Insurance TPA Medi Assist banking on AI to enhance claims submission

What the country needs is 100 per cent health insurance, says Satish Gidugu, Chief Executive of Medi Assist, one of India’s leading Third Party Administrators (TPA) platforms which is increasingly using artificial intelligence (AI) for fraud detection and more.

Speaking with The Federal, Gidugu outlined the company’s vision for scaling up insurance penetration across India, the world’s most populous country. Speaking on the sidelines of Medi Assist’s Raksha Summit 2024 at the Jio World Convention Centre in Mumbai, Gidugu discussed the evolving role of TPAs in expanding insurance access, the company’s outlook for the second half of FY25, and its ongoing AI-driven initiatives.

At the event, Medi Assist unveiled a new report in partnership with the Boston Consulting Group, titled Borderless Health. The report, aligned with India’s Vikshit Bharat vision for 2047, calls for 100 per cent insurance penetration, driven by the Health JAM trinity — Joined Health Data, Automation and Mobile-Enabled Technologies. Edited excerpts of the interview:

The Union government is reportedly planning to increase FDI in insurance to 100 per cent. How do you see this impacting the TPA industry?

The government and regulators have been progressively enhancing the FDI cap, with the cap for intermediaries already set at 100 per cent in the TPA segment.

In the insurance sector, we believe that if the cap is further increased, it will attract interest from some of the largest global players who are keen on investing in India’s growing insurance market.

As the sector continues to expand, we foresee increased opportunities and a need for more efforts to support its development.

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With new players entering the market, competition is bound to intensify. How does the TPA sector in India compare to its global counterparts?

Globally, there are notable differences in the insurance landscape. In many markets, life insurance leads health insurance, with TPAs handling 70-80 per cent of the work.

In contrast, in India, general insurers are primarily responsible for underwriting health insurance, and our estimate is that TPAs manage around 55 per cent of the work.

However, with ongoing discussions about composite licences, the potential inclusion of life insurance in the health insurance segment, and the government’s focus on expanding insurance penetration in India, the TPA market is well-positioned for significant growth.

Media Assist profit rose over 65 per cent to Rs 40 crore in H1 FY25. How do you see your financial metrics grow at the end of this fiscal?

In the past, we've consistently been a company with a PAT (profit after tax) range in the mid-teens. However, as we've acquired multiple companies, there has been some dilution of margins.

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The good news is that the synergies from these acquisitions are beginning to materialise. Our goal is to return to EBITDA margins of 23-24 per cent and mid-teens profit margins in the upcoming quarter.

The company has been on an acquisition spree, with the recent acquisition of Paramount Health for Rs 300 crore. What is the strategic rationale behind this acquisition?

In the past, our acquisitions were primarily driven by the need to fill geographical gaps in our service offerings. However, with the insurance industry poised for significant growth and our ambition to achieve "insurance for all" by 2047, we recognise that meeting the increasing demand will require substantial investment and scale.

With Paramount, our primary focus is on building that scale for the industry. This will allow insurers to concentrate on innovation, product development and distribution, while we effectively manage the servicing aspect, ensuring seamless operations and support.

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Are more acquisitions on the cards?

We have always taken an opportunistic approach to acquisitions. If a strong opportunity arises, we will carefully evaluate it.

I just returned from an AI summit where business leaders discussed various opportunities and challenges surrounding AI. Can you share some of the AI initiatives that Medi Assist has implemented, and how they are driving innovation and efficiency within the company?

For AI to be effective, it requires both a large volume of data and high-quality data. Over the past four years, we've been digitising every document that comes our way, steadily building vast data repositories. This effort has enabled us to launch two unique offerings this year.

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First, we're now able to predict the amount a policyholder needs to pay even before the bills are generated, all driven by AI. Secondly, we've applied AI to fraud detection, which is a significant challenge in the industry.

Our fraud savings, which measure the amount of fraud detected, have improved by 60 per cent compared to last year, thanks to AI’s ability to identify patterns that were previously undetectable by humans.

What innovations has Medi Assist introduced in the consumer interface, particularly in areas like cashless hospitalisation and claims submission, to simplify and enhance the consumer experience?

The cashless simplification is a prime example of our efforts to streamline processes.

Currently, there’s a common perception that discharge takes a long time. After a doctor clears a patient to go home, it typically takes 3-4 hours to generate a bill, followed by an additional 1-2 hours for TPAs to process it.

We’ve eliminated these delays entirely, significantly reducing the discharge time and making the entire process faster and more efficient.

The report you released seems to focus primarily on the numerical goal of achieving 100 per cent insurance penetration. However, on the ground, significant challenges remain in successfully completing transactions. Given this, do you believe the focus should shift more toward addressing these intricate, on-the-ground challenges, rather than just aiming for a numerical target?

We are tackling two key challenges. First, how do you address the needs of a country as large and diverse as India, with its varying economic strata, geography and cultural differences? There is no one-size-fits-all solution. Some aspects must be handled by the government, while others should evolve through private sector initiatives.

The report suggests multiple strategies, such as G2C (Government-to-Citizen), E2E (Employer-to-Employee), and B2C (Business-to-Citizen).

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Take Tamil Nadu’s comprehensive health scheme, for example — it covers a large population but doesn't address the needs of the affluent or middle class. This highlights that a universal solution isn't feasible. The question is whether the coverage is adequate: Does it ensure everyone has access to yearly health check-ups? Or are we certain that everyone is vaccinated?

(The writer was in Mumbai at the invitation of Medi Assist.)