The Insurance Regulatory and Development Authority of India (IRDAI) has, in more recent times, shifted its regulatory focus toward the concerns of policyholders — a departure from an earlier orientation that centred predominantly on expanding the sector. A consultation paper proposing changes to how insurance products are sold points toward a regulatory push to broaden consumer access to cover.
No reciprocal movement from the insurance sector appears to have taken place. A ten per cent co-payment requirement on all retail health insurance policies is being examined through a proposal put forward by the general insurance industry, with a targeted rollout date of 1 January 2027. Pressure has mounted on the regulator to take a stand against the proposal.
Three distinct areas of concern attach to a mandatory ten per cent co-payment requirement built into every health insurance policy. Among the arguments put forward for expanding health insurance access in India, one centres on data showing that households with limited incomes can face financial strain when a single unexpected medical event arises.
Data from the 80th round of the NSS Health Survey, carried out in 2025, found that when hospitalisation became necessary, private facilities handled the care of roughly 58 per cent of patients from rural areas and around 65 per cent of those from urban settings. Among the 44 per cent of patients whose bills were supposed to be covered through government schemes or insurance arrangements, out-of-pocket spending on hospital care still averaged ₹50,508 per person. At roughly ₹2 lakh per head each year, the country's average income sits well below what such a figure would demand of household budgets.
Lowering what patients pay directly, while strengthening what insurers cover, stands as the stated aim of the policy. Coverage gaps can surface even for those who hold comprehensive policies, as insurers routinely settle claims at amounts below what was billed. According to figures released in the most recent IRDAI annual report, health insurers across FY25 approved roughly 71 per cent of total claim value submitted by policyholders.
Available data point to health policyholders absorbing a portion of these costs through out-of-pocket arrangements that have yet to be formally recognised. A compulsory ten per cent co-payment layered onto existing costs would represent an added financial pressure for those affected.
Those who purchase health insurance individually in India face a double strain: premium levels that industry data show running well above what group-policy holders pay, with claim settlements that analysts describe as uneven — a structure that effectively lets employers' pooled plans stay affordable at the individual buyer's expense. Applying a co-payment requirement to individual purchasers rather than across all buyer categories would deepen the gap that already exists between them.
In putting forward the clause, insurance providers have contended that hospitals routinely inflate patient bills and conduct diagnostic tests that may not be medically warranted. Proposals to cap room rates featured among the recommendations contained in a detailed hospital-reform document released by a Parliamentary Standing Committee.
Calls have gone out to the health insurance sector to play an active part in shaping these proposals, with the aim of reaching workable agreements between insurers and hospitals on what constitutes fair pricing for procedures and accommodation.
Co-payment provisions have long been available as an optional feature within policies, giving buyers a way to bring down their premiums or allowing underwriters to account for applicants who carry elevated risk profiles. Without a standardised co-payment requirement in place, individual arrangements of this kind remain permissible on an ad hoc basis.
