2022 Health Insurance Industry Outlook

5 Jan 2022 , 09:40 AM

While the world is still grappling with the aftermath of the ongoing pandemic, mid-2021 witnessed a noticeable turnaround with global focus on vaccinating the populace and relaxing the restrictions. These directives helped to restore confidence among many businesses while stimulating economic revival. The insurance industry in general, and health insurance sector in particular, experienced unprecedented growth during this time.  The growth was largely driven by pandemic-apprehensive buyers wanting immediate financial protection from unexpected, expensive hospitalization costs. Digitization was the flavor of the year — insurance “e-commerce” ballooned as a result of restrictions on physical contact, multiple entrants and emerging technologies.

The projection for 2022 for the health insurance industry in India is quite positive; the new year is likely to see substantial progression led by the following driving forces:

1. Inclusive health insurance schemes: Physical and mental health will continue to be a priority for people in 2022. Consequently, insurers would be inclined to extend varied wellness benefits in their health insurance plans to help meet the policyholders’ health goals or reward them for achievement. The market may also see a lot of unique customizable add-ons in health insurance schemes which will help the insured avail more inclusive and comprehensive coverage.
2. Informed decisioning by consumers: Potential buyers would want to invest in a long-term insurance plan after careful consideration of attributes that are commensurate with their personal requirements. They will favor providers who will allow them multiple choice comparisons while communicating the product information in simple terms.
3. Higher adoption of insurtech: Insurance intermediaries that deploy cutting-edge technology will frontline sales and service in the coming year. Those who have the ability to offer personalized insurance advice, backed by intelligent recommendation engines that help to simplify complex insurance terms will emerge as the obvious winners. Furthermore, capability of mediating omnichannel, multilateral communication along with offering timely assistance for hassle-free claims settlement will enhance the success of these middlemen.
4. Higher phygital purchase: While digital search on insurance will continue to grow in 2022 and beyond, the purchase journey will be oriented towards a phygital — digital information with a personal touch — experience.  Given the complexity of insurance products, consumers will continue to seek personalized advice while wanting to electronically exchange pre-and post-purchase information and communication.
5. Insurance value chain reengineering: Advanced analytics and artificial intelligence (AI) will increasingly drive smart decisioning in insurance product pricing, marketing, underwriting and claims next year and beyond. Many insurers and middlemen are likely to employ chatbots to facilitate meaningful and timely communication exchange. Similarly, machine learning and cloud computing will help underwriters to detect fraud and improve accuracy.
6. Sharper regulatory focus: The uptick in insurance sales in the last couple of years has prompted the regulator to devise policies that favor policyholders while ensuring that the providers continue to follow fair business practices. More policy sales in previous years would lead to higher customer service and claims settlement requests in the following years. Therefore, 2022 is likely to see a lot of reengineering of insurance sales and service-related processes for greater transparency, higher efficiency and better control.On the flip side, some deterrents that could hinder the growth of the economy and the insurance industry in 2022 could be:
7. New Covid-19 strains: Omicron, the recent mutated variant of the virus, though seemingly less fatal, is comparatively more contagious. Although it is too early to assess its impact, the fear is present among people of restrictive measures such as lockdowns. This could lead to businesses facing a setback in their operations due to lesser productive manpower being at work.  One or more damaging mutations might appear, disrupting business recovery plans.
8. Rising medical inflation: Hospitalization and medical treatment expenses are consistently increasing and will continue to do so even in 2022. Though experts claim that the number of hospitalization cases due to Omicron would be lesser, this is yet to be proven. Should the situation be unfortunately adverse, the strain on the medical infrastructure as well as financial savings of those admitted will be unavoidable.
9. Higher insurance premiums: Though the regulator has directed insurers to refrain from modifying existing plans that could result in premium increase in the interest of safeguarding buyers, escalating medical inflation could have a causal impact on future premiums.

The author of this article is Mr. Nayan Ananda Goswami, Head — Group Business and Retail Sales & Service at SANA Insurance Brokers Pvt. Ltd. (SANA.Insure)

The views and opinions expressed are not of IIFL Capital Services, indiainfoline.com