Page 35 - Insurance Times December 2019

accounting for highest claim ratio, followed by group and Exhibit 2: Loss Ratio in Health Insurance
individual business, however, in the previous years, group Business (2013-2018)
business accounted for highest claim ratio (see Exhibit 2).
All three types of insurers experienced underwriting losses
in the last 5 years, but losses decreased by 22% from 2016-
17 to 2017-18 with only 5 insurers showing underwriting
profits in 2017-18 (see Exhibit 3). In addition to these
challenges, the insurance regulatory environment is also
changing at a rapid pace.

Various regulations have been introduced in the last 5 years
with respect to changes in shareholdings, investments,
registration and scope of businesses, code of conduct,
product filing, coverage, standardization, registration of
network providers and quality standards and to protect
interests of policy holders (See Exhibit 4). Some of these
challenges as well as regulatory changes faced by the health
Source: IRDAI Annual Report 2017-18
insurance industry can be attributed to the volatile,
uncertain, complex and ambiguous environment. Thus, it
is important to understand the characterises of such Exhibit 3: Underwriting Losses: Health
environment and to find strategic solutions to manage such Insurance Business (2013-2018)
an environment.

In this article we first discuss the different aspects of the
VUCA world with reference to the health insurance industry
in India. We then propose a framework to manage the
business in a fast-changing environment along with
highlighting the importance of strategic thinking and focus
on 'what you should do'. We also discuss how the 3-Circle
framework can be used by the insurance executives to
manage the VUCA World.

Exhibit 1: Market Share - Health Insurance
Business (Public Vs. Private: 2013-2018)

Source: IRDAI Annual Reports

Note: The underwriting losses represented in the chart
above are not specific to health insurance business in case
of public and private sector general insurers

Exhibit 4: New Health Insurance Regulations (in
last 5 years)
Table 1: Health insurance regulations in past 5 years
Year Regulation/guideline
2013 IRDA (Third Party Administrators - Health
Services) (First Amendment) Regulations
Source: IRDAI Annual Report 2017-18 IRDA (Health Insurance) Regulations

The Insurance Times, December 2019 35