India’s health insurance sector has been on a growth trajectory, with double-digit annual expansion and increased awareness post-pandemic. Yet, beneath this surface of progress lies a deepening fault line—the growing crisis of trust between policyholders and insurers. This trust deficit, if not addressed promptly and effectively, threatens to derail the very goal of “Insurance for All by 2047.”
The three key contributors to this crisis are claim rejections, mis-selling, and rising premiums, particularly for senior citizens and those with chronic conditions. Consumers are increasingly voicing concerns about opaque exclusions, long delays in settlements, and technicalities that are often used to repudiate genuine claims. While insurers must protect against fraud and abuse, the balance between risk protection and policyholder service is tipping unfavorably, leading to widespread dissatisfaction.
Another dimension of this trust erosion is mis-selling of health insurance policies, especially via third-party agents or digital platforms. Policies are frequently sold without fully disclosing waiting periods, co-payments, disease-specific sub-limits, or hospital network restrictions. Customers, especially first-time buyers, are left disillusioned at the time of claims. Unfortunately, this experience not only affects them individually but also deters others from entering the health insurance ecosystem.
Equally concerning is the sharp rise in renewal premiums, especially for senior citizens. Despite IRDAI’s recent move to cap annual premium hikes at 10% for new or repriced products, a large portion of legacy health plans still face disproportionate price hikes—sometimes exceeding 50%—due to adverse claims experience. This pricing volatility undermines the very idea of insurance as a long-term financial safety net.
To restore trust, all stakeholders must act. Insurers need to improve communication, transparency, and customer education. Product brochures must be simplified. Claims processing timelines should be monitored with higher accountability. Third-party administrators (TPAs) must be held responsible for adhering to timelines and for keeping the insured informed—without overstepping regulatory boundaries.
The regulator, IRDAI, has made several welcome moves—from tightening TPA norms to introducing Bima-ASBA for secure payments, and envisioning Bima Sugam to simplify distribution. But more is needed. Grievance redressal mechanisms must be made faster, digital, and binding, so policyholders are not left in a loop of delays and blame-shifting.
Finally, as an industry, we must remember that insurance is built not merely on numbers and actuarial models, but on trust, empathy, and a promise kept when it is needed the most. Restoring this trust in health insurance is not just a moral imperative—it is essential for long-term sustainability and for achieving true insurance inclusion in India.
Let us not forget: it takes years to build trust, and just one rejected claim to destroy it.
