Health insurance has become central to the financial planning of Indian households over the past few years. The covid-19 pandemic was a turning point, underscoring the critical role of insurance in shielding families from medical shocks.
While awareness and intent to insure have certainly grown since then, the perceived unaffordability of health coverage remains a challenge. Premiums for comprehensive plans have seen a measured increase, reflecting both medical inflation and advances in treatment quality. For many families — particularly in the middle-income segment — the cumulative cost of insuring ageing parents or dependants is beginning to feel like a major annual commitment.
Even when justified, such expenses are prompting policyholders to re-evaluate what affordability really means in the context of evolving healthcare needs.
Focus on the outcome
Traditionally, health insurers in India have played the role of financial risk managers — by underwriting policies, settling claims, and tracking loss ratios. That model is now under growing pressure. Policyholders increasingly expect a more responsive, transparent and holistic insurance experience — one that supports them not just at the point of hospitalisation but throughout their healthcare journey.
Hospitals, meanwhile, have made remarkable strides. Investments in robotic surgery, AI-led diagnostics, and precision therapies have transformed patient care and outcomes. These innovations are vital for clinical advancement, but they do come at a cost. For insurers, this poses an ongoing challenge: how to ensure that evolving treatment pathways remain accessible without compromising sustainability.
What’s clear is that insurers and providers must move from transactional interactions to outcome-focused partnerships. Consider a procedure like a knee replacement. If a hospital can restore mobility more quickly, resulting in shorter inpatient stays and lower readmission risk, it raises an important question: can reimbursement models evolve to recognise such outcome-driven excellence rather than treating all interventions uniformly?
Some leading insurers are already showing what this future could look like. Wellness-linked incentives, chronic disease management programs, digital consultation services and cashless outpatient offerings are starting to move from pilots to mainstream. Technology is being used not only to improve customer onboarding and claim settlement but also to detect fraud, better understand utilisation trends, and fine-tune pricing models.
This shift requires a deeper understanding of the full spectrum of consumer health needs. Outpatient care — including consultations, diagnostics, and follow-up — remains one of the largest out-of-pocket health expenses in India, yet is still inadequately covered. A data-driven redesign of products in this space could materially improve relevance and uptake, especially among younger or first-time policyholders.
Learn from global best practices
Globally, models are emerging that could offer direction. In the US, value-based care frameworks reward providers based on outcomes, not procedure volume. In parts of Europe, insurers incentivise preventive behaviour through wellness-linked policy benefits. Countries such as Thailand and South Korea have built strong digital health ecosystems that integrate seamlessly with insurance, improving both affordability and reach.
India, with its demographic scale and digital momentum, has a unique opportunity to adapt and leapfrog other markets. The IRDAI has played an enabling role, encouraging innovation, simplifying product structures, and ensuring greater transparency for policyholders. But the real momentum must now come from within the ecosystem — insurers, providers, and digital health players working collaboratively to reshape the narrative.
As Indian families navigate both the financial demands of modern healthcare and the higher expectations they rightly have from their coverage, the opportunity lies in aligning all ecosystem players — insurers, providers, and regulators — towards more collaborative, future-ready solutions that deliver lasting value.
The next wave of growth for India’s health insurance sector won’t just come from broader distribution or better marketing. It will come from building trust — through transparency, empathy, product relevance, and a genuine commitment to care.
Antony Jacob has led one of India’s leading health insurance companies and advises organisations across the healthcare and insurance sectors.