IRDAI flags gap between health insurance premium growth and protection outcomes in FY25

Health insurance premiums continued to grow in 2024–25, but the increase did not fully translate into proportionate improvements in coverage quality and protection outcomes, the Insurance Regulatory and Development Authority of India (IRDAI) said in its latest annual report.

According to the IRDAI Annual Report 2024–25, general and health insurers collected ₹1.17 lakh crore in health insurance premiums during the year, marking a growth of over 9% compared with the previous year.

The sector covered around 58 crore lives under approximately 2.65 crore policies, excluding personal accident and travel insurance.

Despite this expansion, IRDAI highlighted that the health insurance protection gap remained significant, particularly in individual coverage. While government-sponsored and group policies accounted for a large share of lives covered, individual policies represented a smaller proportion, indicating limited voluntary adoption of health insurance by households.

The report also pointed to rising healthcare costs as a structural challenge. Net incurred claims in health insurance increased during the year, although the incurred claims ratio showed a marginal improvement. IRDAI said medical inflation, fraud risks, and higher treatment costs continued to put pressure on insurers and policyholders alike.

IRDAI observed that premium growth alone does not ensure adequate financial protection if coverage limits, exclusions, and claim settlement experiences do not keep pace with rising medical expenses. The regulator stressed the need for insurers to improve product design, claims servicing, and transparency to strengthen consumer confidence.

The authority said it continues to monitor health insurance pricing, claims trends, and grievance data to address gaps between premium growth and policyholder outcomes, while balancing affordability and sustainability for insurers.