‘Retail health insurance market can deliver 20% ROE annually’

The retail health insurance segment covers only those health insurance policies that are bought by individuals or families.

The report, “Retail health insurance: A large whitespace,” has also projected a market size of $25 billion for this space by FY27, which is 5.3 times higher than the $4 billion recorded in FY22.

“In India, the health retail health insurance segment is currently dominated by five standard health insurers (SAHIs): Religare-led Care Health Insurance, Niva (Max) Bupa Health Insurance, Aditya Birla Health Insurance, Star Health & Allied Insurance and ManipalCigna Health Insurance,” the investment banking firm’s report further said.

The study states that these entities have disrupted the market to capture more than 50% share and are expected to be the biggest beneficiaries of the growth within this segment, these companies have in the past created global and domestic markets alike. has received significant interest from investors.

For example, last year Aditya Birla Health Insurance beat from 665 crores abu dhabi Investment Authority (ADIA) whereas Religare Enterprises Ltd. was in the process of raising 300 for Care Health Insurance through rights issue.

“SAHIs have established presence in the retail health segment. Post Covid, the awareness towards health insurance has acted as a strong catalyst. Given that the distribution of retail health is largely individual agent driven, SAHI’s single product focus and distribution intermediation over multi-line insurers gives them a competitive advantage,” Snigdha Khemka, Director – Consumer, Financial Institutions Group (FIG) and business said services, Avendus Capital.

For investors, retail health insurance will continue to be one of the most exciting segments in the overall non-life insurance or general insurance sector. Anshul Agarwal, managing director and co-head (consumer, FIG and business services), Avendus Capital, believes the segment continues to see significant investment due to high persistence rates, relatively low loss ratios and headroom for growth owing to low growth. Will remain penetration.

“The ability to generate consistent high profits and ROE in excess of 20% will account for continued investor appetite given the limited opportunities in companies that are focused on the retail health segment,” Agarwal said.

The report also pointed out that since around 45% of India’s relevant population is currently devoid of any health coverage, the retail health insurance segment is expected to take the lead over other non-life sectors.

As per the report, low reach (only 60 million individuals covered), as well as increased awareness due to Covid, product innovation, rising disposable income, etc. are some of the major catalysts for growth in the retail health segment, where the coverage is around 250 million. people are expected to reach.