Managed care steals the show!
Aug 22, 2000

Author: PersonalFN Content & Research Team

Apart from the life and pension market, which are expected to keep the cash register of insurance companies ringing, the health care market is pegged by industry sources as the third largest segment, which has an immense potential for growth in the country.

The fact that the General Insurance Corporation (GIC) and its four subsidiaries have not been able to tap even 25% of the healthcare market segment in the country clearly leaves room for new players in the managed care segment.

The world over, for successful development of a private healthcare sector, a balance is maintained between demand for healthcare and supply in the form of hospitals to cater to patients.

Unlike in countries like United Kingdom where there is oversupply in the form of hospitals, in India though demand for healthcare is evident, supply is a major constraint which in turn increases the cost of managing healthcare.

Thus to bring healthcare into its fold, the Insurance regulatory Development Authority (IRDA) is currently working out the norms for entry of private sector into health insurance business.

The new guidelines to be announced shortly will cover third party administrator, health management organisation and other aspects related to the health insurance business. Though the IRDA Act provides that existing and new life and non-life players can undertake health insurance activities as a part of their normal business, IRDA's decision to have a separate set guidelines for companies which will undertake health insurance companies signifies the importance of insurance in health care management of the country.

So far a handful of firms have shown interest in setting up health insurance business. Some of these are---ICICI, Ranbaxy, Cipla, Cadila and Dabar-All State Insurance including others. Reliance India Ltd. also plans to undertake health insurance business as part of non-life business.

Unlike domestic life and non-life business, the ground realties for health insurance companies are very different. Health insurance needs a whole network of hospitals, doctors, medical stores and other para-medical arrangements, which are currently non-existent in India. The entire network has to be put in place before these companies make a plunge into the managed care market.