Health insurers mop up Rs 1 lakh crore in FY25 as premium costs rise

MUMBAI: Health insurance premiums crossed the Rs 1-lakh-crore mark in the first 10 months of the current financial year, marking a 10% increase from Rs 90,785 crore mopped up in the same period last year. However, growth has slowed compared to the previous fiscal year when premiums grew 20%.

Total health insurance premiums for FY24 stood at Rs 1.07 lakh crore. In FY25, the premiums reached Rs 1 lakh crore in Jan 2025, data reported by non-life insurers showed. Individual health segment recorded the fastest growth, expanding by 13.5% to Rs 37,068 crore, accounting for 38% of the total. Group health insurance, primarily purchased by companies for employees, remained the dominant category with a 53% share. Premiums in this segment rose by 12.4% to Rs 47,312 crore.

In contrast, premiums from govt-backed schemes, including Ayushman Bharat Yojana, declined by 9.7% to Rs 8,828 crore. Under the scheme, state govts either purchase insurance or establish trusts to settle claims.

In FY24, all three segments - govt schemes, group insurance, and individual policies - had registered double-digit growth. This year, total premium growth has moderated to 10.4%, with some policyholders seeing increases exceeding 10% following rate revisions by insurers.

The rising cost of health insurance has also raised concerns about reach. Last year, despite a 20% increase in premiums, the number of individuals covered under personal health policies grew by just 5%, broadly tracking workforce expansion. Affordability remains a key issue.

The sharp jump in premiums under individual policies have increased calls for waiver of 18% GST on health insurance premium. In addition to the increase in rates, insurers have been pushing individuals to take higher sum assured on the grounds of medical inflation. While a decade ago, the standard mediclaim was a Rs 3-lakh-cover, most insurers now suggest Rs 5 lakh.

Besides high claims ratio in group policies, another reason for the increase in the cost of cover is the expansion in its scope. Many policies now cover maternity costs. The regulator has also made it mandatory to include some covers that were earlier excluded.

Data from Star Health and Allied Insurance, which accounts for a third of individual health policies in India, show a decline in the retail health renewal ratio from 98.2% in Dec 2023 to 94% in Dec 2024. The company also reported a 10% rise in the overall sum insured in retail health.

Among insurers, New India Assurance remains the market leader, holding a 17% share of total health insurance premiums, followed by Star Health (13%) and Bajaj Allianz (7%). Standalone health insurers collectively account for nearly 30% of total premiums.

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