Health insurance costs jump 50–200% in 3 years, claims still a hassle: LocalCircles survey

Hyderabad: As per a LocalCircles survey on health insurance in India, in FY2024, insurers registered over 3 crore health insurance claims worth approximately Rs 1.2 lakh crore.

Of these, around 2.7 crore claims were settled, amounting to Rs 83,493 crore. This translates to a settlement rate of about 82 per cent by number, but only 71.3 per cent by value, suggesting that a significant share of claims was either partially settled or rejected.

What are the concerns in health claim processing and settlement

Recent data from the Insurance Regulatory and Development Authority of India (IRDAI) and industry sources indicate mixed outcomes in health insurance claim processing and settlement during 2024–26, with several concerns relating particularly to senior citizens.

Claims disallowed amounted to roughly Rs 15,100 crore, while RFs 10,937 crore worth of claims were repudiated by insurers. The average claim amount stood at about Rs 31,086, and nearly 66.16 per cent of claims were processed through the cashless mode, indicating gradual improvements in claim-processing mechanisms.

Increase in complaints on process

Despite these improvements, concerns persist regarding settlement practices.

Health insurance complaints increased by 41 per cent to 1,37,361 in FY2025, largely due to claim rejection, delays and partial settlements. Notably, more than half of the grievances handled by insurance ombudsmen relate to health-insurance claims, highlighting continuing consumer dissatisfaction, the survey said.

Health-insurance premiums have risen over the past two years rather than declining, prompting regulatory scrutiny. In FY2024–25, total health-insurance premiums increased by about 9.19 per cent to INR 1.27 lakh crore, according to IRDAI.

What are the safeguards against medical inflation?

IRDAI has acknowledged that rising premiums are driven primarily by medical inflation and higher claim costs, and has initiated measures to improve predictability, fairness and transparency in premium revisions.

In early 2025, IRDAI issued a circular specifying that insurers cannot increase premiums for senior-citizen health insurance policies by more than 10 per cent in a single policy year without prior regulatory approval. Insurers must also consult IRDAI before withdrawing any senior-specific health-insurance products, ensuring continuity of coverage for older policyholders.

This cap addresses long-standing concerns regarding steep and unpredictable premium hikes for seniors, which in some cases had exceeded 30–40 per cent, making coverage increasingly unaffordable. The new framework aims to curb volatility, promote actuarially sound pricing, and prevent abrupt repricing of existing products.

What are rules regarding revising premiums?

IRDAI’s principles governing premium revisions include:

- Premium increases must be actuarially justified and based on credible claims experience, and insurers must clearly communicate the reasons for any hike at the time of policy renewal.

- Fresh underwriting cannot be undertaken at renewal solely to penalise policyholders with prior claims, and fundamental policy terms cannot be unilaterally altered during renewal cycles.

- The regulator has also encouraged insurers to adopt measures to contain underlying healthcare costs, including negotiating standardised treatment package rates with hospitals, which could help moderate future premium increases.

Over 4 in 10 policy owners speak about claim rejections over invalid reasons

Rejection or delay in settlement of a health insurance claim can be a very harrowing experience, which unfortunately many undergo, leading to a delay in discharge of a patient. It is worse when the patient is no more and the relatives want to get the body for conducting the last rites.

The survey asked health insurance policy holders, “When you or your family member had a health insurance claim in the last 3 years (2023-2025), what was the outcome with the insurance company?”

Out of 18,989 who responded to the question 15 per cent indicated that the “claim was rejected with invalid reasons”; 15 per cent of respondents indicated that the “claim was only partially approved with valid reasons”; 29 per cent of respondents indicated that the “claim was only partially approved with invalid reasons”; 32 per cent of respondents indicated that the “claim was fully approved”; and 9 per cent of respondents indicated that the “claim was fully approved but after some back and forth with the insurance company”.

5 in 10 policy owners said it took 6 to 48 hours for their claim to be approved

Many health insurance policy holders are forced to run around to get their claims reimbursement approved/settled, despite the IRDAI directive that cashless authorisation requests should be approved within one hour and finalise discharge authorisations within three hours of receiving the necessary requests from hospitals.

The survey asked, “When you or your family member had a health insurance claim in the last 3 years (2023-2025) how long did it take on the discharge day with the hospital and the insurance company to get you out of the hospital?” Out of 18,119 who responded to the question 7 per cent indicated that the “process took 24- 48 hours”; 15 per cent of respondents indicated that the “process took 12-24 hours”; 15 per cent of respondents indicated that the "process took 9-12 hours”; 11% of respondents indicated that the “process took 6-9 hours”; 22 per cent of respondents indicated that the “process took 3-6 hours”; 18 per cent of respondents indicated that the “process took 1- 3 hours”; 8 per cent of respondents indicated that “it was processed instantly” and 4 per cent of respondents did not give a clear answer”.

Over 7 in 10 health policy holders confirm their premium increased 50-200%

The LocalCircles survey asked health insurance policy holders, “How much has your annual health insurance premium cumulatively increased over the last 3 years, i.e. between 2022 and 2025?” Out of 17,200 who responded to the question 21 per cent indicated that the increase was “by 200% or more”; 11 per cent of respondents indicated “by 150-200%”; 21 per cent of respondents indicated “by 100-150%”; 21 per cent of respondents indicated “by 50-100%”; 16 per cent of respondents indicated “by 25-50%”; and 10 per cent of respondents indicated “by 0-25%”.

To sum up, over 7 in 10 health insurance policy holders surveyed confirm that their premiums increased 50-200% cumulatively over the last 3 years.

Survey Demographics

The LocalCircles survey stated it received over 54,000 responses from consumers located in 323 districts of India; 67 per cent of respondents were men, while 33 per cent of respondents were women, 41 per cent of respondents were from tier 1, 32 per cent from tier 2 and 27 per cent of respondents were from tier 3, 4, 5 and rural districts.