The government is expected to table the Insurance Amendment Bill in the upcoming Winter Session of Parliament. Analysts and industry experts suggest that the Insurance Amendment Bill could largely be negative for standalone health insurance companies.
The Bill is expected to increase competitive intensity for standalone health insurers.
How?
- Composite insurance licence: This would allow large life insurers with significant disruption capability to enter the health insurance space. However, standalone health insurers may not have the capability to enter life insurance.
- 100% FDI in insurance: Health insurance has been a natural choice for new players, and most new entrants post 100% FDI are likely to enter the health insurance space, increasing competitive intensity.
- Reduction in initial capital and net-worth requirements: This is expected to bring in many new players targeting underpenetrated segments of health insurance, increasing competitive intensity and entering growth areas for incumbents.
General insurers could also face this competitive heat in the health segment, but they will be able to compensate with other segments.
Almost all amendments under the Insurance Amendment Bill seem to be positive for distributors like PB Fintech.
Composite insurance licence, 100% FDI, and a reduction in initial capital are all expected to bring in more insurers, most of whom are expected to undertake health insurance business — and health is the biggest business for PB Fintech (Policybazaar).
Health insurance contributed 20% to income and 60% to value for Policybazaar (PB Fintech).
