The Covid pandemic has emphasized the importance and boosted the demand for health insurance. But with insurers witnessing a deluge of claims coupled with medical inflation, it has also resulted in rising health insurance premiums.
Vital, an insure-tech platform is trying to address this problem of making health insurance coverage accessible to all by reimagining the way health insurance is sold today.
According to Rahul Kumar, Founder & CEO, the idea behind starting Vital was to build a more holistic health insurance product which not only covers one for hospitalization but also general health and wellness expenses while pushing the customer to live healthier.
Personalization of health insurance
Vital currently has a tie-up with standalone health insurer Care. Through this tie-up, Vital offers simple health insurance products with the option of monthly subscriptions.
Vital offers personalized policies based on an individual’s medical condition and lifestyle.
To make feature-rich health insurance policies affordable to customers, they encourage customers to opt for deductibles. Deductible are essentially cost sharing between the customer and the insurer. It is the amount that a policy holder has to pay before the insurance company starts paying up. For instance, if the deductible of your policy is Rs 35,000 and the claim by the insured is Rs 1,00,000 then the insurance company is liable to pay only Rs 65,000.
“We wanted to add several benefits in our product offering and make it holistic but all these features come with a cost. When you want to offer everything, then cost becomes a constraint at some point so that is one of the key reason most of the insurance companies stay away from it,” Kumar said.
“We then figured out that if we want to make the product more attractive from the cost perspective, we could give options to our customers, where they could go for plans with deductibles which they are comfortable paying in case of hospitalization,” he said.
The deductibles are small enough that it does not take away from the essence of insurance.
“All the big catastrophic expenses are still covered by insurance but if one is comfortable paying these small expenses, then one has to pay a smaller premium upfront,” he added.
Kumar says that deductibles significantly bring down the cost of health insurance premiums. So for a Rs. 35,000 deductible, the premium will be approx. 60% lower. If you increase deductibles, the cost further goes down. For a Rs. 50,000 deductible, the health insurance cost is 75% lower. At the same price, Vital provides more benefits compared to a traditional insurance product.
Kumar adds that the purpose of incorporating a small deductible is to avoid anti-selection as insurance frauds come down significantly when customers have some stake in the claim.
For Vital, about 80% customers opt for deductibles, which vary from Rs35,000 to Rs.1 lakh. Largely, customers opt for a Rs.35,000 deductible.
Kumar who is a serial entrepreneur and also the Co-founder of dating app, Truly Madly, says the choice to start Vital was easy as health insurance has miniscule penetration of around 3% and the lowest Net Promoter Score. “We felt health insurance is a product that needs disruption as it is also a complicated product,” he adds.
Kumar adds that the intent behind Vital was to be a full stack provider without having to take an insurance license to build it as it was way too expensive. “So we are a neo-insurer, building our offering over Care Health’s (Religare Health) Insurance books. However the product experience is ours. We are clear that we do not want to be a broker or a comparison platform,” he adds.
Since starting last year, Vital has insured close to 10,000 lives. The company has recently launched a Group SME product as well where it covers more lives at smaller premiums. Besides there is a product for monthly subscription health insurance cover for corporates to cover their employees.
In terms of health insurance offered by Vital, tele-consultations, full body checkups, pharmacies and online medicines have the maximum utilization rates. “We will soon extend benefits such as diet and mental health counselling, disease management, fitness classes etc. for our policyholders. Based on health of each individual we will recommend them which consultation or benefit they could go for,” he said.
“We have recently tied up with Cult, where we are going to provide our members with exclusive fitness consultation through its apps,” Kumar added.
Around, 80% of the claims that we received in the last one year were pertaining to Covid-19. Even though it has had a huge impact on claims it has also increased awareness and importance of insurance.
“Once everyone is vaccinated, intensity of claims and size is going to be lower, but awareness will remain,” he said.
The last year has been bad in terms of claims but good in terms of penetration.
Vital provides a claim manager to its customers to assist them but the claim settlement happens through CARE Insurance as they are the underwriters. “Every member gets mapped to a dedicated care manager at our end similar to agents who are a liaison between a policyholder and insurance company who further assists them with the claim,” he added
In the future, Kumar adds that that they would explore an insurance license. However, “For this we need to generate the scale and build those models first to demonstrate how we are different,” he adds.