Health insurance premiums in India have crossed Rs 1 lakh crore in the first 10 months of the current financial year, marking a 10% rise from Rs 90,785 crore in the same period last year.
While this sounds like solid growth, it’s actually a slowdown compared to the 20% jump seen in the previous fiscal year. By January 2025, total premiums stood at Rs 1.07 lakh crore, according to data from non-life insurers.
The individual health insurance segment has been the biggest growth driver, expanding by 13.5% to Rs 37,068 crore. That’s 38% of the total premium pool. But group health insurance, which is mainly taken by companies for their employees, remains the largest category, holding a 53% market share. This segment grew by 12.4% to Rs 47,312 crore.
However, not all segments are moving upwards. Government-backed schemes, including Ayushman Bharat Yojana, saw premiums decline by 9.7% to Rs 8,828 crore. These schemes are typically funded by state governments, either through insurance companies or by setting up their own trusts to manage claims. Last year, all three segments—government, group, and individual health insurance—grew in double digits. This time, overall growth has settled at 10.4%.
One reason could be the rising cost of health insurance itself. While premiums grew by 20% last year, the number of people buying personal health policies increased by just 5%. This is roughly in line with workforce expansion, but it also signals affordability issues. Some policyholders have been hit with premium hikes of more than 10% due to insurer rate revisions.
Medical costs are rising, and insurance companies are adjusting. A decade ago, Rs 3 lakh was a typical sum insured. Now, most insurers suggest Rs 5 lakh. New regulations also require insurers to cover previously excluded conditions, and maternity benefits are being added to many policies. All these factors are pushing up costs.
In group insurance, a high claims ratio is adding further pressure. A claims ratio basically means how much insurers are paying out in claims compared to what they collect in premiums. If more people are making claims, insurers raise premiums to balance things out.
Many in the industry are calling for the removal of the 18% Goods and Services Tax (GST) on health insurance premiums, arguing that it would make policies more affordable. Whether this happens remains to be seen.
Meanwhile, in the battle for market dominance, New India Assurance leads the way, holding a 17% share of total health insurance premiums. Star Health follows with 13%, while Bajaj Allianz holds 7%. Standalone health insurers (companies that only offer health insurance) collectively account for nearly 30% of total premiums.
One interesting trend is that Star Health, which covers about a third of India’s individual health insurance market, reported a drop in its renewal ratio for retail policies. It fell from 98.2% in December 2023 to 94% in December 2024. At the same time, the total sum insured in the retail health segment increased by 10%, suggesting that while fewer people are renewing, those who do are opting for higher coverage.