Mega healthcare plan to boost India's insurance sector: S and P Global Ratings

New Delhi: The healthcare scheme announced in the Budget will be a "game changer" for India's health industry and generate substantial growth in insurers premiums, S and P Global Ratings said.

The insurance sector is slated to get a boost once the NHPS scheme is implemented as it reflects the governments intent to expand the country's protective umbrella, and could have far-reaching implications for the domestic insurance sector, it said.

"We believe the proposal has the potential to be a game changer for the health industry based on its sheer coverage size and scope," S&P said. "An effectively executed National Health Protection Scheme (NHPS) will bring coverage to 40 percent of the population and generate substantial growth in health insurers premiums and increased cross-selling opportunities," it added.

The scheme, which would be the worlds largest government healthcare programme, was announced earlier this month in the Union Budget 2018-19 for providing medical cover of up to Rs 5 lakh to over 10 crore poor and vulnerable families, constituting 40 percent of India's total population.

"We expect insurers to introduce a range of new products with healthier coverage to capitalize on increased tax incentives amid rising medical inflation," it added. Besides, the governments Budget proposal to merge three public-sector insurance companies should reduce competition and facilitate improved underwriting discipline in the domestic market.

The 3 insurers -- United India Insurance, National Insurance, and the Oriental Insurance -- together contribute around 30 percent of market share of the non-life-insurance market in India, with a premium book of more than Rs 40,000 crore. "A merger of three big public insurers in India will improve the sectors overall profitability by reducing competition. In our view, less competition will facilitate improved underwriting discipline, enhanced risk retention, and better-managed solvency levels in the Indian insurance market," S&P Global rating credit analyst Trupti Kulkarni said