Milliman enters Indian health insurance market, launches a slew of projects

Falaknaaz Syed - Mumbai

Milliman, a premier consulting and actuarial firm with 41 offices world wide and global revenue of USD 400 million, will be setting up a wholly owned subsidiary in India. The company will be setting up its 42nd health consulting practice office in Gurgaon by November 2005. This is an outcome of Milliman’s focused strategy for expansion into China and India. The company has been servicing clients globally for more than 50 years.

Milliman’s foray in the Indian health insurance industry will be of significant benefit to Indian insurance companies who have repeatedly expressed the need for expert assistance for product innovation and design, scientific underwriting and actuarial analysis. Experts have time and again rued the fact that lack of data, professional expertise and understanding of global trends are the reasons why the health insurance segment has not been able to boom in India.

The company is already in dialogue with various industry stakeholders including insurance companies, healthcare provider groups and the industry regulator. As a first step, Milliman will be launching an actuarial educational programme in collaboration with Actuarial Society of India (ASI), Bearing Point and National Insurance Academy by December. As per the agreement, ASI will provide the facilities and Milliman will provide the training. “One of the challenges the industry faces in India is shortage of qualified health actuaries and we hope to help fill this gap shortly,” said Richard Kipp, principal and health actuary with Milliman who is spearheading the expansion in India.

The company has plans of introducing the Indian version of various Milliman tools in India. Among these are the Milliman Care Guidelines, a very comprehensive compilation of treatment protocols and outcome benchmarks that are used by the majority of the managed care, health insurance and healthcare providers in the United States.

The guidelines are clinical decision support tools available in different formats, designed to be used in conjunction with healthcare professional’s clinical judgment. They enable more informed, consistent decisions and promote quality patient care through the best possible care management. They are widely regarded as the industry’s definitive resource for evidence-based knowledge at the point of care.

Milliman will also be introducing its health data warehouse, MedInsight, into the Indian market. MedInsight is a powerful, comprehensive data warehousing approach developed specifically for the healthcare marketplace. It works with existing claims, enrollment, and medical management systems, allowing data warehousing and knowledge management capabilities to be added without abandoning current operational systems.

In addition, Milliman has already started the process of compiling the Indian version of the Health Cost Guidelines. Milliman Health Cost Guidelines include utilisation rates for specific services, and variations in costs in different parts of the country and within the same state - critical data useful for product pricing. In addition, the guidelines provide utilisation benchmarks for managed risk arrangements. Launched more than 40 years ago, Milliman Health Cost Guidelines have become an industry standard in the US since they were launched.

Another new business venture that Milliman is evaluating is the potential of tapping into India’s vast BPO industry to provide new or enhanced services to Milliman’s clients globally. The company is studying the process and quality standards of Indian BPO companies to see how it can work with them to provide integrated data processing and analytical services to clients, not just in the US but across the world.

One of the challenges the Indian health insurance industry faces is shortage of qualified health actuaries and we hope to help fill this gap shortly Richard Kipp, principal and health actuary, Milliman

Key Milliman personnel have been visiting India over the last one year and earlier this year they appointed M/s. Networld Solutions (Pvt) Ltd to assist them in their evaluation of the Indian market as well as to assist them to identifying business opportunities in India. As a result of this on June 29, 2005, the Milliman board passed a resolution approving the establishment of a wholly owned Milliman subsidiary in India. In September, its Board approved opening an office.

When asked about the investment in Indian subsidiary, Kipp said, “Milliman will be investing atleast 200,000 USD initially. This amount is flexible and the company is ready to increase it if required. We wish to deliver good service and intend to be a large player in India.” Milliman is expected to employ a significant contingent of employees, primarily actuaries and consulting professionals in its initial stage. Further expansion will be driven by the participation of the property and casualty consulting practice, as well as by the life practice, in phase II of the operations, which are expected to commence in mid-2006 informed Kipp.

Explaining why Milliman chose to set up wholly owned subsidiary in India, Richard Kipp, said, “Over the last year we have observed significant opportunities in India. We firmly believe that the Indian health insurance industry is on the cusp of a major growth stage. We think that over the next two years, significant development will take place in the Indian health insurance market.”

Citing IRDA’s positive pro-industry stance as an important factor in its decision to set up a subsidiary in India, Kipp said, “The Indian government and IRDA are very keen to significantly develop the health insurance sector. Initiatives currently being contemplated such as the lowering of the capital requirement, enhancements of FDI limits for standalone health insurance companies and establishment of a data warehouse will result in significant interest in the Indian health insurance market globally”, he added.

“We are very happy to be in India and we look forward to helping Indian insurance companies. I personally am very keen to see innovation in product and benefit design because I feel that one of the reasons for the low penetration of health insurance in India is lack of attractive products. In my experience, the Indian consumer is a very intelligent and a thorough consumer who does proper evaluation of benefits and costs before purchasing any product. Products based purely on hospital cover do not attract the younger market which is a very critical segment to ensure proper risk distribution,” said Kipp.

falak@expresshealthcaremgmt.com