The General Insurance Council has proposed a mandatory 10% co-payment on retail health insurance policies starting January 1, 2027. Designed to curb rising healthcare costs, this measure could increase out-of-pocket expenses for patients to nearly 19% of their total bills when combined with non-payable items. The proposal is currently pending approval from the Insurance Regulatory and Development Authority of India (IRDAI).
The General Insurance Council is pushing for a significant shift in how health insurance claims are handled in India. They have proposed a mandatory 10% co-payment on all retail health insurance policies, with a target implementation date of January 1, 2027. The primary goal stated by the industry is to reduce the tendency of inflated hospital billing, which insurers argue happens when policies cover the full cost of treatment without any financial participation from the patient.
Impact on Out-of-Pocket Expenses
Under the proposal, a policyholder would be required to pay 10% of their hospital bill out of their own pocket for each claim. This co-payment would be capped at ₹5 lakh per claim. Crucially, the industry has suggested that this 10% portion would be non-waivable, meaning customers would not be able to use riders or other insurance policies to avoid this payment.
While the 10% figure is the headline amount, the actual financial impact on patients could be higher. Health insurance policies generally exclude certain costs, such as consumables, administrative fees, and specific room rent limits. When these non-payable hospital expenses are combined with the mandatory 10% co-payment, analysts project that a patient's total out-of-pocket liability on a large claim could reach approximately 19% of the total hospital invoice.
Regulatory and Market Risks
This proposal is not yet a confirmed regulation. It requires formal approval from the Insurance Regulatory and Development Authority of India (IRDAI), which has the final say on product structures and consumer protection rules. The regulator will likely assess whether this mandate limits access to quality healthcare or reduces the benefit of having insurance, especially for lower-income groups who may struggle to pay a large portion of a medical bill during an emergency.
From a competitive perspective, the proposal faces hurdles. If insurers attempt to implement these terms as a unified industry mandate, it could draw scrutiny from competition regulators. Furthermore, insurers must balance the need to curb costs with the risk of reduced demand. If retail health insurance products begin to require a significant upfront payment from the patient, potential customers might reconsider the value of purchasing comprehensive policies, potentially slowing down growth in the sector.
Investors and policyholders should monitor the IRDAI for an official decision. The regulator may approve the proposal as-is, require changes to protect consumers, or reject it entirely. Until an official circular is issued, current health insurance terms remain unchanged.