The Indian health insurance industry is facing a challenging time due to rising medical costs and increasing claims. Despite multiple premium hikes, insurers are struggling to contain losses, with many reporting deteriorating loss ratios. The main factor contributing to this trend is the estimated 14% inflation in medical-related costs, which is outpacing premium increases.
New India Assurance, a state-owned insurer, saw its incurred claims ratio worsen to 109% in Q1 FY26, up from 106% a year ago. The company’s CMD, Girija Subramanian, attributed this to a 4% gap between the 10% cap on premium hikes for senior citizens and the actual inflation rate. ICICI Lombard, another major insurer, reported a rise in its retail health book loss ratio from 72.5% to 74.3% in Q1. However, the company expects to end the year with a loss ratio in the range of 65-70%.
Other insurers, such as Star Health and Niva Bupa, have also reported increases in their loss ratios. Star Health’s incurred claims ratio climbed to 68.5% from 66.9%, while Niva Bupa’s loss ratio moved up to 68% on its retail book. The health segment continues to dominate the general insurance industry, accounting for 40.2% of industry gross premium income.
According to analysts, the medical inflation curve is not uniform across the board, with each insurer facing a different inflation rate depending on its portfolio mix. Public sector undertakings (PSUs), for example, have older policyholder cohorts in their retail book, which require more tertiary care and drive up inflation-linked claims.
The industry is expected to continue facing challenges due to rising medical costs and increasing claims. Insurers will need to carefully manage their portfolios and adjust their pricing strategies to contain losses. As a reliable and trusted news source, it is essential to closely monitor the developments in the Indian health insurance industry and provide updates on the latest trends and challenges.
In conclusion, the Indian health insurance industry is facing significant challenges due to rising medical costs and increasing claims. Insurers must adapt to these changes by adjusting their pricing strategies and managing their portfolios effectively to contain losses. With the health segment dominating the general insurance industry, it is crucial for insurers to find a balance between providing adequate coverage and maintaining profitability. As the industry continues to evolve, it is essential to stay informed about the latest developments and trends.