Mumbai: The recent exemption of retail health insurance from the goods and services tax regime has helped reduce premiums. But that alone is not enough to drive growth as the industry continues to battle issues such as high medical inflation, inadequate coverage, differentiated healthcare and claims experience, insurers said in a panel discussion at Mint's BFSI Conclave 2025.

"The premiums have come down by 18%. Does it mean that everyone is going to take insurance? No, that's not going to happen immediately. It's going to take time…price is one of the levers," said G. Srinivasan, managing director and chief executive officer at Galaxy Health Insurance, adding that there is a need not just for more people to buy health insurance but also increase their cover.

He believes the solution is for the industry to come out with products that are meaningful to customers and to focus on other areas of healthcare such as OPD (out patient department) costs. This could help health insurance become one of the first "pull products" in insurance, rather than a push product like other segments.

"The understanding of people about the need for health insurance is very high, but it has not materialized into everyone taking adequate health insurance," Srinivasan said.

"Healthcare inflation is a national issue, it's not just an insurance issue. That's one thing which we have to deliberate more on," said Animesh Kumar Das, managing director and chief executive officer at Acko General Insurance, adding that the "outdated" positioning of health insurance as a sector needs radical transformation. "It's (health insurance) a hack, not a voucher. People should not buy it as something which they need to redeem."

In addition to integrating OPD or wellness or preventive care to manage and optimize health insurance costs, there is also a need to factor in the decreasing age of financial decision-makers, affordability and positioning of insurance products.

"Ten years from here, which is 2035 or so, almost every financial decision-maker at home will be a population which is born after the internet, and their way of getting introduced to any kind of product is very different than what the generation a decade back was doing," he said.

The biggest challenge here, according to Rakesh Jain, executive director and chief executive officer at IndusInd General Insurance Co, is how to standardize the claims experience for policyholders and become more protocol-orientated as an industry. "When we talk about 40,000 hospitals and maybe hundreds and thousands of clinics, how do you handle a health crisis for an individual if your architecture is so varied?"

While proposals such as a common empanelment platform are seeing a lot of interest and should help, material progress has been slow due to friction between ecosystem players. "The logic of common empanelment is we want standardization of rates," Srinivasan said, adding that till then "pinpricks in the whole claims process will continue".

Satishwar B., managing director and chief executive officer of Bandhan Life Insurance, highlighted that a key part of cost optimization is also to weed out frauds and make the onboarding process simpler by embedding health records into the ecosystem.

In addition to affordability, the GST cut on retail insurance has also helped increase discussions around and improve awareness about life insurance, given that it being seen as an acknowledgment by the government of the necessity of insurance, Satishwar said.

Traffic on Bandhan Life's website has gone up by 25-30% for term insurance products over the last two months, Satishwar said, adding that he is optimistic that the increase in volumes will help amortise the increase in expenses due to loss of input tax credit over a period of time.

Srinivasan was more skeptical about the increase in volumes, saying its "still early days".

"We may see some spikes, but insurance is not like automobiles. You will have to really wait and see how this evolves," he said adding that in the medium- to long-term he does expect health insurance to increase, given the high healthcare costs and medical inflation of 12-14%.

What makes Jain optimistic is the compounding need for insurance, given Indian consumers' need to control volatility in their life and financial decisions, and the extent of under-insurance in the country.

"Today, in almost 30% claims, people find their insurance is inadequate after they take it. Now, people have started to define what they need. People are linking their lifestyles to it; it's not just about survival or existence. It is about the quality of life," said Jain.

From 22 September, GST on individual life and health insurance policies was cut to zero from 18%, but the removal of input tax credits has raised insurers' costs. They earlier claimed input tax credit on categories such as commissions, office rent and brokerage. This allowed insurers to reduce their overall GST liability on premiums by partly offsetting the tax paid to their vendors against premiums received from customers.