Worldwide, health insurance plays a key role in improving healthcare access. Adequate levels of health insurance throughout the globe attract investment in healthcare, such as in hospitals, laboratories, durable equipment, and consumables. 

Even in India, an innovative public health insurance scheme designed for BPL families-- Rashtriya Swasthya Bima Yojana (RSBY)-- is reportedly attracting many entrepreneurs to establish hospitals for the rural poor in India’s hinterland.

In penetrating rural markets, according to experts, the insurance sector should seek inspiration from Indian telecom companies. When venturing into rural markets, telcos faced immense hurdles because infrastructure was non-existent in the late 1990s. Undaunted, they first built mobile networks in these regions.

In addition, they studied the needs of their customer base and customised products for rural markets, making a slew of cheap handsets with useful features and introducing rock-bottom tariffs that even the rural poor could afford.

Instead of awaiting customers at their portals and letting the markets evolve over decades, they went to the customers’ doorsteps with irresistible products and prices. Today, even barefoot farmers and fakirs brandish cell phones! Insurance companies could well emulate telecom’s success story to penetrate rural regions.

'Insurers need to analyse the key hurdles hindering penetration. To begin with, insurers should understand their customer needs and expectations, and streamline services in many areas, including cost control, customer service, claims management, pricing and product innovation, among others. Indeed, product innovation could play a lead role in promoting penetration,' says Aman Gupta, principal advisor, India Health Progress.

He adds: 'Secondly, insurers focus only on in-patient (hospitalisation) policies, whereas the real business of healthcare lies in outpatient coverage. Products should therefore include preventive healthcare such as routine checkups and regular tests, including eye and dental treatment.'

Pricing is another crucial issue that makes or mars measures to penetrate rural markets. Since the majority of Indians possess limited purchasing power, insurers should introduce innovative products at varied price points with well-differentiated offerings,  just like the telcos did.

Some public and private insurers have already introduced innovative products with premiums as low as Re one per day and Rs10 per month, catering to individuals as well as to community insurance needs.