Health insurance premium growth has seen a significant slowdown after reaching record highs during the Covid-19 pandemic. The tapering demand from retail consumers, driven by affordability issues, has contributed to this decline.
According to data from the General Insurance Council, health insurance premiums grew by 10.44 percent year-on-year (Y-o-Y) in the April-January period of FY25, compared to 20.79 percent in the same period the previous year. In FY23, the growth rate was 23.57 percent, while in FY22, it was even higher at 25.89 percent.
Several factors have contributed to this slowdown:
Post-Covid Demand Plateau: The demand surge for health insurance witnessed during the Covid-19 pandemic has started to plateau. As the pandemic’s immediate threat wanes, consumers are less inclined to prioritize health insurance purchases.
Affordability Issues: Rising medical costs and high premium rates have made health insurance less affordable for many consumers. This has particularly affected lower-income groups who find it challenging to allocate funds for health insurance amidst other essential expenses.
Market Saturation: The rapid growth in health insurance uptake during the pandemic has led to a level of market saturation. Many consumers who were driven to purchase health insurance during the pandemic have already done so, resulting in a reduced pool of new customers.
Increased Awareness and Alternatives: Consumers are becoming more aware of alternative options for managing healthcare expenses, such as government schemes, community health programs, and employer-provided health benefits. This increased awareness has diverted some demand away from traditional health insurance policies.
Regulatory Changes: The Insurance Regulatory and Development Authority of India (IRDAI) has implemented several regulatory changes to protect consumers. These include capping premium hikes and mandating coverage for specific illnesses. While these changes benefit consumers, they have also affected the growth trajectory of health insurance premiums.
