With health insurance complaints rising 41% on year in FY25, driven by claim disputes, delays and partial settlements, Insurance Regulatory and Development Authority of India (IRDAI) will hold a joint meeting of hospitals and insurers by mid-March to find a common solution to policyholder grievances, including on the rising cost of health insurance. One of the most effective ways to moderate premium increases is to expand the risk pool, Irdai chairman Ajay Seth told Prasanta Sahu. Edited excerpts.
After enabling 100% FDI, are foreign insurers showing interest in going solo in India?
The reform provides greater strategic flexibility to global investors. The decision to ‘go solo’ is ultimately a commercial one. Many joint ventures have been successful partnerships combining global expertise with strong domestic distribution and market understanding. Therefore, we may see a mix of models continuing.
Insurers have flagged inflated costs charged to insured patients versus uninsured patients by hospitals. How do you plan to address it?
Health insurance has a significant unmet need. People want affordable products. We held extensive meetings with general insurers to understand their pain points and expectations from hospitals. Four days ago, I met health service providers of all sizes, and in mid-March, we plan a joint meeting bringing insurers and providers to the same table to solve common problems together. The goal is greater certainty and trust between both groups serving policyholders, improving value for customers while ensuring sustainable business for insurers and providers. Hospitals report delayed claim settlements and ad hoc deductions, showing gaps on both sides that the regulator wants addressed through dialogue and shared solutions.
Policyholder grievances in health insurance rose 41% in FY25. What immediate steps will IRDAI take to improve claims experience and accountability?
IRDAI has introduced major regulatory reforms in health insurance, including prohibition on denial of coverage in emergencies, and stronger disclosure norms such as prospectus, customised benefit illustrations. We have imposed strict turnaround timelines. Another important area is strengthening coordination between insurers and hospitals. We are promoting clearer service-level standards, faster cashless authorisation processes, and better data sharing to minimise disputes at the time of hospitalisation and discharge. We are also contemplating wider adoption of standardised health insurance products offering basic coverage, so that customers have access to simple, comparable, and affordable options, with a hassle-free claim experience. Our objective is clear that health insurance must deliver confidence at the time of need. The focus is on faster settlements, greater transparency, and stronger accountability across the value chain.
Do you think the shift of oversight of the National Health Claims Exchange (NHCX) to IRDA will help curb excessive hospital billing for insured patients?
There is no proposal to shift the oversight of the NHCX to IRDAI. However, IRDAI is fully supportive of the implementation of NHCX, as it has the potential to bring common standards, uniform data formats, and greater transparency across the health insurance value chain. effective cost management requires hospitals to follow defined treatment protocols and adopt standardised coding and documentation practices. It is also important to recognise that health insurance premiums are a function of multiple factors, with medical inflation being the most significant driver. In the medium term, one of the most effective ways to moderate premium increases is to expand the risk pool. Greater insurance penetration spreads risk across a larger population base, improves diversification, and supports more stable pricing.
Despite IRDAI’s efforts, life insurance penetration has fallen fr the third straight year to 2.7% of the GDP in FY25. What is your strategy to reverse the decline?
In a fast-growing economy like India, strong GDP expansion can compress the penetration ratio even when the absolute size of the life insurance sector continues to grow. India’s life insurance penetration, at around 2.7%, is only slightly below the global average of about 3%, indicating that while there is room for improvement, the gap is not entirely structural rather reflects the dynamics of a rapidly expanding economy. With increasing financial awareness, expanding middle-class aspirations, supportive policy measures, and technology-led distribution efficiencies, we believe the medium to long term trajectory of life insurance coverage remains strong. Our focus is not merely on improving a ratio, but on ensuring that more households have meaningful financial protection and long-term security.
Insurance mis-selling remains a major concern. What new measures are planned to curb it? Will channel-wise caps, for Banca, for instance, be considered?
Insurance mis-selling remains a serious concern because it undermines consumer trust and affects the long-term sustainability of the sector. Our approach addresses both preventive measures at the front end and firm action at the enforcement stage. The Reserve Bank of India’s recent draft guidelines relating to bancassurance also reiterate the long-standing regulatory emphasis on fair practices, transparency, and avoidance of mis-selling in bank-led distribution. Customer protection has always been central to the approach of financial sector regulators, particularly where products are distributed through trusted institutions.