ISSN No - RBS

The development ofhealth insurance inIndia is a reflectionof broader policychanges that arebeing felt in theIndian economy.potential that is waiting to be tappedand this could be achieved whensufficient competition is generatedand it is exposed to the developmentsin the rest of the world. Thereforeinsurance sector was opened up forprivate sector participation withprovision for limited foreign equityexposure, which has at present 15private players in the market. Thisprivate entry has thrown opened ahuge array of opportunities, many ofwhich will be in unrelated fields andmay give a bigger push to thedevelopment of the national economyas a whole.Health Insurance IndustryHealth insurance in a narrow sensewould be ‘an individual or grouppurchasing health care coverage inadvance by paying a fee calledpremium’. In its broader sense, itwould be any arrangement that helpsto defer, delay, reduce or altogetheravoid payment for health careincurred by individuals andhouseholds. Given theappropriateness of this definition inthe Indian context, this is thedefinition, we would adopt. Thehealth insurance market in India isvery limited covering about 10% ofthe total population.The development of health insurancein India is a reflection of broaderpolicy changes that are being felt inthe Indian economy. Many economicfunctions that had been restricted tothe public sector since independenceare now being opened to privatesector involvement, including theconversion of organizations run bygovernment to private or semi-privateentities that theoretically mustsurvive without direct governmentsupport. The financial sector is noexception.As a part of its financial sector reformagenda, the Indian Governmentliberalized the Indian insuranceindustry by the enactment of theInsurance Regulatory andDevelopment Authority (IRDA) Act bythe Indian Parliament in 1999. Thisled to the opening up of the sector forparticipation of private insurancecompanies. Prior to liberalization, theinsurance sector consisted of thegovernment-owned Life InsuranceCorporation of India that had amonopoly on life insurance businessand the General InsuranceCorporation of India and its four nonlifesubsidiaries namely, NationalInsurance Co., New India AssuranceCo., Oriental Insurance Co. andUnited India Insurance Co. The newact did not provide for independenthealth insurance companies and thenew market has continued theestablished practice of selling healthinsurance products through theexisting public and new privateinsurance companies.The results of liberalization havebeen significant. Since 1999, IRDAhas licensed 24 new private insurancecompanies, of which 21 have foreignequity participation. Major globalplayers like Aegon, Fortis, FutureGenerali, Principal and Dai-ichi havetied-up with Indian partners to set upinsurance operations. Table-1 showsthe performance of non-life insurers.[ 76 ] Rai Management Journal