Despite COVID-19, the Indian insurance industry has not been able to generate the kind of interest and trust amongst the customers that was expected, why?
COVID‑19 undeniably raised health awareness and brought insurance into mainstream conversation. However, the expected step‑change in long‑term trust and adoption has not fully materialised. Insurance penetration stands at ~3.7% of GDP in FY25, down from a pandemic peak of 4.2% in FY22, and well below the global average of ~7.3%. The core issue is not awareness, but experience and expectation alignment. For many customers, the first meaningful interaction with insurance happens at the time of claim. It is then that exclusions, sub‑limits, co‑payments, and waiting periods become visible, creating what are often perceived as “claim‑day surprises.” Even when policies are contractually sound, this gap between expectation and outcome impacts trust. Product complexity remains a barrier, particularly for first‑generation buyers. Coupled with elevated incurred claims ratios in certain health segments, which have led to tighter underwriting and claims scrutiny, customer perception can suffer if communication is not clear. The opportunity, however, remains strong. Health consciousness is structurally higher post‑pandemic, and regulatory enablers such as higher FDI limits, GST rationalisation discussions, and digital platforms like Bima Sugam can improve transparency and access. Simpler products, clearer disclosures, and consistently reliable claims experiences will define the next phase of growth and trust.
Apart from a few baby-steps here and there, we are missing out on a preventative strategy for the country. Should our focus not be on OPD coverage to nip the problem in the bud and bring down the hospitalisation expenses?
There is a clear structural gap in India’s health insurance framework. Nearly 70% of healthcare expenditure occurs at the outpatient level, yet most insurance products remain focused on hospitalisation. This creates a reactive system. Chronic conditions such as asthma, COPD, diabetes, and pollution‑related illnesses progress through repeated OPD interactions. When these costs are paid out‑of‑pocket, treatment is often delayed until hospitalisation becomes unavoidable. The result is a double cost greater financial stress for patients and more severe, expensive claims for insurers. Expanding OPD coverage integrated with tele‑consultations, diagnostics, pharmacy access, and chronic disease management is no longer optional; it is strategic. The industry must move from financing illness episodes to actively managing health risk over time a shift critical for better outcomes, cost control, and customer value.
Insurers who also cover group health insurance, should they also not create awareness about the importance of individual personal health covers so that the customers can opt for it in good time before the group cover umbrella folds up?
Group health insurance has significantly expanded coverage within the organised workforce, but it is inherently linked to employment and therefore temporary. Job changes, retirement, or unforeseen disruptions often result in immediate loss of cover. This over‑reliance on group insurance creates a vulnerability. Individual health insurance still forms a relatively small share of the market, leading many people to delay personal cover until later in life when premiums are higher and underwriting tighter. Health insurance needs to be repositioned as a personal financial safeguard, not just an employer benefit. Insurers, in partnership with employers, must actively educate customers on the limitations of group cover and the importance of early adoption. Seamless transitions from group to individual cover through portability and continuity of waiting periods are essential to ensure coverage continuity across life stages.
Should not the health insurers and healthcare providers jointly promote in collaboration with the regulator, a reskilling and competency awareness programme so that the underwriting and claims settlement programmes become hassle free?
Yes. Persistent friction in underwriting and claims often stems from variations in clinical documentation, coding, and billing practices across hospitals and intermediaries. Insurance outcomes are directly linked to the capability and alignment of all participants from underwriting and pre‑authorisation to clinical documentation and claims adjudication. Coordinated reskilling initiatives can address these gaps through standardised coding, improved documentation, and better alignment of treatment protocols. Hospital accreditation provides a foundation, but structured, role‑based training and certification across underwriting, claims, TPAs, and hospital administration are now essential. A more skilled and aligned ecosystem enables faster settlements, fewer disputes, and stronger trust. Ultimately, competency is a core driver of customer confidence not just an operational necessity.
The industry is rapidly adopting AI. The sensitivity and correctness of the AI algorithms depend to a very large extent on the kind of data provided for their development. Are our data collection, analysis and utilisation systems up to the mark required?
AI adoption in insurance is accelerating, but the data ecosystem is still evolving. Health insurance data remains fragmented across insurers, hospitals, and service providers. Inconsistent documentation, non‑standardised coding, and variable data quality can limit the accuracy of AI‑driven underwriting and claims decisions. This is compounded by a shortage of specialised talent combining actuarial, medical, and data science skills. Initiatives such as the Ayushman Bharat Digital Mission are laying the groundwork for integration, but interoperability will take time. In the near term, AI delivers the most value in focused use cases such as claims triaging, fraud detection, and document processing. For AI to scale responsibly, data governance, standardisation, and interoperability must take precedence. Without this foundation, even advanced algorithms will have limited impact.
Is there a serious follow-up on setting up of a regulator for healthcare providers?
Healthcare delivery and health insurance are deeply interconnected, making greater alignment across providers increasingly important. While insurance operates within a clear regulatory framework, healthcare delivery remains decentralised and varied. From an insurer’s perspective, standardisation in pricing benchmarks, clinical protocols, and quality reporting would improve predictability and transparency. Significant cost variations for similar procedures highlight the need for shared frameworks. Positive steps already exist, including hospital accreditation systems and selective standardisation under government health programmes. The focus now should be on wider adoption and collaboration, not control. Any future oversight model must be consultative and value‑driven, aimed at improving outcomes, efficiency, and trust, while respecting clinical autonomy. A more aligned ecosystem will strengthen affordability and long‑term sustainability.