India’s health insurance market is forecast to grow at a compound annual growth rate (CAGR) of 12.8% from INR1.3 trillion ($15.1 billion) in 2024 to INR2.0 trillion ($23.8 billion) by 2028, according to GlobalData.
The data and analytics firm’s Insurance Database showed that the health insurance sector’s share within India’s broader insurance industry rose from 6.9% in 2019 to 9.5% in 2023 and is expected to reach 11.0% by 2028.
The sector is anticipated to expand by 15% in 2024, spurred by regulatory changes, high medical inflation, and greater health awareness.
Sneha Verma, insurance analyst at GlobalData, noted that the Indian health insurance market has grown significantly since the COVID-19 pandemic began.
“In 2023, it grew by 17.8%, driven by rising out of pocket expenditure towards healthcare, growing awareness of health insurance due to the increasing risk of lifestyle diseases, and easing insurance accessibility due to digitalization. The trend is expected to continue in 2024 and 2025,” she said.
GlobalData said the demand for private healthcare has driven up health insurance premiums.
Rising service costs and technological advancements have also contributed to higher premium rates, a trend expected to continue in 2024, supporting industry growth.
Verma noted that regulatory developments will further boost the health insurance sector.
From April 1, 2024, the Insurance Regulatory and Development Authority of India (IRDAI) will eliminate the age cap of 65 years for purchasing health insurance policies, encouraging older and high-risk consumers to reassess their coverage. Insurers must now issue policies to individuals with severe medical conditions such as cancer, heart or renal failure, and AIDS.
IRDAI has advised insurers to create products for senior citizens, students, children, and other age groups, although insurers can reassess risk, which may lead to higher premiums.
Other regulatory changes include establishing a new healthcare sector regulator to enhance insurance penetration and implementing composite insurance licenses, allowing insurers to offer life, general, and health insurance under one entity. These measures are expected to attract new market participants, further driving growth.
“The rising demand for health Insurance can also be attributed to the digitalisation efforts of new-age insurers aimed at expanding insurance accessibility using digital platforms. This has led to the adoption of disruptive technologies by insurers to stay ahead of the competition,” Verma said.
GlobalData highlighted that digitalisation has improved operational efficiency across insurance processes, from underwriting to risk analysis.
AI-powered chatbots and virtual assistants have enhanced customer service, while AI and machine learning models have streamlined underwriting, allowing insurers to tailor products to customer risk profiles.
AI/ML tools also aid in guided selling, effective outreach, and fraud detection, reducing costs and improving offerings.
“An increase in health awareness and rising premium rates will support the growth in the Indian health insurance industry over 2024-28. Positive regulatory reforms and initiatives by the government will help in improving the health insurance penetration rate in India (0.35%), which was lower as compared to other regional markets such as Taiwan (1.8%), Australia (0.93%), China (0.78%), and Hongkong (0.67%) in 2023,” Verma said.
India’s general insurance market is also expected to grow immensely, achieving a gross written premium of INR 4.89 trillion (US$57.3 billion) by 2028.
