Future of health insurance in India

The future of health insurance in India is poised for significant growth and transformation, driven by a combination of regulatory changes, technological advancements, and evolving consumer needs. Here are the key trends and developments shaping the future of health insurance in India:

Regulatory Changes and Inclusivity

  1. Age Limit Removal: The Insurance Regulatory and Development Authority of India (IRDAI) has mandated that insurers must offer at least one product without any upper age limit. This is particularly beneficial for senior citizens, who can now purchase comprehensive health insurance policies without facing age barriers.
  2. Reduced Waiting Periods: The maximum waiting period for pre-existing diseases has been reduced from 4 years to 3 years. This allows policyholders to make claims related to pre-existing conditions like diabetes and hypertension much earlier, providing faster financial aid.
  3. Inclusivity for Severe Diseases: General insurers can no longer deny health insurance policies to individuals suffering from severe pre-existing conditions such as cancer, HIV/AIDS, etc. This promotes inclusivity and ensures that those who need it most can access health insurance coverage.
  4. No Sub-limits on AYUSH Treatment: There will be no sub-limits imposed on expenses incurred towards hospitalization treatments taken under AYUSH systems of medicine. This encourages more citizens to opt for AYUSH therapies and treatments without financial constraints.

Technological Advancements and Insurtech

  1. Insurtech Growth: The Indian Insurtech landscape has seen significant growth, with over 150 Insurtechs, 10 Unicorns and Soonicorns, and 45+ Minicorns. This growth is driven by a 12x increase in funding and a focus on digital transformation and customer-centric solutions.
  2. AI and Operational Efficiency: Insurers are actively investing in AI adoption to enhance operational efficiency and diversify health insurance offerings. AI can help in better risk assessment, fraud detection, and personalized policy recommendations.
Preview

Customized and Specialized Products

  1. Customized Insurance Plans: Insurers are now mandated to design specialized products catering to the unique needs of different demographic groups such as senior citizens, women, students, and others. This ensures that insurance plans are tailored to the specific health priorities and requirements of these groups.
  2. Women's Health Insurance: Future Generali India Insurance Company has launched a women's health insurance plan that integrates preventive and comprehensive healthcare, including infertility treatment, stem cell storage, and nursing care.

Market Growth and Economic Factors

  1. Market Expansion: The Indian health insurance market is expected to grow at a compound annual growth rate (CAGR) of 12.8% from INR 1.3 trillion ($15.1 billion) in 2024 to INR 2.0 trillion ($23.8 billion) by 2028. This growth is driven by rising healthcare costs, increasing awareness about the importance of health insurance, and the introduction of new regulatory guidelines that promote inclusivity and transparency.
  2. GST Rate Reduction: There are ongoing discussions in India’s Goods and Services Tax (GST) Council to reduce the GST rates on health insurance premiums. A reduction in GST could make health insurance more affordable and accessible, ultimately boosting insurance penetration across India.

Challenges and Considerations

  1. Medical Inflation: The cost of healthcare in India is rising, with an average increase of 11.35% in claim sizes due to medical inflation, which reached 14% in 2023. This financial burden remains significant for many households, highlighting the need for comprehensive health insurance coverage.
  2. Consumer Awareness: Despite the positive changes, there are still practical difficulties in implementing new regulations, such as ensuring that consumers fully understand the terms and conditions of their policies to avoid any surprises during claim settlements.
In conclusion, the future of health insurance in India looks promising with significant regulatory reforms promoting inclusivity, technological advancements enhancing operational efficiency, and a growing market driven by increasing healthcare costs and consumer awareness. These factors collectively contribute to a more robust and inclusive health insurance landscape in India.