India’s health insurance sector is facing a growing imbalance.
Health insurance claims in India rose by 21% in FY25, but payouts increased by only 12.8%, according to IRDAI.
That means millions of policyholders are consuming more healthcare but receiving less support when they need it most. And that’s a serious problem for policyholders, employees depending on group cover, and businesses managing rising healthcare costs.
This gap isn’t just a statistic. It reflects rising medical costs, stricter scrutiny, complex cashless processes, and policies that may not be keeping up with real world risks.
The result? More claims are getting stuck, paid partially, or delayed.
It’s a clear signal for businesses and individuals to examine whether their current cover can truly withstand today’s healthcare realities.
The Reality Behind the Numbers
The Insurance Regulatory and Development Authority of India (IRDAI) has raised concerns about growing inefficiencies in claim settlements. Despite insurers settling over 3.26 crore claims worth ₹94,247 crore, the incurred claims ratio (ICR) fell sharply, particularly among standalone health insurers (SAHIs), whose ICR dropped to 64.71%.
In contrast, public sector insurers paid out more than they collected, with ICRs above 100%. This indicates the increasing strain on insurers’ margins and sustainability.
Simply put, policyholders are filing more claims but receiving less in settlement.
What’s Driving the Gap?
Several factors have contributed to this widening divide between claims filed and claims settled.
First, medical inflation has risen by more than 14% over the past three years, making treatments significantly more expensive. At the same time, hospital costs continue to escalate without a unified regulatory framework, leading to inconsistent pricing and higher bills for policyholders.
The cashless claim process has also become increasingly complex, creating delays and confusion for both insurers and patients.
Additionally, the growing prevalence of lifestyle-related illnesses, such as diabetes and hypertension, has resulted in a higher volume of claims being filed each year.
Another major contributor is the sharp rise in health insurance premiums, especially for senior citizens, with some policies witnessing increases of 50–100% in a single cycle.
Together, these trends highlight one undeniable truth: healthcare costs in India are rising far faster than the coverage designed to protect against them.
IRDAI’s Take (Make this small box)
While the number of claims settled is high, the amount settled, especially in full, is sometimes lower than expected. This is an area we are monitoring closely.”- Ajay Seth, IRDAI Chairman, Bima Lok Pal Day 2025
Transparency, fairness, and speed in claim settlements remain top priorities for the regulator.
The Opportunity: From Claims to Clarity
At Beacon, we believe the solution isn’t just about having more policies; it’s about creating smarter and clearer ones.
Through our Policy Audits, Preventive Health Plans, and Employee Wellness Insurance Strategies, we help organizations:
- Review claim settlement ratios and identify hidden exclusions
- Simplify TPA coordination for faster cashless processing
- Align coverage with medical inflation and real-world risks
- Build employee trust through transparent group health plans
Because protection is about ensuring it’s settled fairly, fully, and promptly.
Wrapping Up
The IRDAI data reflects a larger story: India’s health insurance sector is evolving, but policy transparency and claim efficiency need to catch up.
For both businesses and individuals, now is the time to review, adjust, and strengthen your health coverage strategy.
Don’t wait for the next claim to reveal your coverage gaps.
Request a Beacon Health Policy Audit today. Let’s move from claims confusion to coverage confidence.
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