Whalesbook
Cancer Insurance in India Faces Growing Payout Challenges
A comprehensive analysis of cancer insurance claims in India by Plum's Data Labs has uncovered a concerning trend: shrinking insurance payouts and escalating out-of-pocket expenses for patients. The insurtech startup's report, which studied data from 8,102 insurance claims over the past three years ending Q3 2025, highlights a significant financial strain on individuals battling cancer. The total cost of cancer treatments covered by these claims amounted to a staggering ₹78 crore, with policyholders forced to contribute ₹23.2 crore from their own pockets. This left an overall insurance payout ratio of only 70.8 percent.
Soaring Treatment Costs
The cost of cancer treatment in India varies dramatically, presenting a formidable financial hurdle. Data indicates that the minimum cost for liver cancer treatment started at ₹74,600, potentially soaring to ₹23.06 lakh. Leukemia treatments ranged from ₹1.65 lakh to ₹40.56 lakh, while brain cancer treatment costs spanned ₹3.43 lakh to ₹43.68 lakh. Ovarian cancer treatment could cost up to ₹16.16 lakh. A case study of a 30-year-old female patient revealed ₹6.31 lakh spent over nine months for early-stage carcinoma in situ, encompassing hospitalizations, chemotherapy, and consultations. Another 39-year-old female incurred ₹43.68 lakh for a 28.4-month breast cancer treatment involving multiple hospital stays and extensive chemotherapy.
Financial Implications and Rising Deductions
The Plum report further revealed that a substantial portion of patients face limits with their insurance coverage. One in every 4.7 patients exceeded the ₹5 lakh insurance limit, and a significant 21.4 percent of cancer patients found their costs exceeding the ₹5 lakh cover altogether. Worryingly, the rate of deductions applied to cancer-related insurance claims has surged by 58 percent over the last three years. These deductions often occur when hospital charges exceed policy limits, such as for room rent or non-medical expenses, or when treatments use off-label drugs or those not yet approved in India, leaving patients to bear the full cost.
Regulatory Landscape and Expert Views
Sunayana Basu Mallik, Partner at King Stubb & Kasiva Advocates and Attorneys, explained that insurers manage costs through mechanisms like waiting periods, sub-limits, co-payments, and exclusions for experimental treatments. "These contractual mechanisms often result in deductions even when the treatment is medically necessary, particularly in the case of newer oncology therapies," she stated. Sauroab Arora, CEO of Plum, questioned whether regulatory bodies like the Insurance Regulatory and Development Authority of India (IRDAI) could influence payout ratios and urged insurers to eliminate sub-limits on first-line cancer treatments. The IRDAI's Guidelines on Standardisation and Coverage of Modern Treatment Methods 2019, consolidated in the 2024 Master Circular, mandate coverage for 12 modern cancer treatments, requiring clear disclosure of sub-limits and exclusions.
Impact
This situation significantly impacts Indian households by increasing financial vulnerability during critical health emergencies. For the insurance sector, it raises questions about the adequacy of current policies and the need for greater transparency and fairness in claim settlements. The rising out-of-pocket expenditure for cancer treatment may also influence demand for more comprehensive health insurance products. The impact rating for the Indian stock market is 6 out of 10, reflecting a moderate influence on the insurance sector and related financial services.
Difficult Terms Explained
Deductible: An amount the insured must pay out-of-pocket before the insurer starts paying for a claim.
Co-payment: A cost-sharing agreement where the insured pays a fixed percentage of the claim amount.
Sub-limit: A predefined maximum cap on amounts for specific treatments within a policy.
Exclusions: Specific conditions or treatments that a policy explicitly does not cover.
Survival Period: A set number of days a patient must survive after diagnosis before critical illness benefits are paid.
Carcinoma in situ: Cancer that is in its earliest stage and has not spread to nearby tissues.
Immunotherapy: A type of cancer treatment that uses the body's immune system to fight cancer.
Robotic surgeries: Minimally invasive surgical procedures performed using robotic systems.
Stem cell therapy: A treatment that uses stem cells to repair or replace damaged cells and tissues.