The health insurance industry in the country experienced 40 per cent growth and covered 10 million people in 2002-03, with the total premium being collected by companies in the sector in the same period being Rs 1,045 crore (Rs 10.45 billion). The premium figure was Rs 750 in the previous year.

The Rs 100 crore (Rs 1 billion) entry capital plus risk-based solvency norms means that the business has to grow at 5 per cent for 15 years to break even.

These calculations were based on the assumption that the sector would see doubling of existing premia and a starting claim ratio of 90 per cent reducing to 85 per cent in 5 years.

A typical viable health insurer will have 3 per cent operating margin after claims settlement, marketing and administrative expenses.

In India the picture is a little different with 120 per cent to 130 per cent claim ratio making the business less attractive.

"This calls for a lowering of entry capital in the consumers interest. Risks can also be taken care of through a monitoring risk based solvency norm," said Biswadip Gupta, vice president Bengal Chamber of Commerce & Industry while delivering his address at a health insurance seminar organised by the Chamber.

Current healthcare expenditure in India was Rs 1,03,000 crore (Rs 1,030 billion), which included Rs 86,000 crore (Rs 860 billion) spent on health care delivery and Rs 17,000

Crore (Rs 170 billion) on pharmaceutical, representing 5.2 per cent of the gross domestic product.

This was comparable to the expenditure incurred by most developing countries on health. However, the coverage of the population under private, social and other types of health insurance was limited to the extent of 15 per cent or less.

Private health insurance in the form of Mediclaim policy of the public sector general insurance companies covered 77.8 lakh (7.78 million) lives, while the Employees State Insurance Scheme covered 3.4 crore (34 million) lives.

The central government health scheme protected 40 lakh (4 million) while the railways health care scheme covered another 12 lakh (1.2 million).

A study on sickness revealed that around 40 to 50 million people are under medical supervision for major ailments at any given point of time and about 200 million mandays are lost annually on account of sickness.