Despite a high growth of 22% in premium numbers, health insurance penetration in India is growing at a slow pace. The number of lives covered under individual policies increased by 2.5% to 528.9 lakh in March 2023 – down from March 2021 levels.
Overall, the number of lives covered under health insurance, including group business, has increased by 5.7% from FY24 to FY23.
However, health premiums collected by the insurance industry have increased by 22% to Rs 89,492 crore in March 2022 from Rs 73,052 crore. A sharp increase in health insurance premiums without an increase in the number of lives covered indicates that insurers are expanding their business by collecting higher premiums from the same policyholders.
Before the onset of the pandemic, in March 2020, the total number of lives covered under individual health insurance policies stood at 432 lakh. However, this number increased by 22% to 531 lakh in March 2021.
As the pandemic subsided, many people left jobs, and lives covered under individual policies fell to 516 lakh in FY2012.
Government plan enrollment has also declined, partly due to states choosing to do their own insurance. From 36.2 crore in FY20, government scheme coverage fell to 34.3 crore in FY21 and to 30.6 crore in FY22.
In FY23, the total number covered under government schemes was 29.8 crore
According to agents, the cost of health insurance affordability has been an issue and many older people who enjoy good health are dropping out because of the high rates.
One positive trend is that the claims-to-premium ratio has increased significantly from pandemic levels. In FY23, general and health insurers settled 2.4 crore health insurance claims and paid out Rs 70,930 crore to settle these claims.
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Despite high premium growth, health insurance penetration in India remains sluggish. The number of lives covered under individual policies increased by only 2.5% in March 2023. Overall, the number of lives covered under health insurance increased by 5.7% in FY23. However, increases in health insurance premiums
indicates that insurers are recovering more from the same policyholders. The total number of lives covered under individual policies increased by 22% in March 2021, but fell to 516 lakh in FY22. Government plan enrollment has also declined, and affordability remains an issue for many older individuals.
Representatives of government employed nurses met Chief Minister Bhajan Lal Sharma who assured them that health insurance schemes would continue. He discussed with Union Health Minister Mansukh Mandaviya and decided to provide free treatment up to Rs 25 lakh.
The nurses expressed concern about the utilization of the money deducted from their salaries and the CM assured them that free treatment would be ensured for nurses and pensioners under RGHS and government schemes.
The Finance Ministry has suggested that Health Secretary Sudhansh Pant meet representatives of the insurance industry to consider their suggestion of a regulator for health services. This is part of the government’s objective of insurance for all.
The insurance industry has welcomed the efforts of the National Health Authority to create a National Health Exchange. A health regulator will ensure that this digital transformation aligns with the efficiency of the provider ecosystem.