The government’s flagship health insurance scheme, Ayushman Bharat, is credit positive for insurance companies as it will aide in higher premium growth, a report said. Prime Minister Narendra Modi, in his August 15 speech, has said that the Ayushman Bharat-National Health Protection Mission (AB-NHBM) will be launched on September 25. The scheme will cover over 100 million poor families and would provide a health insurance coverage of up to ₹500,000 per family per year for secondary and tertiary care hospitalization. “The launch of universal health coverage is credit positive for the country’s insurers because it will help grow health premiums and provide insurers with cross-selling and servicing opportunities,” international rating agency Moody’s said in its report on Thursday. Health insurance contributes around 23 percent of general insurance premiums and is one of insurers main drivers of growth, according to the report.
During financial year 2011-12 to 2016-17, health premiums have grown at a compound annual growth rate of 18 percent. As of FY17, only 440 million people were covered under health insurance schemes, and the rating agency expects the AB-NHBM to increase that number by 500 million. The report, however, said out of the 29 states, 23 have chosen to run the scheme as a trust model, which will diminish insurers’ growth prospects. However, the ratings agency expects that insurers with scale advantages and track records of managing large insurance schemes will benefit from the health program. Trust models entail government funds being allocated to a trust fund rather than to insurance premiums, and the trust fund making disbursements for claims, rather than insurers disbursing claims. When the trust fund is depleted, the government will need to provide additional funds. – Business Standard