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Ayushman Bharat is credit positive for Indian insurers, says Moody's

Ayushman Bharat is credit positive for Indian insurers, says Moody's

Ayushman Bharat is credit positive for Indian insurers, says Moody's
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By Suman Singh  Aug 23, 2018 2:35:44 PM IST (Published)

Credit rating agency Moody’s on Thursday said that the Ayushman Bharat scheme or National Health Protection Mission (ABNHBM) is credit positive for India’s insurers as it will help grow health premiums and provide insurers with cross-selling and servicing opportunities.

Credit rating agency Moody’s on Thursday said that the Ayushman Bharat scheme or National Health Protection Mission (ABNHBM) is credit positive for India’s insurers as it will help grow health premiums and provide insurers with cross-selling and servicing opportunities.

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Prime Minister Narendra Modi, in his Independence Day speech, said his government will launch the ambitious the Ayushman Bharat healthcare scheme on September 25.
The scheme will target poor, deprived rural families and identified occupational category of urban workers’ families, 8.03 crore in rural and 2.33 crore in urban areas, as per the latest SECC data, and will cover around 50 crore people.
Out of 29 states, 23 states have chosen to run the scheme as a trust model.
“Trust models entail government funds being allocated to a trust fund rather than to insurance premiums, and the trust fund making disbursements for claims, rather than insurers disbursing claims. When the trust fund is depleted, the government will need to provide additional funds," Moody's said in a note.
The government's trust model differs from the insurance model, under which the premiums paid would be the maximum limit of exposure for the government and insurers take on all of the coverage risk.
Health insurance contributes around 23 percent of general insurance premiums and is one of insurer’s main drivers of growth.
Under the current trust model scheme, Moody expects the health insurance to rise by Rs 10,000 crore for 500 million families compared to the current Rs 30,400 crore of coverage for 440 million families.
“Although providing the health coverage as a trust model will diminish insurers' growth prospects, we still expect that insurers with scale advantages and track records of managing large insurance schemes will benefit from the health program,” Moody’s said.
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