Health Insurance Premiums Surge Past ₹1 Lakh Crore
MUMBAI: Health insurance premiums in India have surpassed the ₹1 lakh crore mark in the first ten months of the current financial year, reflecting a 10% increase from ₹90,785 crore during the same period last year. Despite this growth, the rate of increase has slowed compared to the previous fiscal year, which saw a remarkable 20% rise. The total health insurance premiums for FY24 reached ₹1.07 lakh crore, with projections indicating that FY25 will also see significant growth.
Individual and Group Health Insurance Trends
The individual health insurance segment has shown the most rapid growth, expanding by 13.5% to ₹37,068 crore, which constitutes 38% of the overall market. In contrast, group health insurance, primarily purchased by employers for their employees, remains the largest category, holding a 53% market share. Premiums in this segment increased by 12.4%, totaling ₹47,312 crore.
However, government-backed schemes, including the Ayushman Bharat Yojana, experienced a decline, with premiums dropping by 9.7% to ₹8,828 crore. Under this scheme, state governments either purchase insurance or establish trusts to manage claims. While all three segments—government schemes, group insurance, and individual policies—registered double-digit growth in FY24, the overall premium growth has moderated to 10.4% this year.
Rising Costs and Affordability Concerns
The increasing cost of health insurance has raised significant concerns regarding accessibility. Despite a 20% rise in premiums last year, the number of individuals covered under personal health policies grew by only 5%, closely aligning with workforce expansion. Affordability remains a critical issue, prompting discussions about the potential waiver of the 18% GST on health insurance premiums. Insurers are also encouraging policyholders to opt for higher sum assured amounts due to rising medical inflation. A decade ago, a standard mediclaim policy typically offered ₹3 lakh coverage, whereas most insurers now recommend a minimum of ₹5 lakh.
Market Dynamics and Insurer Performance
The surge in premiums can be attributed to several factors, including a high claims ratio in group policies and an expansion in coverage scope. Many policies now include maternity costs, and regulators have mandated the inclusion of certain previously excluded covers. Data from Star Health and Allied Insurance, which holds a significant share of individual health policies in India, indicates a decline in the retail health renewal ratio from 98.2% in December 2023 to 94% in December 2024. The company also reported a 10% increase in the overall sum insured in retail health policies.
Among insurers, New India Assurance leads the market with a 17% share of total health insurance premiums, followed by Star Health at 13% and Bajaj Allianz at 7%. Standalone health insurers collectively account for nearly 30% of total premiums, highlighting the competitive landscape of the health insurance sector in India.
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