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Apollo Munich, a standalone health insurance joint venture between the Apollo Hospitals Group and Germany-based Munich Re, recently rebranded itself from Apollo DKV. Antony Jacob, the managing director and chief executive officer, tells Shilpy Sinha the recent controversy around cashless mediclaim has led to an increase in awareness about health insurance. Edited excerpts:
What do you think about the controversy around cashless mediclaim? Was it premature to withdraw the facility?
The good thing is that all stakeholders — insurers, healthcare providers and TPAs — have come together and discussed the issue. They are reaching a solution for a medium to long-term problem. I expect status quo will be restored soon.
PSU insurers are packaging rates for hospitals and diseases. Will you join these rates?
If their packaged rates are better than what we have, we will definitely join. We have to look after our stakeholders and will continuously monitor the market. If we find there are better propositions and better deals that need to be struck, we will go and negotiate for that rate ourselves.
Why is the health insurance segment ailing?
There are two segments, group and retail. Group health is some time away from break-even. It has been very unprofitable in the past for the industry (when there were set rates). It is moving closer to 100 per cent claim ratio then it ever was.
The industry is making money on the retail side. The claim ratio varies from 45 per cent to 65-70 per cent. The average would come to 55-60 per cent, an acceptable loss ratio. The group side is unprofitable because of pricing. Certain insurers have been running their books at unsustainable prices. While pricing is not the only reason, standard rates and negotiated rates may be the other reasons.
Has the controversy around cashless facility helped your business?
It is difficult to say. We have been growing at 100 per centIt is good that the problem surfaced when the penetration is low, at three-four per cent. The extensive coverage by the media has resulted in more awareness about the product.
Do you think TPAs (third-party administrators) would have played a better role here?
TPAs should be treated as our own staff, as they have to follow the same procedures. The way to do is to position our staff in some of these TPAs to monitor, train and to develop the standard of service. The customer should not know if he is (talking to) a TPA or the insurer’s own employee.
There is talk of setting up a health insurance council. How will it help?
Establishment of a health council is the right way to go about it. At the pace it is growing, health insurance will be the single-largest component for the industry in the next three-four years. It will be 40-50 per cent of the total general insurance portfolio of the country. I think it deserves a much more focused group to discuss industry issues and work with bodies like the CII and the government.
Do you see competition from more players in the standalone health segment?
There is competition from every insurance company. This is one product being sold by life companies, non-life insurers and standalone health insurance companies. More companies create more space and awareness about the product. The market opportunity is wide and there is plenty of space in the near future for more standalone health insurance companies. People will start benchmarking in terms of products and services. It gives an opportunity to improve.
What is your break-even target?
We will make profit after tax in 2012-13. We will see close to 100 per cent growth this year. We will reach an excess of Rs 200 crore. Last year, it was about Rs 100 crore. We get 60 per cent premium from retail and 40 per cent from group insurance. We will close the financial year with 75 per cent retail and 25 per cent corporate. We had heavy expense in the initial year in terms of creating infrastructure, manpower and brand. As we get into the fourth and the fifth years, the equation changes and we get into profit.
What are your capital infusion plans?
We plan to infuse Rs 20-30 crore this year. We will add 10 more branches to our existing network of 39. We will hire 6,000 agents by March 2011 and take the total to 18,000. We will increase this number to 45,000 by March 2012. The solvency margin is 1.75 per cent and our expense ratio is 70-80 per cent.
Irda came up with a standard package of products for weaker sections, for insurers to meet their rural and social sector obligations. As a standalone health insurer, will you be allowed to sell this product?
We are going to the regulator to seek clarity on the issue. Why will a life and a non-life company want to have a three-way partnership when two can easily offer the product?