India Health Insurance Market By Type of Insurance Provider (Public, Private), By Type of Coverage (Individual, Family), By Mode of Purchase (Insurance Companies, Insurance Agents/Brokers, Others), By Premium Type (Regular Premium, Single Premium), By End Users (Minors, Adults, Senior Citizens), By Sum Insured (Below USD200, USD200-USD600, USD600-USD1200, Above USD1200), By Region, Competition Forecast & Opportunities, 2021-2031F

Market Overview

India Health Insurance Market was valued at USD 16.17 Billion in 2025 and is expected to reach USD 28.52 Billion by 2031 with a CAGR of 9.98% during the forecast period. India Health Insurance Market is expected to be driven by the increasing cost of medical treatments, the growing incidence of chronic diseases, such as diabetes, obesity, and cardiovascular diseases, and the rise in government efforts in promoting insurance coverages. Additionally, the growing awareness about the benefits of health insurance plans are also projected to aid the health insurance market in the country during the forecast period. The health insurance market in this country has been driven by the rise in individual demand for specialized and high-quality healthcare services. Hospitalization charges, medical devices, telemedicine, medical tourism, and medical equipment are among the products and services that are driving the demand for health insurance industry. The Ayushman Bharat Digital Mission has established over 568 million digital health IDs and integrated more than 350 million health records, enhancing accessibility and interoperability in healthcare.

Key Market Drivers

Rising Healthcare Costs

One of the most significant drivers of the Indian health insurance market is the escalating cost of medical care. Over the past decade, treatment expenses in India have increased due to factors such as inflation in medical services, advanced diagnostic tools, improved but costlier technologies, and higher salaries for healthcare professionals. The cost of hospitalization, surgeries, and post-treatment care has surged, making it difficult for individuals to afford quality healthcare without insurance. As per the National Health Accounts (NHA) estimates, out-of-pocket expenditure still accounts for over 48% of total health spending in India. India’s healthcare costs are rising about 14% annually, outpacing inflation and wages. With 62% of expenses paid out-of-pocket, many face financial strain. Healthcare costs are projected to grow 13% in 2025, exceeding global averages. A single medical emergency can deplete an average household’s savings, especially among the middle-income and lower-middle-income groups. This financial vulnerability has driven people to increasingly invest in health insurance as a means of protection against unforeseen medical costs. Moreover, even for those covered under employer-provided group insurance, the limited sum assured often falls short in case of major illnesses or surgeries. This has led to the rising popularity of top-up and super top-up health plans. The perception of health insurance has gradually shifted from a tax-saving tool to a necessity for financial planning.

Government Policies and Regulatory Push

The Indian government's proactive role in expanding healthcare access and insurance coverage has significantly contributed to the health insurance market’s growth. Initiatives such as Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PM-JAY) have aimed to provide free health coverage of up to 6,000 USD per family annually for over 50 crore economically disadvantaged citizens. This has brought millions of previously uninsured individuals into the formal healthcare system. In addition to public insurance programs, the Insurance Regulatory and Development Authority of India (IRDAI) has made key reforms to promote transparency, portability, and simplified claim procedures. Standardized health insurance products like Arogya Sanjeevani have improved access to affordable policies. IRDAI’s initiatives to reduce ambiguity in policy wording, streamline grievance redressal mechanisms, and digitize insurance processes have increased consumer trust and confidence. The government also provides tax benefits under Section 80D of the Income Tax Act for premiums paid toward health insurance, encouraging individuals and families to purchase policies. Further, schemes such as ESIC, CGHS, and state-sponsored health programs have increased the insurance footprint in India.

Growing Awareness and Digital Adoption

Another crucial factor driving the growth of the health insurance market in India is the increasing awareness among consumers about the importance of insurance and preventive healthcare, especially after the COVID-19 pandemic. The pandemic highlighted the fragility of health infrastructure and the financial burden of treatment, pushing even younger populations and first-time buyers to prioritize health coverage. Digital transformation has also played a pivotal role. Insurance companies and insurtech startups are leveraging online platforms, mobile apps, and AI-enabled chatbots to simplify policy selection, premium payment, and claims processing. This digitization has led to improved customer engagement and reach, especially among tech-savvy urban and semi-urban populations. The rise of aggregator platforms like Policybazaar, digital health wallets, telemedicine integrations, and instant claim settlement apps have made health insurance more accessible and user-friendly. People are now able to compare plans, read reviews, and make informed decisions from the comfort of their homes. Furthermore, corporate wellness programs and preventive care packages bundled with insurance are gaining traction, driving policy adoption beyond traditional illness-based coverage. 

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Key Market Challenges

Low Insurance Penetration and Awareness

Despite growth, India’s health insurance penetration remains low. According to IRDAI and National Family Health Survey data, only around 37% of the Indian population is covered under any form of health insurance. In rural areas and among informal workers, this percentage is even lower. A major reason is the lack of awareness about the importance, benefits, and scope of health insurance. Many people still consider insurance only as a tax-saving tool or believe it is only necessary for the elderly or those with existing illnesses. There’s also confusion about terms like pre-existing diseases, exclusions, waiting periods, and co-payments. This lack of clarity causes distrust and reluctance to buy policies. Moreover, language barriers, low financial literacy, and limited digital access further prevent wider adoption in tier-2 and tier-3 cities. Mis-selling by agents and poorly understood policy documents only worsen the issue.

Complex and Fragmented Claim Settlement Process

A persistent challenge in India Health Insurance Market is the complexity and inconsistency in claim processing. Policyholders often face long waiting times, repeated documentation requests, lack of communication, and unclear reasons for claim rejection or partial settlement. This leads to customer dissatisfaction and reduced trust in the insurance ecosystem. Different insurers follow varied processes and approval timelines, especially when dealing with non-network hospitals. Even with cashless hospitalization, pre-authorization delays and hidden charges create confusion for patients. For reimbursement claims, the burden of upfront payment and delayed refund further strains policyholders financially. Moreover, small hospitals in semi-urban or rural areas may not be part of insurer networks, creating accessibility issues. Many consumers are also unaware of claim-related technicalities, such as sub-limits on room rent or exclusions on certain procedures, which often lead to disputes.

Adverse Selection and Fraud Risk

Adverse selection—where sicker individuals are more likely to buy insurance than healthy individuals—remains a significant problem. In India, many people delay purchasing health insurance until they are older or fall sick. This leads to skewed risk pools for insurers and increases the overall cost of premiums, making policies less affordable for others. Fraudulent claims also strain the health insurance system. Examples include inflated hospital bills, non-essential procedures, fake documentation, or collusion between patients and healthcare providers to exploit loopholes. According to IRDAI reports, insurance fraud costs Indian insurers hundreds of crores each year, reducing profitability and increasing administrative costs. These issues push insurers to impose stricter underwriting norms, longer waiting periods, and exclusions, which in turn reduce customer satisfaction and trust. It also disincentivizes younger, healthy individuals from buying insurance early—further deepening the adverse selection cycle.

Key Market Trends

Rise of Digital Health Insurance Platforms

A major trend revolutionizing the Indian health insurance space is the rapid digitization of insurance distribution and servicing. Insurtech platforms and digital-first insurance companies are making it easier than ever for customers to compare plans, get quotes, and purchase policies online without intermediaries. This transformation is driven by increased internet penetration, mobile usage, and consumer preference for convenience and transparency. Online aggregators like Policybazaar and Coverfox, and digital insurers like ACKO and Digit, have simplified the insurance journey with features like instant policy issuance, chatbots, online KYC, and real-time claim tracking. Moreover, digital tools allow better customer segmentation and personalized product offerings. AI, machine learning, and predictive analytics are being used to assess risk profiles and detect fraud, enhancing efficiency and underwriting precision. The Unified Payments Interface (UPI) has facilitated seamless digital transactions, with over 3.55 billion transactions valued at 76.99 billion USD in a single month, supporting the digitalization of insurance premiums and claims.

Focus on Preventive and Wellness-Based Insurance Products

India Health Insurance Market is witnessing a shift from illness coverage to holistic health management. Insurers are increasingly offering wellness-linked products that reward policyholders for staying healthy, participating in fitness programs, or managing chronic conditions. These wellness-based policies often come with incentives like premium discounts, reward points, gym memberships, free health checkups, teleconsultations, and diet consultations. The idea is to shift from reactive healthcare to a preventive and proactive approach, reducing long-term healthcare costs and improving customer engagement. The trend is driven by rising awareness of lifestyle-related illnesses such as diabetes, hypertension, and obesity, especially among urban and working populations. Policyholders now want more than just hospitalization cover they seek comprehensive support to maintain and improve their health. Insurers are partnering with fitness apps, wearable device makers, and health-tech startups to integrate real-time health tracking with insurance plans. This enables insurers to personalize offerings, manage risks better, and create long-term relationships with customers.

Emergence of Micro-Insurance and Inclusive Health Products

Another important trend in the Indian health insurance market is the development of micro-insurance and inclusive health products tailored for low-income and rural populations. Recognizing the vast uninsured demographic in India, insurers are introducing simple, low-cost products with limited but essential coverage. These policies offer smaller sum assured amounts (e.g., ₹50,000–₹2 lakh) at very affordable premiums—often under ₹500 annually. Coverage typically includes hospitalization for major illnesses, accidental injuries, or maternity, with minimal documentation and easy claim procedures. Government and regulatory bodies like IRDAI are supporting this trend through initiatives such as PM-JAY, Rashtriya Swasthya Bima Yojana, and guidelines encouraging insurers to focus on financial inclusion. Insurers are also collaborating with NGOs, microfinance institutions, and digital platforms to distribute these products effectively in remote regions. The use of mobile wallets, Aadhaar-based e-KYC, and vernacular communication are helping bridge the trust and accessibility gap for first-time policyholders.

Segmental Insights

Type of Insurance Provider s Insights

In the India Health Insurance Market, public insurance providers dominate in terms of overall coverage, especially due to their involvement in large-scale government-sponsored health schemes and wide rural reach. Public sector insurers such as New India Assurance, United India Insurance, Oriental Insurance, and National Insurance Company play a pivotal role in providing affordable health insurance to economically weaker sections, senior citizens, and government employees. Their dominance is largely driven by participation in flagship health initiatives like Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PM-JAY), Rashtriya Swasthya Bima Yojana (RSBY), and other state-level health protection schemes. These programs collectively cover hundreds of millions of individuals, especially in rural and semi-urban areas where private insurers have limited penetration. Public insurers also hold a strong position in group insurance segments, especially those linked with public sector undertakings (PSUs), defense personnel, and other government-linked employee benefit schemes. Their extensive branch network, government backing, and long-standing reputation make them a trusted choice among older and middle-income populations. Despite lagging in innovation and digital agility compared to private players, public insurers maintain a dominant share by virtue of volume-based participation in social health programs and trust-based engagement with traditional policyholders, making them central to India’s move toward universal health coverage. 

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Regional Insights

The North region of India stands as the dominant region in the India Health Insurance Market, primarily led by the National Capital Region (NCR), which includes Delhi and its surrounding areas. This dominance can be attributed to a combination of economic prosperity, high urbanization, and strong healthcare infrastructure. Delhi, being one of the most developed cities in India, has a large working-class population that is well-aware of the benefits of health insurance and actively invests in it, both individually and through employer-provided group policies. The region also houses the headquarters of many corporate entities and government organizations, which boosts group health insurance uptake. Higher per capita income levels in states like Delhi, Haryana, and Punjab make health insurance more affordable and accessible. Additionally, the presence of numerous private and public sector hospitals in the region encourages people to seek quality medical care, often backed by insurance coverage. Moreover, awareness about preventive healthcare and financial planning is relatively higher in the North, supported by frequent outreach from insurers and government initiatives. The high concentration of insurers and agents in the NCR further improves policy accessibility and service delivery. With a combination of economic strength, policy awareness, and healthcare demand, the North remains the most influential region in India's health insurance landscape.

Recent Developments

• In 2025, Future Generali India Insurance has introduced 'Health Unlimited', a health insurance plan designed to address escalating medical expenses and inadequate coverage. The plan offers unlimited restoration of the sum insured starting from the second claim, ensuring continuous financial protection even after the initial coverage is exhausted. It encompasses benefits such as in-patient hospitalization, day-care treatments, AYUSH therapies, pre- and post-hospitalization expenses, organ donor costs, and modern treatment methods.
• In 2025, Life Insurance Corporation of India (LIC) is poised to enter the health insurance market through a strategic acquisition. The insurer has shortlisted seven potential targets, including Star Health, Niva Bupa, and ManipalCigna Health Insurance. LIC aims to diversify its portfolio without acquiring a majority stake, adhering to regulatory norms.
• In 2025, Star Health Insurance has launched three new Star Flexi variants—Essential, Preferred, and Secure—under its Super Star plan to cater to different customer needs. The Essential variant targets first-time buyers in Tier 2 and 3 cities, offering coverage starting at ₹5 lakh with benefits like single private room hospitalization and AYUSH treatments. The Preferred plan suits urban families, providing no room rent caps, air ambulance cover, and premium returns for claim-free years.
• In 2025, Care Health Insurance has launched Ultimate Care, a comprehensive health insurance plan that combines extensive coverage with wellness incentives. Key features include a money-back benefit offering a refund of the first year's base premium after every five claim-free years, a loyalty boost that doubles the sum insured after seven claim-free years, and an infinity bonus providing unlimited cumulative bonuses regardless of claims. The plan also offers up to 30% renewal premium discounts through the Healthy Days program and additional welcome discounts for new policyholders.

Key Market Players

• SBI General Insurance Company Limited
• Star Health and Allied Insurance Co Ltd
• Universal Sompo General Insurance Co Ltd.
• ManipalCigna Health Insurance Company Limited
• ICICI Lombard General Insurance Company Limited
• Tata AIG General Insurance Company Limited
• Edelweiss Tokio Life Insurance Company Limited
• Go Digit General Insurance Limited
• Care Health Insurance Ltd
• HDFC ERGO General Insurance Company Limited

Report Scope:

In this report, the India Health Insurance Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• India Health Insurance Market, By Type of Insurance Provider:

o   Public

o   Private

• India Health Insurance Market, By Type of Coverage:

o   Individual

o   Family

• India Health Insurance Market, By Mode of Purchase:

o   Insurance Companies

o   Insurance Agents/Brokers

o   Others

• India Health Insurance Market, By Premium Type:

o   Up to 10%

o   11%-20%

o   Above 20%

• India Health Insurance Market, By End Users:

o   Minors

o   Adults

o   Senior Citizens

• India Health Insurance Market, By Sum Insured:

o   Below USD200

o   USD200-USD600

o   USD600-USD1200

o   Above USD1200

• India Health Insurance Market, By Region:

o   North

o   South

o   East

o   West

Competitive Landscape

Company Profiles: Detailed analysis of the major companies presents in the India Health Insurance Market.

Available Customizations:

India Health Insurance Market report with the given market data, TechSci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

• Detailed analysis and profiling of additional market players (up to five).

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