News Life and Health07 Nov 2024

India:Health insurance premiums expected to grow to US$23.7bn by FY2028

| 07 Nov 2024

Total health GDPI is expected to reach up to INR2.0tn ($23.7bn) by the financial year ending 31 March 2028 (FY2028), according to Bupa Niva Health Insurance in its draft red herring prospectus as the insurer launches an initial public offer.

The forecast is based on Redseer estimates that indicate that retail business is expected to grow at a CAGR of 18-21% over the next four years to INR0.8-0.9tn in terms of GDPI by FY2028. Group health insurance GDPI is expected to grow at a rate of 13-16% over the next four years, driven by an increase in the number of enterprises, and expanding adoption among small and medium-sized enterprises (SMEs).

India’s health insurance sector witnessed rapid growth, with gross direct insurance premiums (GDPI) more than doubling to INR1.08tn ($12.8bn) in FY2024 from INR0.37tn in FY2018, growing at a CAGR of 19.5%. The group and retail health insurance businesses represented approximately 90% of the overall health insurance GDPI. Retail health insurance accounted for 39% of overall health insurance GDPI in FY2024.

The prospectus says that the major drivers of the growth of India’s health insurance industry include:

  1. Regulatory and government support – IRDAI is enhancing health insurance growth through supportive initiatives like “Insurance for all by 2047”, Bima Sugam, and the government-backed AB-PMJAY scheme, a health insurance scheme for low-income households.

    Additionally, employer-provided insurance to employees further contributes to healthcare coverage.

    New and specialised insurers – IRDAI is encouraging supply-side offerings through approvals of new license and product offerings. This is expected to expand the market by targeting new customer segments.

    Evolving healthcare landscape – The fast-developing healthcare landscape in India serves as a significant catalyst for the growth of health insurance. As specialized and high-quality healthcare infrastructure expands, healthcare costs will also grow. In this context, health insurance will play a crucial role in safeguarding household wealth.

    Demand-side: increasing awareness for health – The COVID-19 pandemic has brought about a significant shift in awareness about health, well-being, and the importance of financial protection against unexpected medical expenses, driving the demand for health insurance.

    Development of digital-first ecosystem – Digital enablement across the insurance value chain has streamlined the insurance process. Technology has improved customer experience across the value chain through online purchase channels, AI/ML (Artificial Intelligence/Machine Learning) models for specialised underwriting, identifying fraudulent claims, and expediting processing times.

Threats and challenges facing the health insurance industry

Health insurance companies navigate a complex landscape that is filled with many challenges, including:

  • Rising healthcare costs
  • Fraudulent claims
  • Regulatory compliance
  • Standardisation issues
  • Cyber security risks

 

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