Health insurers have become an unintended beneficiary of the cash ban. Companies in the health insurance space are reporting an increase in demand especially from the self-employed segment.
Nikhil Apte, Chief Product Officer-Product Factory (Health), Royal Sundaram General Insurance said the number of enquiries from self-employed class have risen since January.
"Earlier, this community used to have a lot of cash at their workplaces or at the residence. Now, there is also a limit on withdrawals from ATMs. Hence, the amount of cash that they may have for medical emergencies is less," he explained.
Sources tell Moneycontrol the health insurance industry could have seen a rise of 20 percent in new policy purchases in December, data for which is awaited.
Post demonetisation, restrictions in cash withdrawals and deposits have driven more people to store less paper money in their home lockers. A significant component of the self-employed, which includes businessmen and doctors, earlier paid their medical bills in cash. Now, with less cash in hands, they are opting for healthcare which encourages cashless payments.
"Ironically, even [businessmen and doctors] are willing to purchase health policies that will enable them and their kin to get treated without having to pay high amounts in hospital since they would have a health policy to take care of their needs," he added.
For corporate employees, health insurance is usually provided as a group product by the organisation. While the amount of cover provided by the company may not be adequate, it still covers the basic medical needs of the individual. Now, the self-employed, who are not on anyone's payroll but their own, are coming forward to buy health insurance.
Standalone health insurance companies saw a rise of 48.3 percent in their premium collections for December 2016 on a year-on-year basis. A senior official involved in health underwriting explained that while the demand could also be partly due to customers rushing in to buy products for tax-saving, cashless products are seeing a spike.
"Individuals having their own ventures are keen to buy policies to tide over the cash crisis. In metro cities like Mumbai, even a smaller surgery could set you back by a few lakhs. Since restrictions continue on one hand while some hospitals are still insisting on cash payments, it is imperative that they are well protected," he said.
Insurers say cashless health insurance products which pay customers an upfront amount for hospitalisation are more popular than reimbursement products that pay them the amount later.