Insurance Article, The Insurance Times 2021, The Insurance Times October 2021

A Study on Health Insurance in West Bengal

Abstract

Health insurance is a tool to bring financial stability and is a necessity for modern societies. It restricts the financial drain of an individual during a medical emergency and provides the insured with financial indemnity and stress free coverage in the event of hospitalization. Although the coverage and penetration is still very low in India when compared to other developed nations, there has been a remarkable increase in its popularity among the masses. A survey on the state of health insurance in West Bengal is done for the purpose of this study on a representative population residing in and around the city of Kolkata. The results show that the position is still far from being satisfactory among the educated urban masses. The low amount of annual premium paid by the sample proves that even among those who have opted for health insurance, the coverage is not adequate.

Introduction

Health insurance is a tool to bring financial stability since it restricts the financial drain of an individual during a medical emergency. It covers the risk of medical expenses of a person during his treatment and protects him from the erosion of huge amount of money which is associated with modern medication and hospitalization. Health insurance has been an emerging industry due to an increase of middle class population, high hospital expenses, expensive healthcare, digitisation and an increase in the awareness level of the consumers.(Dutta 2020).

Some of the benefits of health insurance are:

  • Blanket coverage: It helps to deal with health related issues and avail the best accessible medical treatment. It covers hospitalisation expenses that arise during hospital stay like room rent, nursing, boarding, cost of medicines, ICU expenses, pre and post hospitalisation expenses, ambulance charges and expenses incurred to avail medical treatment during home stay.
  • Cashless treatment: Network hospitals which are generally tied up with insurance companies provide cashless treatment to the insured in the event of hospitalisation. The insured can avail treatment in the hospital without making any payment for the medical expenses incurred which is reimbursed by the company when the claim is made.
  • Transferable benefits: It helps the policy holders to transfer their existing health insurance policy along with all current benefits and coverage to a new health insurance provider.
  • Tax deduction under section 80D: The government provides tax deduction for health insurance premium paid by insured under the Income Tax Act,1961 thereby promoting health insurance on one hand and reducing tax on the other.
  • No claim bonus: Health insurance companies provide no claim bonus to the insured for not making any claim in the policy period and it is applicable for both individual health insurance and family floater plans.

Health insurance has become a necessity for modern societies and provides them with financial indemnity and stress free coverage in the event of hospitalization.

Problems of health insurance in India

There has been a considerable increase in life expectancy of low or middle income countries due to improved access to better health care and medical revolution but there is also a trend of rise in chronic illness like cancer, heart diseases etc. Recent studies have enlightened the fact that expenditure on health care is a far better tool to alleviate poverty than the poverty alleviation programs. Ahuja and Narang (2005) highlighted a two way relationship between poverty and health, with conclusion that better health outcome reduces poverty. They proposed for extending health insurance to the low income groups to alleviate poverty. They highlighted the conditions to be highly essential for the provision of minimum health care services of affordable quality, namely the possibility of resource mobilization from targeted sector so that part of cost gets recovered, the existence of nodal agency like any public agency, civil society association, community based organisation, micro finance institution, micro entrepreneurs association and so on.

State of Health Insurance in India

Health insurance has gained popularity among the middle class and the elite class in India. Although the coverage and penetration is still very low when compared to other developed nations, there has been a remarkable increase in its popularity among the masses. A concise picture of the present state of health insurance in India for the past decade is shown below:

Table 1: Health insurance premium earned and amount claimed in recent years (2009-2019)

Year Health insurance premium earned (In Crores) Claims Settled (In Crores) Claims Settled Ratio (Claims settled/ Premium earned)
2009-2010 6351.82 6857.31 107%
2010-2011 8783.61 8546.18 97.29%
2011-2012 9660.52 9013.42 93%
2012-2013 11413.76 10834.29 94.92%
2013-2014 14373.7 14007.22 97.45%
2014-2015 17260.69 17405.79 100.84%
2015-2016 20456.57 20900.18 102.17%
2016-2017 24709.75 26088.59 105.58%
2017-2018 27875.24 26247.22 94.16%
2018-2019 33010.89 30027.26 90.96%

(Source: Handbook on Indian Insurance Statistics, Website: www.irda.gov.in)

It is observed from Table 1 that there is a healthy claim settlement ratio in the last 10 years in India which is positive news for the insured. This has created confidence among the general masses and has resulted in sizeable growth in premiums collected by the insurers as well as in the amount of claims made to the insurers. Dutta (2020) remarked that the health insurance sector is going to its boom phase from Rs. 1909 crores for the financial year 2006-07 to Rs.33011 crores for the financial year 2018-2019, and the growth has been 1629% which highlighted the fact that insurance sector has grown throughout the period at an average rate of 135% per annum. The Compound Annual Growth Rate has been 27%.The annual growth is depicted in Table 2.

Table 2: Percentage increase/ decrease in health insurance premiums earned and claims settled in the last 10 years(2009-2019)

Year Increase in health insurance premium earned (%) Increase in claims incurred (%)
2010-2011 38.28 24.62
2011-2012 10(approx) 5.47
2012-2013 18.15 20.20
2013-2014 25.93 29.28
2014-2015 20.08 24.26
2015-2016 18.52 20.08
2016-2017 20.79 24.82
2017-2018 12.81 0.61
2018-2019 18.42 14.40

(Prepared by authors from table 1)

From the above table it is very evident that the claims incurred by the company always has been on rising trail and it has been a trend of claims incurred being more than insurance premium earned. So grossly it has been found that insurance companies has been suffering loss over years due to delayed settlement of claim and increasing complaints of policy holders regarding difficult claim settlement process.

Empirical survey on Health Insurance in West Bengal

A survey was conducted in between March-April with a closed end questionnaire containing questions relevant to the objectives of the study. The survey was conducted in and around the city of Kolkata in West Bengal. For the purpose of the study, 50 working women, 50 non-working women and 50 working men were selected through purposive sampling technique. The sample was such drawn that people of different age category and financial status came under the purview of the study. Confidentiality of the data was ensured to the respondents. The data thus obtained were tabulated in Ms-Excel and analysed for meaningful inferences.

Table 3: Health insurance policy taken by the respondents:

Response Non working women Working women Working men Total

Yes

33 (66%) 37 (74%) 40 (80%)

110

No

17 (34%) 13 (26%) 10 (20%)

40

Total

50 (100%) 50 (100%) 50 (100%)

150

Many people are still unaware about the importance of a health insurance policy that would pay for their medical expenses and provide them cover during emergency. From table 3 it is evident that 34% of non-working women do not have any medical insurance. Being financially dependent, it becomes more burdensome for their families in case of medical emergency. 26% of working women and 20% of working men don’t have any health insurance policy. Lack of awareness among the masses is clearly observed in and around the city of Kolkata.

Table 4: Amount of premium on health insurance policy paid by the respondents

Response Non working women Working women Working men Total

Below Rs 5000

15 31 13 59

Between Rs 5000 to 10000

12 6 14

32

Above Rs 10000

6

0 13

19

Total 33 37 40

110

It is observed from table 4 that only 39.33% of the sample surveyed (53.6% among those who pay premium) pays a premium of Rs 10000 or above every year for their health insurance policy for themselves and their families while 12.66% of the sample surveyed (17% among those who pay premium) pays a premium below Rs 5000 every year. It can be easily said that even among people who are covered, the amount of coverage is insufficient.

Table 5: If money is kept aside for investment every month

Response Non working women Working women Working men Total

Yes

10 (20%) 38 (76%) 50 (100%) 98

No

40 (80%)

12 (24%)

0

52

Total 50 50 50

150

80% of the non-working women do not keep aside any sum for investment and rarely take investing decisions. 76% of working women and 100% of working men however keep aside a sum for investment every month and they invest in properties, insurance, gold, stocks, mutual funds etc.

Table 6: Person whose advice is sought for investing money

Response

Non working women

Working women Working men

Total

Husband/ wife or family members

41 (82%)

10 (20%)  

14 (28%)

 

65

Company agents

0 (0%)

13 (26%) 0 (0%)

13

Friends and colleagues

8 (16%)

0 (0%) 0 (0%)

8

Financial advisor

0 (0%)

8 (16%) 0 (0%)

8

Self decision

1 (2%)

19 (38%) 36 (72%)

56

Total

50

50 50

150

82% of non working women are dependent on their husbands or family members for their investment decisions and only and 1% takes self decisions. 38% of working women take self decisions as compared to72% of working men.

Table 7: Preference of public or private company for insurance

Response Non working women Working women Working men Total
Public Company 39 (78%) 16 (32%) 22 (44%) 72
Private Company 11 (22%) 34 (68%) 28 (56%) 78
Total 50 50 50 150

On a whole, the sample is evenly distributed regarding their preference of insurance companies but 78% of non-working women prefer to invest in government insurance policy as compared to 32% of working women and 44% of working men. More working women prefer private insurers as 68% of working women preferred them for their service and promptness. Private schemes are also preferred by 56% of working men.

Conclusion

Lack of awareness of health insurance is clearly observed in and around the city of Kolkata from the survey. The importance of an insurance policy has always been felt in those times when the whole family faces financial crisis due to a member’s lack of insurance. Lack of liquid assets and non-recurring flow of income often prevents lower income families to opt for health insurance. The scenario is bad in rural areas but the position is still far from being satisfactory among the educated urban masses. The low amount of annual premium paid by the sample proves that even among those who have opted for health insurance, the coverage is not adequate. It is also interesting to note that the working women are least bothered to increase their risk coverage. Financial advisors or company agents do have adequate knowledge of insurance products but it is observed that they are not given much importance by the sample surveyed. The selection of companies by the sample is not based on their past records or market capitalization but on other considerations. Thus it can be concluded that the state of health insurance among the selected sample is far from being satisfactory as they are under insured, ill informed and are in need of information about the product.

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