The Indian health insurance market is set to experience significant growth, with a projected compound annual growth rate (CAGR) of 12.8%, escalating from $15.1 billion in 2024 to $23.8 billion by 2028, according to a report by GlobalData.
The sector’s share within the broader Indian insurance landscape has risen from 6.9% in 2019 to 9.5% in 2023, with expectations to reach 11.0% by 2028. In the immediate future, the industry is anticipated to expand by 15% in 2024, driven by regulatory changes, medical inflation, and increasing public awareness of healthcare needs.
“The Indian health insurance industry has demonstrated remarkable growth since the onset of the COVID-19 pandemic. In 2023, the sector grew by 17.8%, propelled by rising out-of-pocket healthcare expenses, heightened awareness of health insurance due to the growing prevalence of lifestyle diseases, and improved access to insurance facilitated by digitalisation. This positive trend is expected to persist into 2024 and 2025,” said Sneha Verma, Insurance Analyst at GlobalData.
Factors contributing to the rising premium rates include increased demand for private healthcare, escalating service costs, and advancements in technology. Alongside regulatory reforms, these elements are poised to continue driving industry growth in 2024.
A significant regulatory change is set to take effect in April 2024, when the Insurance Regulatory and Development Authority of India (IRDAI) will eliminate the age cap of 65 for purchasing health insurance. This reform aims to encourage higher-risk consumers to seek coverage. Additionally, insurers will no longer be able to deny policies to individuals with severe medical conditions, although they may reassess risk, potentially resulting in higher premiums.
Further regulatory developments include the establishment of a new healthcare regulator and the introduction of composite insurance licenses. These changes could enable insurers to offer life, general, and health insurance under a single entity, attracting new market participants.
Digital transformation is also a key driver, with insurers increasingly utilizing artificial intelligence (AI) and machine learning to enhance customer service, streamline underwriting processes, and detect fraud, thereby improving operational efficiency.
“An increase in health awareness and rising premium rates will bolster the growth of the Indian health insurance industry from 2024 to 2028. Positive regulatory reforms and government initiatives are expected to enhance health insurance penetration in India, which stands at a mere 0.35%. This figure is notably lower compared to other regional markets, including Taiwan (1.8%), Australia (0.93%), China (0.78%), and Hong Kong (0.67%) as of 2023,” Verma added.
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