ICICI Limited, the `click and brick' universal bank has decided to enter the managed healthcare segment in a big way. The institution plans to set up a general insurance outfit shortly. With the launch of this new outfit, it will become the first financial intermediary to enter both the insurance segments-life and non-life. The institution has tied up with Prudential of the UK to float a separate life insurance venture.

Disclosing the universal bank's plan to enter the healthcare market, Kalpana Morparia, CGM ICICI told personalfn.com, ``we see a huge potential in the managed healthcare segment and we as a universal bank would like to tap it.''

So far ICICI has not revealed its likely partner in the general insurance arm to be set up shortly. It makes sense for ICICI to enter the general insurance market as there is tremendous synergy between ICICI's personal banking activities and the general insurance business. Their proposed general insurance arm plans to complement their home loan business by offering fire insurance and car loans by auto insurance policies.

According to market sources, once product patents and exclusive marketing rights are introduced, healthcare is likely to become more expensive in the country. And this will give a fillip to health insurance companies as more people would require insurance.

While ICICI plans to set up a wholly owned company, a joint venture with a foreign partner is not entirely ruled out. Worldwide, the non-life insurance business is facing a slump against life, which is witnessing strong growth. In India too, the growth in the non-life segment has slowed down. However, in the near future there is a scope for high growth in the non-life segment.

This is on account of the extremely low penetration of personal lines of insurance such as mediclaim and householders insurance. Besides, even in the present market, with corporate firms accounting for a major portion of the premium, ICICI will be in a position to leverage its relationship with its corporate clients to get business. Even after liberalisation, competition in this segment is likely to be much lower than in the life segment.

Health Insurance in India is a growth sector with considerable future potential. Although the lower middle class 20% population with per capital real Gross Domestic Product (GDP) of $527 may not be able to afford much insurance coverage, the middle and upper middle class population (around 180 million) with per capita real GDP of $2641 gives an indication of the tremendous market potential for health insurance in the country.

The fact that this huge market is not tapped by the existing player in the industry, there is currently room for a few players. As per World Bank statistics, the country spends 6% of GDP on healthcare of which nearly 78% is private sector expenditure and 22% public expenditure.

Currently India, China and Japan are considered the biggest market for the healthcare segment. Delivery of quality health service is greatly facilitated by the availability of health insurance products as it puts quality healthcare within the reach of the common man. With only two billion people insured by the General Insurance Corporation, the players feel that there is tremendous potential in the Indian market. According to industry sources, the spread of health insurance will also provide opportunity to improve the quality of healthcare in the country.

At present, the four subsidiaries of GIC offer group and individual medical plans. However because of lack of proper marketing and servicing, the schemes have not exactly penetrated deeper into the country.

The emergence of new players in this segment will definitely improve the customer relations, services and product mix. For the present, the Indian consumers can look forward to world-class product at a competitive price in the country.

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