Public sector insurers were more generous than their private sector counterparts, paying out more in claims than they collected in premiums.
Published Jan 05, 2025 | 7:00 AM ⚊ Updated Jan 05, 2025 | 7:00 AM
If you filed a health insurance claim in 2023-24, chances are you didn’t receive the full amount you had hoped for. According to the latest Insurance Regulatory and Development Authority of India (IRDAI) report for 2023-24, health insurers paid out less than expected in many cases, raising questions about the level of protection policyholders actually have.
Standalone health insurers, which focus exclusively on providing health insurance policies, paid an average of ₹3.18 for every ₹5 claimed in 2023-24, with key players including Star Health and Allied Insurance, Care Health Insurance, and ManipalCigna Health Insurance.
This translates to an Incurred Claims Ratio (ICR) of 63.63 percent, meaning 36 percent of claims were not paid. In the previous year, standalone health insurers paid ₹3.07 for every ₹5, with an ICR of 61.44 percent.
Private sector insurers, offering a mix of health and other general insurance policies, paid an average of ₹4.17 for every ₹5 claimed in 2023-24. Notable companies in this category include Go Digit General Insurance, ICICI Lombard General Insurance, and Bajaj Allianz General Insurance. This was an improvement from ₹4 out of ₹5 in 2022-23 (ICR: 80.09 percent).
Interestingly, public sector insurers like United India Insurance paid more in claims than they collected in premiums. For every ₹5 received in premiums, they paid ₹5.15 in claims, with an ICR of 103.16 percent in 2023-24. This was a slight improvement from the previous year’s ₹5.28 per ₹5 premium (ICR: 105.77 percent).
If you filed a health insurance claim last year, you may have been surprised by how much – or how little – your insurer paid. The IRDAI Annual Report 2023-24 provides valuable insights into how insurers handled health claims across different sectors.
Standalone insurers have shown varied performance. Star Health and Allied Insurance Co Ltd., emerged as the highest payer, with an Incurred Claims Ratio (ICR) of 66.47 percent. On the other hand, Care Health Insurance Ltd., settled only 57.69 percent of claims, paying ₹2.88 for every ₹5 claimed.
Private sector insurers demonstrated better overall payouts, with an average ICR of 83.49 percent. Among them, Go Digit General Insurance Ltd., stood out as the highest payer, with an ICR of 93.87 percent, paying ₹4.69 for every ₹5 claimed. However, insurers like Kotak Mahindra General Insurance Co. Ltd., fell short, with an ICR of 59.06 percent, paying only ₹2.95 per ₹5 claimed.
Public sector insurers have been generous with claims settlements, often exceeding the premiums collected. United India Insurance Co Ltd., was the highest payer among public sector insurers, with an ICR of 109.23 percent, paying ₹5.46 for every ₹5 collected. In contrast, National Insurance Co. Ltd., paid ₹4.54 per ₹5, with an ICR of 90.83 percent.
The data highlights the varying performances across different types of insurers. Standalone health insurers generally pay the least, though companies like Star Health are more reliable. Private sector insurers provide better payouts overall, with standout performers like Go Digit. Public sector insurers tend to pay generously, but this often comes with sustainability challenges.
In the fiscal year 2023-24, health insurance companies in India disallowed claims amounting to ₹15,100 crore, or 12.9 percent of the total claims filed. According to IRDAI, out of the total ₹1.17 trillion claims under health insurance, only ₹83,493.17 crore, or 71.29 percent, were paid during the year ending March 2024. Additionally, insurers repudiated claims amounting to ₹10,937.18 crore (9.34 percent) while outstanding claims totaled ₹7,584.57 crore (6.48 percent).
There were approximately 3.26 crore health insurance claims during 2023-24, of which 2.69 crore (82.46 percent) were settled. The average amount paid per claim was ₹31,086.
In terms of mode of settlement, 66.16 percent of claims were settled through cashless services, and 39 percent through reimbursement.
During 2023-24, health insurance companies collected ₹1,07,681 crore as health insurance premiums (excluding personal accident and travel insurance), registering a growth of approximately 20.32 percent compared to the previous year. These companies covered 57 crore lives under 2.68 crore health insurance policies.
Standalone health insurers saw an increase in underwriting losses to ₹723 crore in 2023-24, compared to a loss of ₹529 crore in 2022-23. The profit after tax for standalone health insurers was ₹915 crore.
The report suggests that government schemes like Ayushman Bharat have played a crucial role in increasing health coverage, particularly for economically vulnerable families. These initiatives aim to improve access to healthcare services and enhance financial protection against medical expenses. A significant portion of the insured population is covered under government schemes like Ayushman Bharat, which alone covers over 30 crore individuals.
The group insurance segment is rapidly growing, covering approximately 20 crore people, primarily through employer-sponsored plans. Group insurance is currently the fastest-growing segment in India’s health insurance market.
Coverage varies significantly between urban and rural areas, with urban populations generally having better access to health insurance products. For instance, only about 14.1 percent of the rural population has health insurance compared to 18.0 percent in urban areas.
The report emphasises the need for targeted strategies to improve health insurance penetration in rural areas, where accessibility and affordability remain significant barriers. The introduction of micro-insurance products and community-based approaches are suggested as potential solutions.
Overall, the overall insurance penetration in India has decreased to 3.7 percent, down from 4 percent in the previous year. This decline indicates challenges in expanding health insurance coverage across the country, despite regulatory efforts to enhance access.
The Indian health insurance market is projected to grow significantly, reaching an estimated value of $23.8 billion by 2028, with a compound annual growth rate (CAGR) of 12.8 percent from 2024.
(Edited by Dese Gowda)
