Health insurance claims jump 21% in FY25, but settlements lag; Irdai flags growing gap, Pg13

Key Highlights:

• Health insurance claims surged by 21.18% in FY25, while the amount settled by insurers only increased by 12.88%.
• Insurers settled 3.26 crore health insurance claims, paying Rs 94,247 crore in FY25.
• Standalone Health Insurance companies (SAHI) mobilized Rs 1.18 lakh crore as health insurance premium in FY25.
• Public sector insurance companies' Incurred Claims Ratio (ICR) was highest at 103%, while SAHIs' ICR was 64.71%.
• Medical inflation and rising healthcare costs have led to sharp increases in health insurance premiums.

Detailed Insights:

• The growing gap between claims filed and amounts settled indicates rising healthcare costs, increased policy utilization, and potential inefficiencies in claim settlement.
• Irdai has expressed concerns over the gap between health claims and settlement amounts, emphasizing the need for prompt, fair, and transparent claim settlements by insurers.
• Rising premiums are a major factor slowing health insurance growth, with some insurers increasing premiums for senior citizens by 50-100%.
• The average cost of healthcare services has increased by over 14% in the past year, driven by advancements in medical technology and rising labor costs.
• Over two-thirds (67%) of businesses are now investing in preventive healthcare to combat soaring medical inflation.
• Irdai directed insurers to implement cashless settlement of health insurance claims from August 1, 2024, to streamline hospital bill settlements.
• In FY24, the average amount paid per claim was Rs 31,086, with 72% of claims settled through Third Party Administrators (TPAs) and 66.16% settled via cashless mode.

Key Concepts Involved:

• Incurred Claims Ratio (ICR): The ratio of actual payouts on claims made by insurance companies compared to the premium collected.
• Medical Inflation: The rate at which the cost of healthcare services increases over time.
• Third Party Administrator (TPA): An organization that processes insurance claims for insurers and provides administrative services to members.