Rapid Growth of Standalone Health Insurance in India

The standalone health insurance sector in India has been making significant growth, rising above the broader insurance industry with its rapid growth. In recent years, standalone health insurance companies have emerged as key players in the healthcare financing landscape, offering specialised products tailored to the evolving needs of consumers.

In FY24, the general insurance industry saw a significant rise in annual premiums, reaching almost Rs 2.9 lakh crore, marking a 13% increase from FY23. Concurrently, the five Standalone Health Insurance companies (SAHI) experienced remarkable growth, with total premiums soaring by 26.2% to Rs 33,115 crore. This surge in SAHI premiums is attributed to larger policy sizes and premium rate adjustments to combat medical inflation, coupled with expanded coverage.

Analysis reveals that retail health insurance premiums grew at a Compound Annual Growth Rate (CAGR) of 20% between FY12-19, while coverage increased at 11%. However, between FY19-23, premium growth remained robust at 19%, primarily driven by price hikes and higher sum assured, while coverage expansion slowed to 5.9%.

For the 11 months ending Feb 2024, total health insurance premiums, including those from general insurers and SAHI companies, amounted to Rs 98,716 crore, marking a 20% increase from the previous year. This growth underscores the increasing significance of health insurance, constituting 37.5% of total premiums, up from 35.2% the previous year.

New players are shown to be capitalising on its rapid growth. While general insurance companies are also witnessing growth in health insurance premiums, sluggish performance in other segments, like motor insurance, has hindered overall industry growth.

Private insurance companies recorded a robust 14% growth in premiums, reaching nearly Rs 2.5 lakh crore, while public sector insurers showed mixed performance, with Oriental Insurance leading in growth at 17%, and National Insurance lagging behind at less than 1%. Overall, private insurance and SAHI companies increased their market share by one percentage point, indicating a shifting landscape in the insurance industry towards health-centric offerings.

The Standalone Health Insurance sector's significant growth reflects its ability to address evolving consumer needs and deliver value-added solutions in a rapidly changing healthcare landscape. With its focus on comprehensive coverage, product innovation, and digital transformation, standalone health insurers are poised to continue driving the next phase of growth in India's health insurance industry.