About Niva Bupa Health Insurance Company Limited

Niva Bupa Health Insurance Company's purpose is to “give every Indian the confidence to access the best healthcare”. They aim to achieve this purpose through their health insurance products and services that enable customers to navigate their healthcare journey, by providing them access to a holistic health ecosystem. They are one of India’s largest and fastest growing SAHI based on overall health GDPI of ₹54,944.28 million in Fiscal 2024. They had a market share in the Indian SAHI market of 17.29%, 16.24%, 15.58% and 13.87% for year-to-date August 2024 (Fiscal 2025), Fiscals 2024, 2023, and 2022 respectively based on retail health GDPI.

Responding to the evolving needs of the customers over 16 years of operations, they have built a track record of product innovation catering to a range of customer groups. They offer the customers the ability to access a comprehensive health ecosystem and service capabilities via their ‘Niva Bupa Health’ mobile application and website, thereby offering them a holistic proposition. They had 14.99 million active lives insured as of June 30, 2024. They are strategically focused on the retail health market and their GWP from their retail health products was 67.65% and 68.47% of their overall GWP for the three months ended June 30, 2024 and Fiscal 2024, respectively. In India, health insurance providers can be broadly categorized into three main types and as of August 31, 2024 there are four IRDAI-recognized public insurers excluding specialized insurers, 21 private insurers, and 7 IRDAI-recognized SAHIs.

The Company have a telemarketing sales team, comprising 412 employees as of June 30, 2024. The Banker of the Niva Bupa Health Insurance Company Limited is Axis Bank Limited.

India’s health insurance
Non-life insurance includes motor, health, travel, fire, marine, and other segments such as microinsurance. Historically, motor insurance has held a dominant position, representing 39.3% of the non-life GDPI in FY18. However, over the past five years, health insurance has experienced substantial growth, expanding its GDPI share from 24.6% in FY18 to 37.1% in FY24. Health insurance has exhibited the highest growth with a CAGR of 19.5% between FY18 and FY24, surpassing the overall non-life insurance market’s growth (CAGR of 11.5%) over the same period. Health insurance is expected to maintain its consistent growth, projected to increase at a CAGR of 15- 17% from FY24 to FY29.

Health insurance has witnessed growth owing to increasing awareness of insurance as protection against healthcare inflation, rise in the number of diseases and increasing affordability with customized health insurance products provided by specialized players. Other factors which may affect the performance of health insurance industry include:

• India’s real GDP growth rate which is expected to grow at a CAGR of 6.5% from CY2024 to CY2029, the highest among the top 10 economies;
• Significantly lower insurance penetration when compared to developed global economies in CY2023;
• India’s health expenditure as a percentage of GDP amongst the lowest globally in CY2021;
• High out-of-pocket medical expenses;
• Rising disease burden in India, leading to increased healthcare expenses on diagnosis, treatment and posttreatment care, which, along with an increase in public awareness of these health risks, is expected to lead to a higher demand for health insurance; and
• Growing digitalization.

India’s health insurance sector has witnessed rapid growth since FY18. The health insurance GDPI has more than doubled from INR 0.37 Tn (USD 4.5 Bn) in FY18 to INR 1.08 Tn (USD 13.0 Bn) in FY24, growing at a CAGR of 19.5%. As per Redseer estimates, total health GDPI is expected to reach INR 2.2-2.4 Tn (USD 26-28 Bn) by FY29.

As of FY24, Group health insurance (which provides coverage to a group of individuals, typically employees of company) and Retail health insurance (which offers individual policies purchased directly by individuals or families from insurance companies) businesses represent approximately 90% of the overall health insurance GDPI. Retail health insurance contributed approximately 39% of overall health insurance GDPI in FY24. As per Redseer estimates, Retail business is expected to grow at a CAGR of 18-21% over the next 5 years and GDPI will reach INR 1.0-1.1 Tn (USD 12-13 Bn) by FY29.

Group health insurance GDPI is expected to grow at a rate of 13-16% over the next 5 years (from FY24 to FY29), driven by an increase in the number of enterprises, and expanding adoption among Small and Medium-sized Enterprises (“SMEs”). With near 100% adoption among large enterprises, insurers are increasingly focusing on SMEs to drive Group health growth. SMEs represent a potentially higher profitability business compared to large enterprises. The reasons for higher profitability include:

• Large corporates tend to offer health policies covering both employees and their parents. On the other hand, SMEs typically buy employee only policies. Consequently, insurers receive a lot more claims from large corporates due to age-related risks.
• Insurers also have a higher control on managing risk in SMEs. This is because SMEs often have simpler organizational structures and operations, and a smaller pool of employees compared to corporates which translates to fewer data points for insurers to analyse. Insurers can also directly engage with SME owners and managers, allowing for better understanding of their businesses and risk exposures. This leads to a higher potential for cost efficiency for insurers.

Thus, underwriting SMEs tend to be more profitable as compared to underwriting large corporates due to better access to customer pool data which facilities the ability to better price risks.

Furthermore, Group health insurance products are increasingly being sold as affinity products, where they are bundled with other products and solutions and marketed as comprehensive products. By bundling Group health insurance with market solutions, insurers can customize coverage options and benefits to align more closely with the specific needs of customers, thereby enabling targeted sales. Thus, these products adopt characteristics like Retail health insurance offerings. This approach not only enhances the attractiveness of the insurance offering but also allows insurers to leverage the marketing and distribution channels of their partners.

The Group health insurance market in India has seen significant expansion and increased at a CAGR of 20.21% from Fiscal 2018 to Fiscal 2024, outpacing the retail health insurance sector’s growth rate of 17.75% during the same period. The group health insurance market in India has seen significant growth, increasing from INR 0.21 trillion (USD 2.55 Bn) in FY18 to INR 0.66 trillion (USD 7.90 Bn) in FY24. The group health insurance GDPI in India Aug’FY25 stands at INR 0.31 billion (USD 3.70 Bn).

The growth of group health insurance in India is driven by multiple factors. Regulatory support and initiatives like Ayushman Bharat Yojana have expanded coverage adoption, while tax incentives make it financially advantageous for employers. Corporates are increasingly recognizing the importance of health insurance for attracting and retaining talent. Furthermore, the development of innovative products for small SMEs, covering even four employees, further boosts gross premiums. Additionally, an expanding workforce, increasing healthcare awareness, and urbanization are promoting the growth of group health insurance.

Retail health insurance currently accounts for ~39% of the overall health insurance for FY24, having grown at a CAGR of 17.7% between FY18 and FY24. Going forward, it is expected to grow at a CAGR of 18-21% over the next 5 years to reach approximately INR 1.0-1.1 Tn (USD 12-13 Bn) by FY29. The retail health insurance segment is the most promising segment in the health insurance industry in India as of March 31, 2024, due to higher average premium per life, higher renewal rates and lower Combined Ratios as compared to group health insurance.

Lives insured under Retail health insurance increased from 33.3 Mn to 52.9 Mn between FY18 to FY23. It is expected to grow at a CAGR of 10-12% from FY23 to FY29 to reach 90-100 Mn lives by FY29. Retail health insurance is also subject to seasonal fluctuations in product mix, operating results, and cash flow The sale of retail health insurance products increases in the last quarter of each fiscal year to take advantage of income tax benefits available to customers.

Retail health insurance has witnessed an increase in average premium paid per life from INR 4,758 in FY18 (USD 57.3) to INR 6,700 (USD 80.7) in FY23 and has consistently remained higher than Group business (including Government) whose average premium per life has increased from INR 472 (USD 5.7) in FY18 to INR 1091 (USD 13.2) in FY23. The higher average premium per life in Retail health insurance premiums can be attributed to the expansion of coverage options and the introduction of innovative & additional features in product offerings such as wellness programs, telemedicine services, and coverage for specific critical illnesses. These added features enhance the overall value proposition of Retail health insurance and justify the higher premiums, as policyholders recognize the comprehensive protection and additional perks that come with the plans.

Health Insurers (SAHI) landscape in India
In India, health insurance providers can be broadly categorized into three main types: Private Insurers, Public Insurers, and Standalone Health Insurers (“SAHI”). Public insurers include government-owned health and non-life insurers, Private insurers are privately-owned entities offering health and non-life insurance services, while SAHIs are specialized entities focused on health insurance (incl. travel and personal accident) coverage only. As of August 31, 2024 there are four IRDAI-recognized public insurers excluding specialized insurers, twenty-one private insurers and seven IRDAI-recognized SAHI companies in India: (1) Aditya Birla Health Insurance, (2) Care Health Insurance, (3) Manipal Cigna Health Insurance, (4) Niva Bupa Health Insurance, (5) Star Health & Allied Insurance, (6) Narayana Health Insurance, and (7) Galaxy Health Insurance. These SAHIs, Private and Public insurers form the competitive landscape of the health insurance industry.

The competitive landscape of health insurance in India is based on several factors including brand recognition and the reputation of the provider of products and services, customer satisfaction, underwriting and pricing of risks, distribution network and access to services and service personnel, pricing and quality of services, product design and diversification, financial strength, high-quality and stable professional team and information technology capabilities.

SAHIs lead Retail health insurance with 56% market share in FY24 while Public insurers dominate the Government health insurance with 68% market share. As of FY24, Public insurers hold a 46% market share in Group health insurance, while Private insurers and SAHIs account for 39% and 16% respectively.

SAHIs have a better Loss and Combined ratio as compared to Private and Public insurers. The Claims ratio for SAHIs was 65% in FY24, whereas Private and Public Insurers had a Claims ratio of 90% and 103% respectively. This can be attributed to the large share of Retail insurance for SAHIs as Retail tends to have a lower claims ratio in comparison to Group insurance. Health insurance and Non-life insurance players across the industry were impacted by higher claims driven by second COVID-19 wave in Fiscal 2022, which had led to an increased claims ratio in that year.

SAHIs have an Expense ratio of 35% in FY24 as compared to 26% and 21% of Private and Public insurers respectively and have consistently shown a constant Expense ratio from FY22 to FY24. This is largely due to the greater reliance of SAHIs on Individual Agents for their Retail business distribution. Taking into consideration both Loss and Expense ratios, the Combined ratios for Private and Public insurers in FY24 stand at 116% and 125% respectively. In comparison, SAHIs have the lowest Combined ratio of 100% in the same year, yielding better financial results than Private and Public insurers.

SAHIs GDPI has already quadrupled in last 6 years and is expected to reach INR 0.7-0.9 Tn (USD 8.7-10.6 Bn) growing at a CAGR of 25-30% from FY24 to FY29. Their focus on health products allows for innovation and a wider range of offerings. Additionally, increased focus on tier II+ markets (cities/areas with population below 2 million), tie-ups with new Banca partners and stronger emphasis on digital sales will further add to the growth.

NIVA BUPA HEALTH INSURANCE COMPANY LIMITED COMPETITIVE STRENGTHS
1. Granular retail health insurer with a focus on delivering robust GWP growth, capital efficiency and profitability
2. Their customer centric proposition driving customer experience and retention
3. Technology-led automated approach to customer servicing
4. Bupa parentage and brand associated with health insurance and healthcare
5. Their Domain Knowledge and Experience in Claims and Provider Management
6. Multi-Channel Diversified Pan-India Distribution, with Technology-Led Empowerment of Distribution Partners
7. Their Technology and Analytics Platforms
8. Experienced Management Team Backed by Established Investors and Underpinned by Sustainable Employment Practices

NIVA BUPA HEALTH INSURANCE COMPANY LIMITED STRATEGIES
1. Continuing to grow their product portfolio to serve the needs of customers, expand their partnerships with Network Hospitals, and further develop their healthcare ecosystem
2. Continue to invest in technology and analytics to facilitate the sales and servicing of their products
3. Further expand their presence in existing geographies within India, invest in deepening their distribution channels and increase market share in retail health insurance
4. Continue to invest in talent recruitment, development and retention to drive execution
5. Deepen culture of sustainability and “doing the right thing” to create a sustainable health franchise for future generations

NIVA BUPA HEALTH INSURANCE COMPANY LIMITED RISK FACTORS & CONCERNS
1. The profitability depends on their ability to manage their underwriting risks and appropriately price their products.
2. A significant portion of the business is generated from the health insurance line of business.
3. They  are dependent on their intermediated distribution channels, particularly individual agents, corporate agents and brokers.
4. They may be unable to obtain reinsurance on a timely basis at reasonable costs and could be exposed to credit risks in their reinsurance contracts, including with General Insurance Corporation of India (“GIC Re”).