India health premiums rise 200% amidst medical inflation and trust gaps

Poor risk assessment, unregulated hospital pricing, and claim rejections have kept combined ratios above 120% for five years.

India’s health insurance affordability crisis is deepening, with over 70% of consumers reporting premium hikes of 50% to 200% as medical inflation, hospital pricing and claims distrust pressure the market.

Rasleen Kaur, Head of Corporate Strategy and Investor Relations at PB Fintech Limited, said premium increases are being driven by two main factors: medical cost inflation and weak risk assessment when policies are first sold. In offline sales, she said, agents may fill out forms incorrectly or fail to declare chronic conditions, leaving insurers with incomplete risk information.

“When the portfolio starts to become old, the chronic patients start to claim more, which eventually leads to prices going up for the old portfolio,” Kaur said. In India, prices cannot rise only because one customer has claimed, so increases apply across the wider portfolio.

Bharat Khamari, Practice Head for the Insurance Division at GlobalData, said medical inflation is around 14% in India, compared with general inflation of around 3.5% and global medical inflation of around 10%.

Chronic diseases, higher claim frequency and seasonal hospitalisation have pushed health insurers’ combined ratio above 120% for the last five years.

Hospital costs remain a major pressure point. Khamari said India lacks a dedicated healthcare price regulator, whilst some hospitals have moved away from standard package pricing and added separate charges for services such as disinfection. Kaur said PB Fintech is developing PB Health to align payer and provider incentives so hospitals do not overcharge or overtreat.

Trust is also driving the backlash. Kaur said there is mistrust between insurers, hospitals and consumers, with patients unsure whether claims will be paid or whether treatment is standardised and evidence-driven.

Khamari said insurers need to communicate price increases more clearly. He added that a 41% jump in health insurance grievances in 2025 has intensified frustration over claim rejections and partial settlements.