India’s non-life insurance coverage business, led by the well being phase, witnessed a decline in progress throughout the monetary 12 months ended March 2025 amid the slowdown within the economic system and hike in premium throughout the board by insurers. The gross premium earnings underwritten by insurance coverage corporations was at Rs 3.07 lakh crore throughout FY25 as towards Rs 2.89 lakh crore in FY24, displaying a decline within the progress at 6.21 per cent as towards 12.77 per cent within the earlier 12 months.
Basic Insurance coverage Council information exhibits that the expansion fee within the medical health insurance — the biggest phase within the non-life business — plummeted throughout 2024-25 to eight.98 per cent from 20.25 per cent within the earlier 12 months with the gross premium earnings of insurers at Rs 1.18 lakh crore in FY25 as towards Rs 1.08 lakh crore final 12 months. The sharp hike in premium and growing declare rejections prompted clients to defer choice on shopping for well being insurance policies.
The premium earnings on authorities medical health insurance schemes declined by 12.17 per cent to Rs 9,234 crore, based on GI Council information.
The expansion within the insurance coverage sector has slowed down with inflation and stagnant incomes forcing shoppers to prioritise important bills. In consequence, many people and companies are reducing again on discretionary spending, together with medical health insurance premiums. Business consultants warn that top premiums and perceived low instant want are driving a good portion of the inhabitants to delay or keep away from buying insurance coverage, particularly medical health insurance, altogether. This pattern slowed down the expansion within the sector, as insurers struggled to draw new policyholders.
A significant motive for the expansion slowing down is the sharp rise within the medical health insurance premium, triggered by medical inflation and excessive declare standing.
The IRDAI lately directed insurers that they need to not revise the premium on well being cowl merchandise for senior residents by greater than 10 per cent in a 12 months. The regulator’s transfer follows a pointy hike in well being premium by over 50-60 per cent by insurers within the case of senior residents with some insurers even resorting to 100 per cent hike in premium.
Why shoppers are slashing medical health insurance purchases
“The well being phase is witnessing excessive prices. Insurers have gotten picky… they’re focusing on younger people who find themselves paying decrease premium. But it surely’s a worthwhile portfolio,” mentioned an insurance coverage sector official. The alarming soar in hospitalisation bills signifies the surge in healthcare prices and medical inflation within the nation.
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Medical inflation is on the rise and present inflation is round 14 per cent which additional fuels the hike within the premium.
“I would love the premiums to be capped however the identical can’t be performed except the hospitals are regulated,” mentioned an insurance coverage sector official.
“The rise in medical health insurance premiums might be attributed to a number of elements. Based on the business information, the common value of healthcare providers has elevated by 15 per cent over the previous 12 months, pushed by developments in medical expertise and rising labour prices. Moreover, the rising prevalence of way of life illnesses, corresponding to diabetes and hypertension, has resulted in a better variety of claims,” mentioned Rakesh Jain, CEO, Reliance Basic Insurance coverage. Actually, business claims information exhibits that lifestyle-related illnesses account for over 30 per cent of all medical health insurance claims, he mentioned.
The medical health insurance sector skilled strong progress throughout and instantly after the COVID-19 pandemic, pushed by heightened consciousness and elevated coverage purchases. “Nonetheless, because the pandemic’s impression subsided, the surge in demand has regularly normalized, resulting in a tapering impact on progress. The implementation of a revised premium recognition methodology has impacted the phase’s progress,” Jain mentioned.
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In the meantime, the expansion in gross premium earnings within the motor insurance coverage phase fell to 7.94 per cent (Rs 99,065 crore) in FY25 from 12.92 per cent (Rs 91,780 crore) final 12 months. Of this, Rs 58,711 crore is accounted for by third celebration motor premium.
Based on GI Council information, crop insurance coverage premium declined by 1.98 per cent to Rs 30,095 crore throughout FY25. Hearth insurance coverage premium earnings additionally declined by 5.3 per cent to Rs 24,286 crore.