December 8, 2023

Cigna to Sell Health Insurance in India

The joint venture, which the companies expected to announce on Monday, comes as Indian policy makers are trying to increase the use of health insurance in the country. About 15 percent of Indians have some form of health insurance, according to industry estimates, far less than other large developing nations, like China, where about 90 percent of the population has at least basic health coverage.

Cigna’s venture will be set up in partnership with the TTK Group, which is best known in India for its popular Prestige brand of cookers but which also administers insurance policies and makes drugs and medical devices.

Officials from the companies did not put a value on the deal nor say how much each would invest. They said they hope to sell insurance policies beginning in 2013 after obtaining regulatory approval.

Though small now, India’s health insurance market is growing fast. In 2010, private insurance companies had 6.8 million policies covering nearly 55 million Indians (or 4.6 percent of the population), up from fewer than 9 million people five years earlier, according to the government’s Insurance Information Bureau. The Indian government also provides subsidized health coverage to 25.3 million poor families.

Bill Atwell, president of Cigna International, said Indians pay out of pocket for 64 percent of health care expenses, which suggests to Cigna that there is a huge untapped market for insurance. He said the company’s partnership with TTK would help it sell personal insurance products directly to consumers, rather than through agents or employers.

The company plans to sell policies at 1,500 TTK retail stores, on the telephone, over the Internet and through other partners like banks.

“Matching up with a retailer makes perfect sense,” Mr. Atwell said in a telephone interview from Bloomfield, Conn., where Cigna is based. “It allows you to think more broadly about how to reach the customer.”

T. T. Jagannathan, chairman of the Bangalore-based TTK Group, acknowledged that the companies’ venture was an “experiment.” “If we are able to put it in box and sell it to the consumers,” he said, “it would be a revolution in the health care business.”

Cigna has been one of the most aggressive American health insurers to expand overseas. The company has been selling insurance in China since 2003 and now has nearly one million customers and $250 million in annual revenue there. It operates in 12 other countries.

Cigna is not alone in looking at the Indian market. Raja Rajamannar, chief innovation and marketing officer at Humana, based in Louisville, Ky., said in a recent interview in Mumbai that his company is thinking about coming to India. Munich Re, the German insurer, and Bupa, a British firm, already sell health insurance here through joint ventures.

Still, foreign insurers have struggled to build big business here because Indian regulations limit their ownership of their local operations to 26 percent. That restricts the amount of money they can invest in India and makes them more dependent on local partners who do not always have the ability to invest substantial sums in these ventures.

Lawmakers have delayed for several years a proposal to increase the ownership limit to 49 percent, but policy makers have hinted that Parliament might vote on an increase in the coming months.

Mr. Atwell said Cigna was willing to start operations at the 26 percent limit, though it hoped to increase its stake in the future if the rules changed.

Another hurdle will be simply getting a license to start selling insurance. Mr. Jagannathan said Indian rules require TTK to first sell its third-party administration business that serves other insurance companies before it can apply for a license.

The company sought permission to sell the administration business a year ago but has not yet received an answer from the Insurance Regulatory and Development Authority.

The two companies say they will primarily focus on the urban Indian market, which is much more affluent and has access to more hospitals, clinics and doctors than rural areas that are home to about 70 percent of India’s population.

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