The average cost of retail health insurance in India has surged by nearly 50% over the past six years. This increase is primarily driven by rising medical inflation and growing demand for comprehensive coverage policies.
Medical inflation, hovering around 14-15%, has compelled health insurers to adjust premiums accordingly. Additionally, the COVID-19 pandemic has heightened awareness about health insurance, leading to increased demand for long-term policies.
The rising cost of healthcare services, treatments, and medications has also contributed to the jump in average ticket size. The introduction of new technologies and treatments has further escalated healthcare expenses. As a result, insurance premiums have been adjusted to cover these higher costs.
Moreover, increased utilization of healthcare services and an aging population have amplified the demand for healthcare services, further driving up the average ticket size.
In response to this growing demand, health insurers have introduced higher sum insured offerings ranging from Rs 2 crore to Rs 5 crore, as well as unlimited sum insured plans. This allows individuals to access high-end medical treatments without financial constraints.
The average sum insured, which stood at Rs 2-3 lakhs five years ago, has witnessed a significant increase, with more people opting for coverage of Rs 10 lakhs and above.
As of January 2024, health insurance accounted for 37.72% of the total premium, surpassing motor insurance's 30.95% share. This shift reflects the growing importance of health insurance in the Indian market.
Insurers anticipate a moderation in health insurance premium rates in the future due to efforts to enhance transparency and curb fraud.