I was very excited when I saw the full page advertisement Aviva Life Insurance ran on 18 Dec 2016 in the Times of India , on providing heart care to couples.
The IRDA now allows life insurers to also cover medical illnesses , and I think this is a very healthy trend. In the past, health insurance products were primarily provided by health insurance companies. Most of these had a very shortsighted approach because of legacy issues. They were illness insurance product, which reimbursed for the medical care needed in case the customer fell ill. This is why they did not invest in preventive health care.
There was no business case for them to do so, because their customers were often not loyal for a sufficiently long duration of time for this investment to pay off. If they invested in patient education, it was not possible for them to prove that this provided a financial return on investment. They understood that if they educated customers, they could help them to reduce their risk of certain chronic illnesses such as heart disease , by helping them to modify their behaviour and improve their lifestyle . However, if you spent all this money on the customer, and they then decided after three years to go to some other health insurer, you would effectively lose all that money you had invested in educating him ! The problem with patient education programs which are designed for reducing life style risk factors is that there are very long-term investments , and it's hard to document an ROI until you can track them for at least 10 to 20 years.
This is where life insurers have an edge ! Because customers are locked into a life insurance program, the interests of both the life insurer and the patient are completely aligned. After all, life insurers don't want their customers to become patients, and this is why they will do their best to proactively engage in patient education , so that they can help them to reduce their lifestyle risk factors.
When this happens, health insurance will actually become healthcare insurance because it encourages customers to remain healthy, and will no longer remain just illness or sickness care insurance. This is a very encouraging trend, and I think we will see a lot more patient education activities in this space, because life insurers realize that the only way of reduce these risks is by changing customer's behavior by educating them. The health portfolio of insurers is growing rapidly in India, which is still a very underserved and underpenetrated market, which means the opportunities are huge !
I am very hopeful that Information Therapy will become a key part of their offering. Information Therapy is extremely important in mature markets such as the US, which has a much more evolved insurance industry. Health insurers here are profitable , and they understand the need for making long-term investments in behaviour modification .
In India, the problem is that most health insurers are still not profitable, as a result of which they don't have deep enough pockets to be able to invest in these long-term initiatives, which will pay off only after a period of 5 to 10 years.
Life insurers, on the other hand, have a completely different worldview. Not only do they have very deep pockets, they also understand that if they want to grow their business and compete with the existing health insurers, they will need to provide additional offerings which add value to the customers' life.
This is a step in the right direction, and I think we will see more life insurers follow the trailblazing path which Aviva has taken. And since health insurers will also need to respond to this new challenge, customers will benefit !