Health premium growth jumps, but coverage lags

MUMBAI: Health insurance penetration in India has been growing at a sluggish pace despite the high growth of 22% in premium numbers. The number of lives covered under individual policies in March 2023 grew 2.5% to 528.9 lakh — lower than March 2021 levels.
Overall, the number of lives covered under health insurance, including the group business, has increased 5.7% in FY23 from FY24.
However, the health premium collected by the insurance industry has increased 22% to Rs 89,492 crore from Rs 73,052 crore in March 2022. The sharp rise in health insurance premiums without a corresponding increase in the number of lives covered indicates that insurers are growing their business by collecting more premiums from the same policyholders.
Before the onset of the pandemic, in March 2020, the total number of lives covered under individual health insurance policies was 432 lakh. After, however, the number jumped 22% to 531 lakh in March 2021. As the pandemic waned, a number of people dropped out, and the lives covered under individual policies fell to 516 lakh in FY22.

Government scheme enrolment has also dropped, partly because of states choosing to do their own insurance. From 36.2 crore in FY20, government scheme coverage fell to 34.3 crore in FY21 and declined to 30.6 crore in FY22. In FY23, the total number covered under government schemes was 29.8 crore.
According to agents, the value of health insurance affordability has been an issue and many older people, who are enjoying good health, are dropping out because of higher rates. One positive trend is that the claims-to-premium ratio has significantly increased from the pandemic levels. In FY23, general and health insurers settled 2.4 crore health insurance claims and paid Rs 70,930 crore towards the settlement of these claims.