The subject of health insurance premiums is one that ignites passionate debate across various forums. Many voices in these discussions highlight a common concern: the perception premiums for health cover are excessively high for the average Indian, rendering insurance unaffordable. Though I agree that health insurance is a necessity, insurance premiums must be reasonable and affordable to all.
But first, let’s take a step back and understand the economics of it all. If a customer pays Rs 100 as gross premium, Rs 18 is deducted as GST or goods and services tax.
Sadly, the conversations around reducing GST on health insurance, a necessity, have made little headway so far. GST of 18 percent on a basic need is far too high. There is a pressing need to bring this down; my personal take is that there should be zero GST on health insurance for senior citizens, and 12 percent GST should be levied for other health insurance policies. This ensures that the government does not incur losses while also making healthcare more affordable. On the other hand, the costs for insurers are mounting every year.
Medical inflation rising sharply
In 2025, healthcare costs are expected to increase by 13 percent, which is higher than the 12 percent increase in the previous year and the global average of 10 percent. As costs rise, insurers often find themselves in a position of incurring losses.
We all speak about customer wellbeing, and rightly so. But how many players in the ecosystem really pitch in? Insurers are often left to shoulder all the responsibility alone. A closer examination of the system reveals an imbalance that requires attention. Top hospitals across the country consistently report strong profits year after year. You will be amazed to know that the top 10 hospitals in the country had a combined profit of more than Rs 5,000 crore in FY25.
These top healthcare providers handle a significant portion of total health claims paid out; for example, Bajaj Allianz General Insurance pays about 20 percent of the total health claims to these hospitals, and I am reasonably certain the trend would be similar for other insurers as well. On the one hand, the profits of hospitals continue to grow, while on the other hand, the insurance industry, which works to make healthcare more accessible, is bleeding.
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Claim amount paid higher than premiums collected
The industry is operating at a combined ratio well above 100 percent, at about 112 percent. In simple terms, for every Rs 100 collected as premium, we pay out Rs 112 in claims and operating costs. As per the Insurance and Regulatory Authority of India’s annual report, general and health insurers paid more than Rs 80,000 crore towards health insurance. Medical inflation keeps pushing costs up. Hospital bills rise, and procedures become costlier, yet insurers are supposed to charge the same price without increasing premiums; that seems unfair.
No one asks how or why hospital costs continue to soar at an exponential rate, or how transparency can be improved. Even the Supreme Court has recognised the growing gap in healthcare costs and has urged the government to standardise rates for various medical treatments and procedures. Despite such clear directions from the apex court, there hasn’t been any significant progress. It is high time we had a hospital regulator in place to manage rising medical costs and increase transparency within the system.
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NHCX: A no-show by hospitals
The insurance industry has been working relentlessly to streamline the claims process through initiatives like the National Health Claims Database (NHCX). This is a collaborative initiative by IRDAI and the National Health Authority (NHA). This single-window digital platform is positioned as a standardised and interoperable system for health claims. NHCX aims to enhance transparency and operational efficiency, minimising manual administrative work.
The insurance industry is fully aligned with this vision, and every insurer is already part of the NHCX system. However, very few hospitals are on the platform, which raises the question: Why is there hesitancy regarding data sharing if it makes life easier for citizens? Change is difficult when it challenges entrenched interests and revenue models. However, if we genuinely care for our customers, transparency should be a shared goal.
This isn’t about pointing fingers, it’s about asking: Can we build a system where customer care is everyone’s responsibility? If we genuinely want to make healthcare accessible and affordable, all stakeholders must come together to achieve this goal. Because only when we all move forward together can we truly build a healthier nation, where access to affordable healthcare is not a privilege but a right. We need alignment, collaboration and, above all, fairness. Ultimately, affordable healthcare cannot be delivered by one stakeholder alone; it requires a shared responsibility, rooted in empathy, driven by equity and powered by collective will.
The writer is MD & CEO at Bajaj Allianz General Insurance.
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