHI started operations in 2006, and today, there are five specialized
health insurers. The establishment of SAHI coupled with aggressive growth in this line of insurance,
meant that the regulator needed to supervise with a keener eye. In a decade, the premium of Rs 1370
crore in 2003 -4 had grown to Rs. 17,495 crores. This rapid growth was one of the main reasons behind
the amendment of the Insurance Act in 2015. The Amendment Act defines ‘health insurance business’
inclusive of travel and personal accident cover, thereby recognizing health insurance as a separate vertical.
Today, the health insurance premium alone has increased to Rs.73052 Crores in the year 21-22 (registering
a growth of about 25 per cent over the previous year), confirming that the amendment was a wise move.

4. Government’s Role in Health Insurance

This segment also caught the imagination of the Government, and the public sector general insurers
were encouraged to devise schemes for the marginalized section of the society. Thus, the Jan Arogya
policy for the economically weaker sections was followed by the Universal Health Insurance scheme for
the below-poverty population. The Government initially supported the latter by providing Rs 100 as a
subsidy against the total premium of Rs 365 per annum. It was health insurance at Re 1 a day in this
scheme. Soon, every State started to formulate schemes to give financial relief to the marginalized section
of their population. The Rashtriya Swasthya Bima Yojana (RSBY) became a popular scheme in almost
every State. This Insurance covered hospitalization for a Sum Insured of Rs 30,000/- and the premium
was fully subsidized by the State Government. The Scheme covered treatment costs of hospitalization
of specified diseases. Insurers were selected on competitive bidding for the implementation of the scheme.
The insurers, who were all on a quest for high growth, participated in the tenders enthusiastically,
quoting prices that were a delight to the States. Section 64 VB of the Insurance Act, which deals with
procuring premium before risk acceptance, had already been relaxed in the Rules of the Act, so State
governments were even more excited.

Today, the flagship Government health scheme is the Pradhan Mantri Jan Arogya Yojana (PMJAY),
one of the two elements of Ayushman Bharat (the other being the setting up of health and wellness centres)
designed to cater to the economically weaker sections of society. The Sum Insured of Rs 5 lakhs for every
family, enrolment procedure, the list of diseases covered, tie-ups with hospitals, handling of claims, and use