Insurance is one of the greatest manmade devices for managing risks.  Human beings are exposed to the possibility of adverse occurrences.   Such accidental events could be financially devastating for those individuals who suffer from these unfortunate events.  Yet, society mitigates such losses by collectively sharing them.  Insurance is a wonderful instrument that  equitably shares the losses of a few among the many who are exposed to similar loss probabilities.

Though Insurance has an ancient history and is an evolved and internationally accepted loss mitigation instrument, yet it has to constantly respond to society’s needs on emerging exposures and increasing expectations.

Particularly in health insurance,  some  people  have unfortunate health conditions that could make them more prone to the need for  frequent medical interventions than  is the case with a normal cohort.  The number of people with such exposures might not be large enough to fit into a conventional risk classification.  The occurrences too could be  quite frequent.   The risk transfer mechanism for such groups might thus be a challenge.

Insurance Companies  thus  have difficulty in responding to such  expectations.  This mismatch between expectations and solutions is not particular to  insurance industry.  In every field of human interface, solutions do fall short of expectations.  Yet, real progress lies in endeavouring to catch up with growing customer expectations and in designing  suitable solutions.

These expectations have to be addressed by the insurance companies by designing suitable covers that mitigate such losses.  Yet, if such losses would have to be shared  only by that group exposed to these risks, the premium would be hefty and unaffordable.   Several design features such as Provider Contracting , risk mitigation, deductibles, and Premium Subsidy by Government  would have to be innovatively blended to address the challenge. 

Insurance industry has always responded to societal needs for covering emerging exposures.  In health insurance the Insurance Companies are now mandated to cover many such conditions which were declined in the past.  The Insurance Companies have reasonable concerns about covering losses which are likely to be more probable and more frequent.  But they should also respond to society’s expectations on providing relief to the unfortunate few who direly  need loss mitigation.  Addressing these expectations is a formidable challenge for the Insurance industry.  But as in the past, the industry is very likely to find solutions that mitigate these losses without compromising their financial resilience.