The Indian health insurance industry is set to grow at a compound annual growth rate (CAGR) of 12.8% from ₹1.3 trillion (US$15.1 billion) in 2024 to ₹2.0 trillion ($23.8 billion) in 2028, in terms of gross written premiums (GWP), forecasts data and analytics company GlobalData.
GlobalData’s Insurance Database reveals that the share of health insurance in the Indian insurance industry increased from 6.9% in 2019 to 9.5% in 2023 and is projected to reach 11.0% in 2028. The country’s health insurance industry is expected to grow by 15% in 2024, driven by favourable regulatory changes, high medical inflation, and increased awareness of healthcare.
Sneha Verma, Insurance Analyst at GlobalData, said:“The Indian health insurance industry has witnessed impressive growth since the onset of the Covid-19 pandemic. In 2023, it grew by 17.8%, driven by rising out-of-pocket expenditure towards healthcare, growing awareness of health insurance due to the increasing risk of lifestyle diseases, and easing insurance accessibility due to digitalisation. The trend is expected to continue in 2024 and 2025.”
Health insurance premiums are on the rise in India due to the high demand for private healthcare. Rising service costs and technological advancements have also pushed up health insurance premium rates over the last couple of years. The trend is expected to continue in 2024, which will support the growth of health insurance.
Verma added: “Favourable regulatory developments aimed at increasing health insurance penetration and promoting inclusivity will also support health insurance growth. Effective from April 1, 2024, the Insurance Regulatory and Development Authority of India (IRDAI) removed the age cap of 65 years to buy health insurance policies. This will encourage uninsured or underinsured consumers in this high-risk age group to review their health insurance coverage.”
Additionally, insurers are now prohibited from refusing to issue policies to individuals with severe medical conditions like cancer, heart or renal failure, and AIDS. IRDAI has also advised insurers to design products specifically for senior citizens as well as students, children, and other age groups. However, insurers will have the right to reassess their risk for such policies, which might lead to an increase in premium rates for health insurance policies and support the growth of health insurance.
Other recommendations include setting up a new regulator for the healthcare sector aimed at improving health insurance penetration, as well as the implementation of composite insurance licences so that insurers can undertake life, general, and health insurance business under one entity. If implemented, these changes are expected to encourage new players to enter the market, supporting health insurance growth.
Verma continued: “The rising demand for health insurance can also be attributed to the digitalisation efforts of new-age insurers aimed at expanding insurance accessibility using digital platforms. This has led to the adoption of disruptive technologies by insurers to stay ahead of the competition.”
From underwriting to risk analysis, digitalisation has taken over many insurance processes to improve operational efficiency. Artificial intelligence (AI)-powered chatbots and virtual assistants have helped insurers in personalising their customer service. AI algorithms coupled with machine learning (ML) models are making underwriting an efficient and accurate process. This has enabled insurers to customise their products based on the customer’s risk profile.
AI/ML-enabled tools not only help in guided selling and effective outreach but also identify frauds and irregularities in the claim process. This is helping insurers in reducing their costs and improving the overall product offerings.
Verma concluded: “An increase in health awareness and rising premium rates will support the growth in the Indian health insurance industry over 2024–28. Positive regulatory reforms and initiatives by the government will help in improving the health insurance penetration rate in India (0.35%), which was lower as compared to other regional markets such as Taiwan (1.8%), Australia (0.93%), China (0.78%), and Hong Kong (0.67%) in 2023.”
GlobalData also forecasted Hong Kong’s predicted growth recently.
