Group health policies lead the way as medical inflation, retail premiums bite

ET Intelligence Group: As medical inflation surges along with rising health insurance premiums, employer group insurance has emerged as the fastest-growing segment of health insurance, according to the industry information provided in the draft red herring prospectus of Medi Assist, India's largest insurance third-party administrator (TPA) that is gearing up for its IPO.

As per the 'Independent Market Assessment of Health Benefits Administrators in Indian Health Insurance Industry' report by Frost & Sullivan commissioned by Medi Assist, there has been a 31% jump in insurance penetration post-Covid aided by a significant jump in insurance penetration in group policies during the pandemic.

Group policies have grown at a CAGR of 18.2% between FY17 and FY22, higher than the growth posted by retail as well as government insurance. With a greater number of companies rolling out employee-centric health and wellness benefits, employer group policies led to a significant increase in lives covered in recent years.

Nevertheless, only 37% of lives were covered under health insurance schemes in India in FY22 with government policies covering 22% and private health insurance covering 15%. It results in high out-of-pocket expenses for the uncovered population at a time when medical inflation is more than double the general inflation rate of 5-6%. This rising healthcare cost is pushing people to buy health insurance.

Consequently, the number of lives covered under health insurance is expected to grow at triple its rate from 3.53% in the five years from FY17-22 to 11.3% over FY23-28. And employer group insurance is likely to be the fastest growing segment with an estimated CAGR of 16.6% over FY23-28.