MANAGEMENT DISCUSSION

AND ANALYSIS

Mr. Ashish Mehrotra

Managing Director & CEO

Ms. Anika Agarwal

SVP & Head-Marketing Digital and Direct Sales

Mr. Anurag Gupta

SVP & Head - Agency Channel

Mr. Aseem Gupta

SVP & Head - Portfolio Management & Affinity Channels

Mr. Atul Bhandari

SVP & Head - Bancassurance and Alliances

Mr. Joydeep Saha

Head - Actuarial

Mr. Partha Banerjee

Director & Head - Legal Compliance & Regulatory Affairs

Ms. Priya Gilbile

SVP & Head - Health Risk Management

Mr. Rahul Ahuja

Chief Financial Officer

Mr. Vikas Gujral

Chief Operating Officer

Max Bupa Health Insurance Company Ltd. or MBHI, a leading specialist health insurer, launched in FY 2010, is a 51:49 joint venture between Max India Limited and the UK-based Bupa Group.

MBHI is a perfect blend of Bupa’s 70 years of global experience in health and cares panning across 190 countries and Max Group’s expertise in health and insurance-related services in India including hospitals, clinical research, and life insurance.

MBHI possesses comprehensive health insurance policies for individuals and families across all age groups, in its product portfolio. It has a direct working relationship with over 3,600 top quality hospitals and health care providers in the country.

Today, Max Bupa is among the fastest growing health insurers in the country. Max Bupa is the preferred health insurance partner to over 2 million customers in India. Max Bupa is known for its comprehensive products and services,customer-centric approach that it provides to its customers at each touch point and strong brand equity in the market.

The key differentiators of Max Bupa that set it apart from other players in the health insurance segment are:

A Comprehensive and Unique Product Portfolio

  • Max Bupa has carved a niche for itself in the health insurance sector through its innovative and comprehensive products that are designed keeping in mind every lifestage of the customer – it offers the lowest waiting period in the industry for maternity and also covers newborns’ vaccination till the age of 12 years; covers day care procedures for all customers; cashless coverage globally for treatment of critical illnesses; reducing co-pay on continued renewal for senior citizens, among a host of other benefits for young and old customers

  • Max Bupa’s market leading and comprehensive flagship product, Heartbeat, has a strong market penetration and sits as the most distinguished proposition in our product portfolio, with its host of ‘industry first’ features:

  • Heartbeat pioneered customer-centric features like any age enrolment and life-long renewability in the health insurance industry, which later became a part of the regulatory framework

  • Heartbeat is the only product in the industry which offers comprehensive coverage to Indian extended/ joint families by providing a unique combination of individual and floater sum insured, giving the customer the best of both the coverage structures

  • Over the years, Health Companion has been consistently rated as the best indemnity plan in the market by publications like The Mint – a comprehensive plan with a host of customer-centric features like no claim bonus, refill benefit and coverage for alternative treatments like Ayurveda, Unani, Siddha & Homeopathy for in-patient hospitalisation and sum insured up to ₹ 1 crore

Max Bupa is the preferred health insurance partner to over

2 million customers

Exemplary Service

  • Max Bupa lives up to its promise to its customers at the moment of truth i.e. the point of claim. It is the only health insurer in the country that provides 30 minutes of cashless claim processing to its customers (post pre-authorisation)

  • Max Bupa is utilising the latest technology and tools to enhance customer experience at each touch point:

  • Max Bupa has recently introduced self-service apps for its agents and partners to enable instant customer enrolment and policy issuance – creating customer delight at the point of sale

  • Max Bupa has successfully implemented an omnichannel-based integrated CRM solution that enables faster, seamless and real-time services to its customers, agents, and partners

Strong Brand Equity

  • Max Bupa is one of the most trusted and reputed brands in the industry. It has emerged as the most trusted and well-known health insurance player in India in multiple consumer surveys including the coveted Super brands in FY 2016 and FY 2017 as well as the ‘Brand Trust Report’ in FY 2014, FY 2015, and FY 2016


Awards Night a Business Meet, 2017

Awards Night a Business Meet, 2017

  • Max Bupa’s flagship annual health initiative Walk for Health, which has inspired millions to move towards a healthier lifestyle, has successfully established Max Bupa as one of the few brands that is true to its purpose – of helping its people, customers and the community at large to lead a healthier and more successful lives

At the heart of the business are its values. These are the principles that determine the way its people behave and their code of conduct. Max Bupa’s business rests on six values – ‘CREATE’: Caring, Respectful, Ethical, Accountable, Trustworthy and Enabling. Max Bupa’s values are embedded in the organisation’s DNA – they resonate in each customer interaction; Company’s R&R framework is based on its values; each employee is coached about the values at the time of enrolment and is appraised on the basis of values that he/she demonstrates through the year; senior leaders take personal accountability for their actions and demonstrate the culture of ‘own the whole’ i.e. taking endto- end responsibility and accountability. This value system is instrumental in making Max Bupa one of the most trusted health insurers in India.

An experienced and talented team of leaders drives the strategic direction of the Company. The management team at Max Bupa is focussed on providing its customers with innovative products and exemplar services that meet their needs. They believe that this is possible only by creating an exemplary work environment for its employees, where enough opportunities are given to employees to learn and grow within the organisation.

INDUSTRY DEVELOPMENTS

In India, health insurance sector continues to experience hyper growth – it is the most rapidly growing segment in the BFSI sector with gross written premiums increasing by 26% from ₹ 27,369 crore in FY 2016 to ₹ 34,374 crore in FY 2017. With 27 per cent of the population in some form of health insurance coverage, the sector presents a huge opportunity for growth and thus continues to attract new players. The rise in lifestyle and chronic diseases like cancer, diabetes and cardiovascular ailments over the past few years is contributing towards the increasing awareness about health insurance. According to industry experts, the health insurance market is expected to grow by ~15% to ~ ₹ 50,000 crore by FY 2020 and is likely to continue the same trajectory post FY 2020 for 3-5 years.

Max Bupa continues to cater to the B2C Health Insurance sector [growing at ~39% (3-year CAGR till FY 2016), ahead of industry at 21%]. The Health Insurance industry continues to be dominated by 4 public sector companies, which together constitutes 60% of the market share. In addition, there are 24 private players, including 6 standalone health insurers, the latest edition being Aditya Birla Health Insurance.

The Health Insurance landscape is fast changing and dynamic– Reliance is expected to launch its SAHI business; Aditya Birla launched its operations in October 2016, while Religare recently announced its decision to exit the health insurance market.

OPERATIONS – HIGHLIGHTS

Max Bupa further strengthened its foothold in the Health Insurance sector with a growing base of ~2.34 million customers across the country, serviced via its diverse distribution channels, including a network of 17,000+ agents, spread across the country, a telesales team covering 500 cities, bancassurance partnership with leading Indian and international banks and NBFCs and a stream lined online sales mechanism in partnership with leading web aggregators.

With a workforce of over 1,600 people, Max Bupa has a strong footprint in 27 offices across 16 cities – Delhi, Mumbai, Hyderabad, Chennai, Bangalore, Pune, Ludhiana, Chandigarh, Jaipur, Thane, Surat, Kochi, Kolkata, Patna, Goa, and Jodhpur.

Max Bupa’s alliance with Bank of Baroda for distribution of its health insurance products, which was inked this year, is its largest business partnership by far and among the biggest bancassurance alliances in the health insurance sector. This alliance gives us an opportunity to penetrate the bank’s network of 5,400 domestic branches and 60 million customers in India.

The Company also has strong enduring partnerships with leading Indian and International banks like –Standard Chartered Bank, Federal Bank, RBL Bank, Deutsche Bank, Sarv UP Gramin Bank, Bajaj Finserv and Muthoot Finance, which provide access to millions of the bank’s customers across the country.

In addition, the Company has tie-ups with top third-party distributors and aggregators like NJ Brokers, Coverfox, Bank Bazaar, and Policy Bazaar.

Max Bupa’s indemnity product offerings including its flagship product Heartbeat and Health Companion continue to be well received in the market and contribute to steady sales growth. Max Bupa further fortified its existing line of retail products to strengthen its customer value proposition – the Company introduced an enhanced version of Heartbeat and Health Assurance. With many industry-first features like international cashless treatment for 9 critical illnesses, coverage for 14 relationships in a single policy and tapering co-pay for senior citizens, Heartbeat now refreshed, continues to be one of the most comprehensive health insurance products in the market. The refreshed version of Health Assurance has been well received by all channel partners and customers. The product comes with varied features like higher sum insured options, upto 3 years of tenure, 150% of CritiCare amount in option 2 and flexible combinations between the 3 different sub-products – Accident Care, Criti Care & Hospi Cash. With its Bancassurance and NBFC partners, Max Bupa launched a number of customised offerings (on GHI & GPA format) for their customer segments and has recently launched a 5-year group critical illness policy and a 2-year group health secure cover, the first Use & File products since the Health Regulations 2016 came into effect. The Company will continue to innovate and expand its retail portfolio in FY2018, to provide its customers with a wider choice of products and services.

To cater to the health needs of digital customers, Max Bupa Health Insurance has entered into an exclusive three-way tie- up with GOQi, a leading fitness technology player offering an integrated wellness ecosystem in India, and Swiss Re, a leading global reinsurer, to provide unique health and wellness offerings. Max Bupa proposes to offer its consumers ready access to GOQii’s unique personalised wellness engine which is equipped with solutions such as health coaching and health management tools. Swiss Re will provide technical assistance to Max Bupa in creating relevant products and expertise to create risk assessment models for the future.


CEO Ashish Mehrotra with celebrities Saif Ali Khan and Kangana Ranaut at Walk for Health 2017

CEO Ashish Mehrotra with celebrities Saif Ali Khan and Kangana Ranaut at Walk for Health 2017

The Company continues the distinguished Customer Relationship Management (CRM) system that provides a single view of customers which remarkably reduces the turnaround time and ensures seamless personalised service. This tool has been recognised as the best service innovation in insurance in Asia by Celent in FY 2016.Post the launch of CRM, there has been a 30% reduction in call volume, reduction in average call handling time and 6% increase in first-time resolution, thereby enhancing the overall customer experience. Max Bupa has invested heavily in tech-enabled solutions for easy and hassle-free processes for all its customers; Agent self-service app, Instant policy issuance app, customer self-service through IVR are some of the technologically-enabled services currently being offered.

Max Bupa continues to invest in building its brand equity. Max Bupa’s flagship health initiative, Walk for Health successfully concluded its fifth edition as a tri-city (Mumbai, Delhi, and Bengaluru) walkathon on 26th February. Walk for Health is a reflection of Max Bupa’s commitment to helping India put its

With a workforce of over 1,600 people, Max Bupa has a strong foot print in 27 offices across 16 cities –Delhi, Mumbai, Hyderabad, Chennai, Bangalore, Pune, Ludhiana, Chandigarh, Jaipur, Thane, Surat, Kochi, Kolkata, Patna, Goa, and Jodhpur.


In its fifth edition, Walk For Health covered three cities - Mumbai, Delhi and Bengaluru

In its fifth edition, Walk For Health covered three cities - Mumbai, Delhi and Bengaluru

‘Health First’. The fifth edition of the Walk for Health initiative was special as it saw an endorsement from Athletic Federation of India, the apex body of athletics in India. As a part of the association, Max Bupa hosted the ‘National Race Walking Championships’ in the capital that culminated with the Delhi chapter of the walk. The initiative saw participation by over 40,000 Indians this year.

Key Campaign Results:

Social Media Success: People participated and shared their experiences widely on social media. Celebrities tweeted about it and the netizens followed the conversations rigorously. Resulted in 13,000 posts and 180 million impressions. Reached 16 million people through social media. Trended 5times on Twitter.

Partnership with The Times of India: The initiative was widely publicised by the Times Group with 40-plus advertisements and editorial coverage in The Times Group publications. High decibel campaign of 4 weeks reaching to about 12 million people, with more than 2 hours of editorial coverage on Times Now along with the live coverage of the event.

Buzz through PR: The movement became a talking point across multiple platforms with more than 300 news articles in print and online media and 30 minutes of unpaid airtime through electronic media across the country.

Reiterating its 30-minute cashless claims promise, Max Bupa Health rolled out its new brand campaign across leading television channels and social media platforms like YouTube and Facebook. The campaign focusses on the moment of truth i.e. the claims process, which is one of the biggest pain points for customers of health insurance, at the time of hospitalisation and one of the most critical factors for families while choosing a health insurance policy. Through the campaign, Max Bupa has highlighted its differentiated service proposition – the promise to deliver cashless claims preauthorisation within 30 minutes. While the industry average for cashless claim processing ranges between 2 and 4 hours, Max Bupa continues to offer the same in just 30 minutes and demonstrates its commitment to put its customer’s health first.

Max Bupa’s key performance indicators for the year (FY 2017) are as follows:

  • Gross Written Premium (GWP) increased 25% to ₹ 594 crore in FY 2017 from ₹ 476 crore in FY 2016.

  • Urban customer base of over 1.3 million in March 2017, increasing the overall customer base to 2.4 million.

  • Provider network increased to ~3,700, spanning over ~500 cities in India.

  • 8th largest private health insurance provider with an estimated market share of 4.3% in the private segment (as on March 2017).

  • Awards and Accolades:

    • Won ‘India’s Most Valuable and Admired Health Insurer 2016’ Award by Pharma Leaders

    • Recognised as the best BFSI Brand 2016 in the Health Insurance Category by The Economic Times, owing to the brand’s strong market equity, focus on innovation, ‘customer first’ philosophy and unique initiatives like Max Bupa Walk for Health.

    • Won the prestigious Celent Award for Model Insurer - Asia under the category of ‘IT Management Best Practices’ in April 2016.

    • Listed as a Super brand in FY 2016 and FY 2017- Super brands is one of the biggest consumer awards in the country.

    • Recognised for ‘Technology Maturity’ at the 6th India Insurance Awards 2016 for Omni Channel CRM platform which is helping the business enhance its operational and cost efficiencies and deliver remarkable customer experience.

    • Emerged as the Most Trusted Health Insurance brand in the Brand Trust Report 2016. This is the third consecutive year of Max Bupa being recognised as the most trusted Health Insurance brand by the Brand Trust Report published by TRA, through an independent consumer research across 16 cities in India.

    • Recognised for best IT practices at Model Asia Insurer of the Year 2016 for implementation of an omnichannel-based integrated operational CRM solution that enables convenient, faster and more accurate services to customers, agents, and partners.

    • Recognised as one of the top 50 brands’15-16 in India by Pitch and Exchange4media

Max Bupa corporate team at Business Meet, 2017

Max Bupa corporate team at Business Meet, 2017

STRATEGY

Max Bupa continues to retain its focus on the retail segment. The Company is building a comprehensive suite of product offering to become a provider of choice for high net worth and affluent segments in the top 20-25 cities across the country. There are several other product innovations in the offing to tap into wider customer segments. The impetus is on developing simple and customer-centric products which can be distributed effectively through multiple partners.

Max Bupa is strengthening its direct tie-up with over 3,700 hospitals across 480 cities. MBHI supports its customers through its in-house team of dedicated professionals including doctors.

Health Risk Management (HRM) is one of the key strategic priorities for MBHI. HRM plays a major role in ensuring that risk principles regulate the design and development of products, sales process, under writing and policy servicing processes.

Max Bupa has a huge focus on enhancing its digital capability to provide an exemplar customer experience. Its latest innovations in technology include tab-based over-the-counter (OTC) policy issuance to enhance customer experience at the point of sale, self-service enabled through state-of-the-art CRM system to provide exemplary customer service and first of its application like ‘InstaInsure’ to facilitate instant policy purchase. MBHI is all geared up to invest further in the digital domain to create an integrated wellness ecosystem for its customers, deliver remarkable customer experience and further enhance its operational efficiencies.

Max Bupa looks forward to investing in the development of itsover 1,600 employees through the deployment of a formal talent assessment, management and development framework.


OUTLOOK AND RISKS

Indian health insurance continues to remain a fundamentally attractive industry with growth projections of ~15% over the next 5 years and the industry is expected to double from the current levels of ~ ₹ 27,000 crore. The industry is gradually shifting towards the B2C segment as witnessed over the last few years and is expected to continue this trend – B2C segment is the fastest growing segment with a CAGR of 19% over the last 2 years. Max Bupa, now the 5th largest B2C player in the industry, plans to continue building on its expertise in the retail segment and add more families through its innovative product and service proposition. With established processes, a stable sales team and growing reputation, Max Bupa with its customercentric orientation will continue to capitalise on its market differentiation and build long-term customer relationships.


REGULATORY ENVIRONMENT

During the year, the industry has seen significant changes on the regulatory front. The amendment of the Insurance Act, the introduction of new distribution channels like Point of Sale and Insurance Marketing Firms, an amendment to important regulations like Corporate Agents Appointment, Individual Agents Appointment and Rural Social Obligations for insurers,last year, set the ground this year for consolidation of the regulatory framework around insurance operations.

In this order, the year witnessed some crucial enactments from the Regulator in the form of revised Health Insurance Regulations, TPA Regulations, Guidelines on Product filings, Regulation over remuneration of distribution partners, etc. The revised Health Insurance Regulations introduced the concept of wellness, for the first time in the history of insurance in India. This development widens the expanse of health insurance by allowing more space to the insurers to innovate and provide greater value to customers. The guidelines and regulations related to remunerations and rewards of intermediaries brought more clarity in various facets of insurance operations.

The mechanism to incentivise the insurance agents and intermediaries over and above their commission limits was regularised for the first time in India.

The regulator has also issued an important draft on outsourcing regulation that proposes to bring in clarity in the understanding of the term “outsourcing”.The proposed regulation, amongst other changes, is set to conclusively determine the various facets of outsourcing criteria for the insurers.