Over 10 yrs, only about 5% of individuals covered under retail health insurance make one or more claims. Yet, this small group accounts for nearly 90% of all hospitalisation costs, with claims often exceeding 10x premiums they have paid. For this system to function, the remaining 95% must continue paying premiums year after year, typically without making a claim.
Hospitals, however, largely interact only with the 5%. The real challenge lies in ensuring that the 95% continue to participate consistently, which is difficult. In many markets, this is addressed through mandatory participation or employer-provided group coverage. Co-payments, deductibles and tiered hospital networks are not customer favourites in India. Yet, they are essential for long-term sustainability.
