Health claims rise: Combine base policy, super top-up for high coverage

The average health insurance claim payout on Policybazaar.com’s platform increased from Rs 62,014 in 2022-23 to Rs 81,025 in 2024-25 (year-to-date), an increase of 30.7 per cent. About 38 per cent of the total claim amount paid was to individuals in the 18–35 age group. These and other numbers put out by the insurance aggregator reveal trends in health insurance claims that warrant suitable responses from customers.

 

Rising claim sizes 

The increase in claim sizes is driven primarily by medical inflation. “Medical inflation in India has hovered at around 14 per cent for the past two years,” says Amitabh Jain, chief operating officer, Star Health and Allied Insurance.

 

 

Technological advancements have also contributed. “Technological advancements like robotic surgeries have pushed up treatment costs,” says Devang Mody, chief executive officer (CEO), Bajaj Finserv Health.

 

The growing presence of corporate hospital chains and luxury healthcare facilities has led to higher claim amounts. Policies, too, have evolved to offer broader coverage. “Policies now include coverage for consumables, modern treatments (without caps), AYUSH, maternity, and other benefits,” says Shashi Kant Dahuja, executive director and chief underwriting officer, Shriram General Insurance.

 

Jain highlights that product features like lower deductibles and multiple restorations of the sum insured have also contributed to higher payouts. Seasonal illnesses like dengue have exacerbated the situation. “With increased awareness, individuals choose hospital treatment over self-medication even for ailments like dengue, which contributes to higher claims payout,” says Siddharth Singhal, head–health insurance, Policybazaar.com.

 

Higher claims from urban centres 

Policybazaar.com found that Maharashtra accounted for 14.5 per cent of total claims, with an average claim size of Rs 86,402. Delhi followed, contributing 10.2 per cent of claims with an average size of Rs 100,600.

 

What can customers do? To combat rising health insurance expenses, an adequate sum insured is essential. “Even though the average claim size is Rs 81,025, severe cases can cost as much as Rs 30–40 lakh. We advise clients to buy a base policy of Rs 10 lakh with a premium of Rs 16,000 for a family of three (eldest aged 35). Adding a super top-up of Rs 90 lakh, which would cost Rs 2,500–3,000, provides Rs 1 crore coverage for around Rs 19,000 annually,” says Singhal. Opting for monthly premium payments can ease stress.

 

S. K. Raghav, managing director, Lords Mark Insurance Broking Services, recommends selecting insurers with strong cashless networks to avoid out-of-pocket expenses.

 

Young adults lead in claims 

Individuals aged 18–35 accounted for 38.2 per cent of total claims, according to Policybazaar.com data. This group is susceptible to seasonal ailments (fever, viral infections, etc.), injuries, and accidents. The incidence of chronic conditions like diabetes and heart ailments is also increasing among them.

 

“Changing lifestyles and lower immunity are contributory factors,” says Dahuja.

 

According to Raghav, higher utilisation of policies to meet maternity expenses is playing a part. Jain attributes this phenomenon to increased stress levels.

 

What should customers do? The fallacy that health insurance is necessary only at an older age, say in the 50s and beyond, needs to be done away with. “One hospitalisation bill of Rs 20–25 lakh can significantly impact a family’s finances. A health cover should be purchased as soon as one starts earning,” says Singhal.

 

Buying at a younger age also means one can choose from a wider range of policies. The chance of the policy proposal being rejected is lower. Raghav adds that the young can also accumulate no claim bonuses (NCB) over time.

 

 

Combating financial burden of chronic diseases

 

>Claims arise due to both seasonal and chronic diseases, but managing chronic ailments such as heart conditions and cancer is more challenging due to higher costs

>A critical illness plan can provide additional financial security by offering a lump-sum payment upon diagnosis; this can be used to meet non-hospitalisation expenses

>It can also help when hospital bills rise beyond the sum insured of the standard hospitalisation policy

>Buying policies that offer regular check-ups can also help by enabling earlier detection