The Prime Minister’s Office (PMO) is set to review on May 20 the challenges facing health insurance as growth in coverage slows and premiums rise, government sources told Moneycontrol.
The meeting will likely be chaired by Shaktikanta Das, Principal Secretary-2 to Prime Minister Modi.
“Shaktikanta Das, Principal Secretary to the Prime Minister of India, Narendra Modi will chair the meeting, where DFS secretary M Nagaraju will make a presentation on issues in the health insurance sector on May 20,” one source aware of the developments said.
This meeting comes against a backdrop of a slowdown in the growth rate of non-life insurance coverage, especially for health insurance.
A significant portion of India’s non-life insurance portfolio comes from health insurance, but it is currently grappling with two major headwinds – rising premiums and a slowdown in coverage.
“This meeting may pave the way for regulatory or policy tweaks to revitalise India’s health insurance ecosystem,” the official said. Discussions are likely to focus on measures that could boost health insurance coverage, which remains below 60 crore individuals. Premium rationalisation at a time of an ongoing debate around GST impact, need for simplified products and grievance redressal may find mention in the meeting.
One of the key concerns for the industry is the Goods and Services Tax (GST) levied at 18 percent on health insurance premiums. Stakeholders argue that this high rate adds to the burden on policyholders, impacting affordability and slowing the uptake of health insurance products. Despite appeals from industry bodies and Minister of Road Transport and Highways Nitin Gadkari to the GST Council, consensus on the issue has been elusive.
“A rationalised GST rate on health insurance will directly reduce the cost for policyholders, encouraging greater enrolment and renewals, thereby increasing insurance penetration,” the person noted.
The meeting may discuss broader sector challenges such as the complexity of health insurance products, delays in claim settlements, and consumer dissatisfaction, contributing to the slowing growth of the sector, the person further added.
Slowing Coverage
Despite covering a lower proportion of population, health insurance coverage in India has remained in single digits since the pandemic. Data from regulator IRDAI in February showed that coverage of health insurance hit 57.29 crore by FY24, 4.2 percent higher than a year ago.
The growth was slower than the 5.7 percent increase in persons with health insurance witnessed in FY23.
Before the pandemic, between FY15 and FY18, the pace of addition of people under health insurance coverage was higher, at 18.7 percent per year on an average, covering 20 crore individuals. The period saw the number of people with health insurance rise from 28.8 crore to 48.1 crore by FY18.
