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Hello, and welcome to The Core Report Special Edition. I'm in conversation with Mayank Bathwal, CEO of Aditya Birla Health Insurance. Thank you so much for joining me, Mayank.

Thank you.

You lead the only insurance company defined as health-focused. What does that mean?

What does a health insurance company do today, if you look at it from a consumer's perspective? Traditional health insurance is what I call sickness funding, we fund a sickness event, and that's an important job, because the last thing people want during a stressful health event is to worry about their finances.

We take care of that. But our view as an organization has been that you should build as long a relationship with the consumer as possible from the first day of their life to the last, because every person needs it.

So the question is: why should you have a reactive, episodic, transactional relationship with the consumer? Also, if you're only doing sickness funding well, if I were to ask any customer whether they'd love to use our benefits once they've bought our offering, the obvious answer is no, because no one wants to be in the hospital just to use a product.

So that's one issue, you end up building a relationship based on friction, where the consumer essentially says, "Stay away from me." The second point is: when are we, as an organisation, doing well economically? When our consumer is healthy.

So why shouldn't we, as a category, do everything within our ability to influence, motivate, and incentivise consumers toward a healthier life? That's the whole genesis of it, a complete alignment of interests. Good health for the consumer means good health for the business.

So can we do something about that? Through products, access, communities, advisors, and so on, the category gets repositioned. The consumer starts to think, "Now I'm getting something more than just sickness funding, this feels like a health partner, because they actually care about me." And in the consumer's mind, the category starts to look very different from how it looked before.

Right. A couple of questions. Health has traditionally been seen as a subset of general insurance in this country, and that's still largely the case. What are the advantages of separating from that definition?

Traditionally, when the Insurance Act was passed, it covered life and general insurance together. Over time, I think regulators realised that health is such a large category in itself that there was merit in calling it out separately. Even though, technically, it still sits within general insurance, the creation of a standalone health insurance category sent the message that it's really its own category.

General insurance companies are still allowed to sell health insurance. But if you look at where most of the growth, innovation, and new offerings have come from, it's mainly the retail side, the standalone health insurance, or "SAHI," category. And now other players want to be in this category too.

So I think it's largely a historical distinction. For all practical purposes, SAHI is a category on its own.

Right, SAHI being standalone health insurance. How has this manifested through the consumer's lens over the last few years?

The first monoline health insurance company came in around 2006–07, when Star Health entered the market. That's about 20 years now. After that, many other companies followed, the erstwhile Apollo Munich, Max Bupa, and then Care, ourselves, and a few others.

I think each of us has brought something new for consumers, based on what we've understood about their needs and desires, whether in the offering itself, the overall experience, how interaction and engagement happen, or new consumer segments and distribution channels.

So the category has broadened, both in terms of meeting consumer needs and in terms of reach, though a lot still needs to be done. The real growth has happened only since the monoline players entered. I'm not saying general insurance companies haven't played a good role, they have, in their own way. But since this is our sole focus, the pressure on us to stay relevant for the consumer is much higher than it is for a multi-line company.

Right. What would you say are the top three or four trends you see today in how consumers are engaging with health insurance, compared to a decade ago?

We started about a decade ago, and back then it was purely about paying for a sickness event, "I've been in the hospital, you pay for that." Technically, health insurance companies should cover the entire spectrum of healthcare costs: what I call promotive, preventive, primary, secondary, tertiary, and then recuperative or long-term care.

Traditionally, and this was true ten years ago, coverage was limited to hospital care, which is why it's called IPD, or inpatient expenses. Over time, that has broadened. You now see some coverage of outpatient expenses, along with wellness offerings, so consumers are experiencing a larger share of their healthcare costs being funded.

That's one trend. The second is that consumer engagement with the category has clearly increased. It used to be very episodic; now, through digital interventions over the last ten years, all players are interacting with consumers far more regularly — starting with the model I mentioned earlier. In our case, for instance, a consumer spends about 70 minutes on our app every month.

Seventy minutes a month. They're tracking their health data, accessing the ecosystem, participating in communities, using discovery tools, and so on, engagement has clearly gone up.

Related to that first point: because medical inflation has consistently been 10 to 12 percent, and I don't see that changing soon, the size of the relationship itself has increased. I remember when we started, I asked why we were selling policies worth only 2 or 3 lakh — was that really enough for the consumer? I got a lot of pushback from the distribution community, who said you can't mandate higher coverage, that people won't buy it.

I wasn't trying to mandate anything, I was simply saying consumers need to buy more, because you're not buying insurance for today; you're buying it for the future. Today, 10 to 15 lakh has become the basic size of the cover. So people have increased the size of their relationship, that's clearly happened.

And finally, from an experience perspective, while a lot still needs to be done, the quality of the consumer experience has definitely improved over the last ten years, thanks to greater tech integration between insurers, portals, and healthcare providers. Information flows better now, and technology is generally helping across the board. So on all these fronts, things have improved, but we haven't reached where we want to be, there's still a lot to do.

When you say 10 to 15 lakh is the median size of cover, is that specific to your company, or industry-wide?

I'd say it's industry-wide. Ten lakh has become very much the norm now.

For a family?

Yes, for a family. As families grow, they tend to increase their cover, but 10 lakh has become the norm. That said, there are segments of society that need a lower amount,5 lakh, for instance. But even at the Ayushman Bharat level, the government is now considering raising the 5 lakh threshold. I recall a state, I believe it was Tamil Nadu, not Bengal, where the minimum was recently raised to 25 lakh. People are realising that if you truly want to cover future healthcare costs, the size of the coverage needs to be higher.

And you're saying one reason for this is that costs are rising so much that you need much more cover to keep pace?

Absolutely. The compounding effect of inflation is significant, you understand this well, Govind. Take a treatment that cost, say, 50,000 rupees back in 2015–16. If you compound that by 10 percent a year, it won't just become 1 lakh, it could become 5 lakh, or even 10 lakh.

That's what people are facing. And related to that: health is one subject where, if you ask a consumer whether they want the cheapest or the best, the answer is obvious. They won't compromise on the quality of healthcare they seek. They'll borrow if they have to, but they'll go for the best, regardless of their income segment, that's not something people are willing to compromise on. They realise they need adequate insurance now.

Right. You mentioned the full spectrum, promotive, preventive, primary, secondary, tertiary, and so on. Could you explain what "promotive" means, and how your offerings are spread across these categories?

Promotive care is something we started, and many other players now offer it too, essentially, incentivising good health behaviour. If you eat well, sleep well, or stay physically active, for instance, going to the gym, you're rewarded for it. In our case, consumers who walk regularly earn benefits for that; several other insurers now do the same.

So these are actions consumers take to promote good health, and they're built into how offerings are designed. And then, of course, there's preventive care.

So you could get a lower premium?

Yes, in our case, for example, we return up to 100 percent of your premium if you maintain a healthy lifestyle. Last year, around nine and a half thousand customers received their full premium back.

So if they paid 10 lakh, they'd get 10 lakh back?

Yes, whatever the relevant premium was for that individual. To my mind, that's promotive health built into the design of the offering, and most companies today offer discounts or refunds for demonstrating good health behaviour. It's becoming the norm, which I'm glad to see.

Similarly, there's preventive care, regular checkups, for example. It's still something of a taboo; people worry, "What if I find something wrong?" But we've managed to convince many of our customers that knowing your health status is itself the first step toward a healthier journey.

Then there's primary care. We've built in significant outpatient expense coverage for the corporate segment, and we've now started extending this to retail as well. Most companies today offer retail OPD coverage, either as an embedded benefit or as an add-on. So we're seeing the category expand across the full spectrum of healthcare costs, something that wasn't there ten years ago.

When you talk about OPD, I imagine that's where the friction is highest. If I visit a doctor — a specialist or otherwise — and spend, say, a thousand rupees, can I get that back?

That's an important point. OPD took a long time to come about because it carries a high potential for fraud and abuse. That makes pricing difficult, technically, I could go to a neighbourhood doctor and ask for a bill without actually receiving the treatment, and the insurance company would have no way of knowing.

So we have to factor in that potential for abuse. The good news is that over the last ten years, several health-tech companies have emerged, building networks of doctors, starting with platforms like Practo, and later Bajaj Health and others. They've created visit-booking systems and online pharmacy delivery; you can book checkups online, and so on. Products have started to capture this.

We promote cashless treatment, go to a network provider, and it's handled directly. In some cases, we allow reimbursement, but we have to be careful about how it's used, so that misuse by a small segment of consumers doesn't drive up costs for everyone else.

Because of these tech-enabled networks, where doctors and pharmacies are integrated into the platform, this has become more feasible today than it was ten years ago. Still, in the retail space, everyone remains cautious, because misuse is a real risk. In the corporate segment, the risk is somewhat lower, since there's more oversight at the organisational level. In retail, it's harder to control.

But it's there — you're saying the product exists.

It's there. Yes, all of us offer that product now.

For example, there's currently an H1N1 scare, and many people are getting flu vaccinations. Would health insurance cover that?

It depends, not every product covers it. If you've taken an OPD plan, some include vaccinations, but not all. This is still an evolving area.

The core question is: what is insurance really about? It's about probability. Everyone pools money together, that's how it started. In a village, everyone would contribute, and whoever needed it would use the pool. The next year, people would contribute again, even if they hadn't made a claim the previous year, because they might need it in the future.

The moment a cost becomes near-certain, the probability-driven logic of insurance starts to break down. So then the question becomes: how do you design a product for something with that level of certainty? Maternity coverage is a good example, you don't see much of it in the retail segment, because once someone buys a maternity benefit, it's more or less certain to be used. That makes pricing difficult.

So it comes back to that core principle of insurance: how likely is a benefit to be used, and how do you price it so the broader pool pays a fair price? If a benefit will only be used by a specific group, the rest of the pool shouldn't have to subsidise it.

Tell us about the trends you're seeing in the composition of claims — how India's lifestyle is changing and what that reflects when you look back at the last decade.

That's an important point. In many ways, it mirrors how the economy itself is maturing, along with rising income levels.

Fifteen or twenty years ago, we saw a lot of claims linked to infectious diseases — dengue, flu, malaria, and so on — which often became serious enough to require hospitalisation. Those have started to decline, thanks to better hygiene, dietary habits, vaccinations, and earlier care, since people now go to the doctor sooner and often recover without needing hospitalisation.

Meanwhile, non-communicable diseases — lifestyle diseases — have been rising. Diabetes-related complications, for instance, tend to affect nearly every organ over time. We're also seeing more cases linked to obesity and high blood pressure, including in rural areas, though the mix still skews more toward non-communicable diseases in urban areas and communicable diseases in rural ones, where hygiene standards remain lower.

That's one major macro shift. The other is that earlier detection is becoming more common, more people are going for screenings and health checkups, so a potentially cancerous tumour or a heart condition might be caught earlier. In the past, someone might not have realised anything was wrong until it reached a very advanced, often untreatable stage. But because people are being more proactive, and medical technology has improved for early detection, that's also reflected in the claims data.

And based on the data you're seeing, what does it suggest about the future, how people might maintain their health going forward?

That's a tough one. Clearly, health is becoming...

Let me put it differently — what should I, as a consumer, be doing today, or why should I be taking out health insurance, given what we need to prepare for? Cost, I think, is an important factor regardless. You mentioned non-communicable diseases are rising, and we're getting more prepared for that, though not fully there yet. But within non-communicable diseases specifically, are there other trends an individual might not be aware of?

There are a couple of trends that are, in a way, opposite to each other. One is that health as a concept is becoming more prominent in consumers' minds — especially among the younger generation, though this is true across age groups now. People are more health-conscious today than they were ten years ago, no question — partly because access to healthcare, including digital health, has improved. That access has increased across the country, though not yet to the extent the government or any of us would ideally want.

The other trend is that costs are rising, and will likely continue to rise, as treatment quality improves and the healthcare system becomes more corporatised. I don't see that trend reversing anytime soon. So if you want access to the best quality healthcare, do you really have the option of going without private insurance? The government can't fund healthcare indefinitely — it doesn't have the fiscal capacity to cover all 140 crore Indians. So a large segment of the population will need private coverage.

The question, then, is whether you want access to the best treatment or not — and that alone should answer the question of whether to buy insurance. Second, as medical science advances, it will create access to more personalised healthcare and medicine. And access to that is far easier through health insurance funding than trying to manage it entirely on your own.

Right. We're also seeing the hospital sector become more organised, with more chains than before, and significant capital flowing in — alongside rising costs. How are you seeing that from your vantage point?

As a health insurance company, we're ultimately a pass-through for healthcare costs. Whatever trends emerge in the healthcare industry are, in some way, tied directly to us, so those cost trends eventually get reflected in the health insurance structure.

What we need as a category is predictability, predictability in where costs are heading, so we can price accordingly. It's important to understand that cost isn't just about the per-unit price; it's also about the composition of care. If a treatment previously involved two elements of care and now involves three, the overall cost goes up, even if each individual component only rises by, say, 5 percent. Adding a new element of care increases the overall cost.

Robotic surgery is a good example — earlier, a procedure might have been done differently; introducing a robotic approach represents a whole new mode of treatment, and that raises costs. So what we're asking for is predictability, so we can price fairly and be allowed to price fairly.

The way you're describing it, it sounds like that predictability doesn't currently exist. Or does it?

I think there's an opportunity to make it more predictable. That's why platforms like the one being run through the CII, under the current chairman, are so valuable, he's finally bringing both sides to the table, which was a real challenge before. These conversations are now starting to happen, figuring out where each side fits in.

It's also worth noting, Govind, that a strong health insurance category benefits the healthcare side too, because we create demand. By offering financing options, we enable consumers to access treatment, including higher-quality treatment. Otherwise, in India, we've unfortunately seen cases where people couldn't access care simply because they lacked the money and couldn't borrow beyond a certain point. Now, we're helping create that demand.

So this conversation is happening more and more, and I'm glad it is, because it will help us solve some of these problems.

Broadly speaking, would you say the number of hospitals in your network and in other insurers' networks has been growing, making it easier for consumers to access cashless transactions?

When we started, our network had around three or four thousand hospitals. Today, we have about 16,000. Most of our peers are in a similar range, 12,000 to 16,000. We're also working to bring hospitals onto a common panel for the entire industry, similar to a shared ATM network.

So yes, the number of hospitals has clearly grown. Cashless rates have reached about 70 to 72 percent, and ideally we'd want that closer to 100 percent, because it benefits consumers, hospitals, and insurers alike. Reimbursement introduces friction that should really be avoided. But overall, we've seen a good increase.

I know you focus a lot on the youth segment. Tell us how that's playing out, and how remunerative is this category?

Let me first explain why the youth segment matters. As I said earlier, health insurance is fundamentally about pooling money, and non-claimants are, in effect, subsidising claimants. That's the nature of it, and non-claimants shouldn't feel resentful about not receiving a benefit, because unfortunately, most non-claimants eventually become claimants themselves.

At a macro level, we need young people in the insurance pool. If the pool only consists of middle-aged and older policyholders, the risk pool becomes riskier to price, which is partly why premiums for seniors sometimes rise beyond what's affordable.

India also has a very large youth population, and traditionally they haven't participated in insurance as much as we'd like. Bringing them in early is good for them too, since lifestyle diseases are increasingly affecting people in ways they might not expect. It's also the most underpenetrated segment, so engaging the youth helps raise overall category penetration.

But the youth demand a different kind of health insurance, not the traditional sickness-funding model. They say, "I'm healthy, I'm not going to end up in the hospital, so don't speak to me in the negative language of something going wrong, because I don't see that happening to me." So the product has to be designed differently for them.

The optimism of youth.

Exactly and it should be that way. You want that optimism. So they're telling us they need something different from health insurance, both in benefit design and in the overall experience.

So what product did you build for them?

We had introduced a product earlier that rewarded a healthy lifestyle. Let me back up, we offer two kinds of benefits: being a good health partner, and providing insurance coverage. On the health-partner side, we initially rewarded clinical and physical health markers.

But the youth said, "Don't define health narrowly for me." It could be physical health today, nutritional health tomorrow, or good sleep. They wanted us to broaden the definition of health and let them choose what mattered to them, rather than dictating it.

So in our product, called Active Yuva, we expanded the definition of health beyond clinical and physical metrics to include nutrition and sleep tracking, and we run campaigns that bring in other dimensions of health as well. We reward the right behaviours — tracking what they eat, how long they sleep, physical activity like gym visits, and so on.

On the core insurance side, they told us: "I don't see myself in a hospital, so give me OPD coverage." That became an integral part of the offering. They also wanted maternity benefits included, and the flexibility to reduce costs when travelling — since many of them travel frequently and didn't want to pay for both domestic insurance and separate travel insurance at the same time. Experience has become very important to this generation.

So we built in the ability to switch coverage on and off, and so on. The overall idea was about designing around their actual needs.

That's not something I'd considered being able to say, "I'm travelling to Europe for 15 days and I'm already paying for a separate 15–20 lakh travel policy there, so why should I also pay for domestic coverage at the same time?"

Exactly we built that into the youth product, and it's been a big hit.

So you can switch it off here and switch it back on when you return?

Yes, and you get a discount on your premium.

It's almost the reverse of roaming.

Exactly. We arrived at this through about a year of research into the youth segment, this is what came out of it. The product itself was actually designed by younger employees within our organisation, which is part of why it resonates so well. We've already seen strong early success. And that's really the broader lesson, understand each segment's needs individually, and design products and offerings around the levers that matter most to them.

What does your demographic breakdown look like today at Aditya Birla Health Insurance?

In terms of age segments?

Yes, age.

We used to have about 20 percent of our customers under the age of 35. That's now climbed to around 24–25 percent, just in the last six months, as we've brought in more young customers. And I think there's more growth to come — importantly, we're not shrinking the other segments; the overall pie is growing.

So in absolute terms, they're growing too.

Yes — the pie is growing overall. As the Prime Minister has said, including in a recent speech, the goal is insurance for all, so we need to bring everyone in. In financial services, there's a saying: catch them young, and stay with them for the long term. It's good for the customer, and good for the business. That's really the effort here.

And how remunerative is this segment for you as a company?

Ultimately, profitability comes down to pricing. Priced correctly, this segment typically has a much lower claims profile, they rarely have serious health conditions requiring treatment. They might have a maternity claim, or occasionally an accident or an illness like dengue, but that's largely the extent of it.

Claims are really a function of two metrics: frequency and severity. For this segment, both tend to be lower, fewer claims overall, and lower severity when they do occur, so you price it accordingly, lower than other segments. But if you price it right and retain good customers within this cohort, profitability tends to be better, which in turn helps subsidise pricing for seniors, so you don't have to raise their premiums as sharply.

And do people who sign up in this segment, say, over the last three or four years, tend to stay with you?

That's a good question. Historically, the youth cohort had the lowest persistency or renewal rate, because they felt they weren't getting enough value out of the product, and would rather spend that money elsewhere, a mutual fund, a trip, or a new iPhone.

But with the kind of benefits we've now introduced, where they're actually getting tangible value on a more regular basis, health incentives, for example — retention has improved significantly.

Last year, 12 percent of our customer base received some kind of reward for good health, and those customers are now far more persistent with us than even the average claiming customer.

So you have to make the product genuinely relevant to them if you want them to stay — and that's exactly what we, along with other players in the industry, are trying to do.

Last couple of questions. One thing that keeps coming up is that India's insurance sector as a whole isn't growing the way it should. Would you say one reason for that, among many, is that we're not designing products as efficiently or appropriately as we should?

I'd say there are actually three reasons we need to address. One is relevance, I mentioned earlier how important that is for the youth segment specifically. The second is affordability. There's clearly a large segment that needs lower-cost insurance, the so-called "missing middle." Even a recent parliamentary committee report referred to roughly 40 crore Indians in this missing-middle category, where premium costs need to come down.

But how do you actually lower costs? There are really only two components to the insurance premium: distribution cost and healthcare delivery cost. The regulator has said the overall cost component should stay within 30 to 35 percent, with about 65 percent going toward claims. So we need to bring both cost components down to make the product genuinely affordable. Bima Sugam, for instance, is intended to help lower distribution costs by scaling up. Bringing down healthcare delivery costs is a separate challenge, with different approaches needed.

How do you go about that? I know others have asked you this too, how successful has Bima Sugam been so far?

I think we're really just getting started. That's what the current chairman is pushing us toward launching products soon. As you may have read, the plan includes a simple, standard product across health, motor, and life insurance. I'm hopeful we'll see success there as awareness of the platform grows.

Affordability is a major problem, and Bima Sugam could be one way to address it, particularly on the distribution side. The healthcare cost side is a much broader and more complex challenge, involving benefit design and several other levers. It's a significant subject on its own.

The third issue is experience. Some consumers don't buy insurance, even when the product is relevant and affordable, simply because they've heard that claims don't get paid. How do we address that friction in consumers' minds? That's something we need to solve as an industry.

A lot of people do have negative impressions, at least in their own minds.

I wouldn't dismiss that, even if the underlying reason turns out to be something else, the consumer's experience is ultimately ours to own. It could be that we didn't spend enough time explaining the benefit clearly, and the consumer assumed something different from what was actually covered.

Pre-existing conditions?

Pre-existing conditions, waiting periods, or simply not clearly explaining what's covered and what isn't, these all create friction points. There's also friction at the claims stage itself. We may believe we're doing the right thing by screening for fraud, waste, or abuse, but if that process ends up giving a legitimate claimant a poor experience, then from their perspective, it is a poor experience. It's a broad issue, and we're working on it collectively, including through the CII platform the chairman is driving, but it's something we definitely need to solve.

Got it. Last question. You touched on wellness earlier, and I wanted to come back to it at one level it feels quite abstract, but at another, it seems to capture our entire approach to health and staying well, in body and spirit. How do you see wellness, both as a business and in terms of what it delivers for the consumer and for you as a provider?

You're right, different people define wellness differently. For us, it's simple: if it leads to a good health outcome for the consumer, it's wellness. Every intervention that, in some way, drives consumers toward good health behaviour qualifies.

I always say I can't make my customers healthy, I can only influence them, through access and incentives. Ultimately, it's their decision what they do with that. But any intervention that nudges them toward better health — physical, mental, or spiritual — counts as wellness in our view, and the definition is intentionally broad.

I'd say wellness has become one of the top consumer trends over the last ten years, and industries are now organising around it — some well, some less so. Overall, I think that's a good thing. As a country, that's something we should want — the Prime Minister, for instance, launched the Fit India movement some time back, which is very much aligned with wellness.

Yoga, right?

Yoga is part of it, yes, Fit India covers yoga, eating right, sleeping well, and more. And science is increasingly validating this. I don't think many people realised, even ten years ago, that sleep is actually the single most important factor for good health. Everyone assumed exercise and physical activity mattered most, but sleep and nutrition matter just as much, if not more. As the science improves, it's important for industries serving consumers to understand and respond to these emerging trends.

At a macro level, if India wants to achieve its broader goals, we need a healthy citizenry and wellness is a critical part of that. We need to observe it, understand what's happening, and make sure we're playing our part in that shift.

Okay, last question, what's your own wellness routine?

Since starting this organisation, it's been something I take seriously, how can I talk credibly about good health if I don't practise it myself? I was never much of a gym person before, but I came to realise how important strength training is, so I now do that regularly. I try to stick to a 10 p.m.–to–6 a.m. sleep schedule as consistently as possible, and I try to eat right. And sometimes, you just need to take a break and relax, because the work never really stops. These have become an integral part of how I live, and it's something we actively encourage across our organisation.

That's a good note to end on, Mayank. Thank you so much for joining us.

Thank you. Thanks for the invite, Govind.