The General Insurance Council has proposed a mandatory 10% co-payment for retail health insurance policies to curb rising claims. While the move aims to manage costs, critics argue it shifts the financial burden to consumers without addressing systemic issues like high hospital billing and rising broker commissions. The proposal faces scrutiny over its potential impact on market competition and consumer affordability.
The General Insurance Council is advocating for a mandatory 10% co-payment across all retail health insurance policies in India. Under this rule, a policyholder would be required to pay 10% of their total medical bill from their own pocket before the insurance company covers the remainder. The proposal is designed to create a sense of shared responsibility, aimed at reducing the trend of unnecessary claims and helping insurers better manage their loss ratios.
However, the move has triggered significant debate. Industry observers point out that health insurance premiums have surged by 140% between 2018-19 and 2024-25. Critics argue that forcing a mandatory co-payment on top of these rising costs ignores the core drivers of inflation in the healthcare sector. Instead of placing the burden on patients, opponents suggest regulators should focus on transparent hospital billing practices and the rising cost of procedures, which often inflate claim sizes.
Another point of contention is the increase in distribution costs. Between 2023 and 2025, broker commissions for retail health insurance products jumped from 10% to 30%, a 118% rise in commission rates. Critics argue that these escalating intermediary costs have a greater impact on premium pricing than patient-side behavior, and that focusing on co-payments diverts attention away from these inefficiencies in the insurance value chain.
There is also a concern regarding the potential for adverse selection. If health insurance plans become less attractive due to mandatory co-payments, there is a risk that healthier individuals may exit the insurance pool to avoid the extra expense. If the insurance pool is left with a higher concentration of sicker, high-risk individuals, insurers could face even greater pressure on their long-term sustainability, potentially leading to further premium hikes.
From a competitive perspective, the insurance industry relies on product differentiation to win customers. Insurers currently use varying network structures, deductible options, and co-payment tiers to create unique products. An industry-wide mandate for a uniform co-payment could remove these competitive tools, limiting the variety of financial protection options currently available to the public. The next critical step will be the response from regulators, as stakeholders look for a balanced approach that addresses rising claim costs without unfairly penalizing policyholders or stifling market competition.