The General Insurance Council has proposed a 10% mandatory co-payment for all retail health insurance policies starting January 1, 2027, capped at ₹5 lakh per claim. While insurers aim to tackle rising medical costs, the proposal awaits approval from the IRDAI. Critics argue the move could increase the financial burden on policyholders already managing high out-of-pocket expenses.
The General Insurance Council (GIC) has moved to introduce a mandatory 10% co-payment clause for retail health insurance policies across India. The proposal, if accepted by the regulator, would come into effect on January 1, 2027. Under this plan, policyholders would be required to pay 10% of their hospitalization bills, with the contribution capped at ₹5 lakh per claim.
Insurers have stated that the change is intended to address the rising cost of healthcare. Over the past few years, insurance companies have faced significant challenges due to medical inflation and instances of over-billing by hospitals. By introducing a mandatory co-payment requirement, insurers aim to encourage patients to be more aware of their medical expenses, potentially helping to curb unnecessary diagnostics or treatments that drive up claim costs.
However, the proposal has faced strong pushback from consumer advocates and industry observers. Critics argue that shifting this cost to individuals could harm households that are already struggling with high out-of-pocket medical expenses. When combined with non-payable items in hospital bills, the actual expense for a patient could rise significantly, potentially making the insurance cover feel less effective to the common user. There is also a concern that such a move might erode trust in health insurance products if consumers feel they are paying more for the same level of coverage.
It is important for policyholders and investors to note that this is currently only a proposal. The Insurance Regulatory and Development Authority of India (IRDAI) has not given its approval to this plan. The regulator frequently reviews proposals with a focus on consumer protection and affordability. It is expected that the IRDAI will carefully assess how such a mandate would impact the broader health insurance market before making any final decision.
For the insurance sector, the key monitorable will be the official stance taken by the IRDAI. If the regulator approves the plan, insurers will likely need to adjust their product offerings and premium structures. If it is rejected, the industry will need to find alternative ways to manage rising claims and hospital costs, such as working toward standardized treatment protocols or capping hospital room rates. Investors may watch for future updates from the regulator to understand how this might influence the financial performance and product strategy of health insurance companies.