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

The report, “Retail Health Insurance: A Large Whitespace,” has also forecast a market size of $25 billion for this space by FY27, a 5.3x jump from 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 and Allied Insurance and ManipalCigna Health Insurance,” the report by the investment banking firm further noted.

These entities have disrupted the market to capture over 50% share and are expected to be the biggest beneficiaries of growth within the segment, the study said, adding that these companies have received significant interest from global and domestic investors alike in the past.

For instance, last year, Aditya Birla Health Insurance bagged ₹665 crore from Abu Dhabi Investment Authority (ADIA) while Religare Enterprises Ltd was in the process of raising ₹300 for Care Health Insurance via a rights issue.

“SAHIs have established a presence in the retail health segment. Awareness of health insurance post-Covid has acted as a strong catalyst. Given that the distribution of retail health is primarily individual agent driven, SAHIs’ single product focus and distribution arbitrage over multi-line insurers provide them with a competitive advantage,” said Snigdha Khemka, director – consumer, financial institutions group (FIG) and business services, Avendus Capital.

For investors, retail health insurance will continue to be one of the most exciting segments within the overall non-life insurance or general insurance space. Anshul Agarwal, managing director and co-head, consumer, FIG and business services at Avendus Capital, is of the view that the segment will continue to see significant investments due to high persistency rate, relatively low loss ratio and headroom for growth due to low penetration.

“The ability to generate consistently high profits and RoE of over 20% would account for sustained investor appetite due to limited opportunities in companies which focus purely on the retail health segment,” said Agarwal.

The report also pointed out that since approximately 45% of India’s relevant population is currently devoid of any health coverage, the retail health insurance segment is expected to be the leader among other non-life segments.

According to the report, low penetration (with only 60 million individuals covered), coupled with a Covid-led rise in awareness, product innovation, rising disposable income etc. are some of the key catalysts for growth in the retail health segment, where coverage is expected to reach about 250 million individuals.