Health insurance premium in India: Why policies are getting costlier every year; govt explains reasons

Health insurance premiums in India continue to rise every year, but the pace of increase has slowed recently, with the latest data showing a rise of around 9.9 per cent - the lowest in the past three years. The Union government told the Lok Sabha that health insurance premiums keep climbing because of things like higher medical costs, people living longer, more folks buying insurance, and new features getting added to policies.

On March 9, Minister of State for Finance Pankaj Chaudhary answered questions in Parliament and said insurers raise premiums from time to time to match rising healthcare costs and changes in who’s buying the policies. Sure, prices are going up, but regulators and the government are watching closely, trying to keep things fair and affordable so regular people can still get health insurance.

Health insurance premium rise: How much did it increase in recent years?

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According to data shared by the government in the Lok Sabha, the average premium for health insurance policies has gradually increased in recent years.

In 2024–25, families paid an average of Rs 7,020 per person for a floater health insurance policy - about 3.35% more than last year. For individual health insurance, the average premium jumped to Rs 11,187, which is roughly a 10% increase.

Although premiums continue to move upward, the government said the 9.9 per cent increase is the lowest in the past three years, indicating some moderation in price escalation.

Why health insurance premiums increase every year?

The government told Parliament why health insurance keeps getting more expensive. They pointed to a few main reasons.

First, medical inflation is a big one. Hospital stays, medicines, tests, and all those specialized treatments just keep costing more every year across India. When healthcare prices climb, insurance companies have to raise premiums - otherwise, they can’t keep up with what they’re paying out for claims.

Then there’s the fact that policyholders are getting older. As people age, they’re more likely to make claims, and that bumps up the risk for insurers.

How insurers decide the premium amount?

The government said insurance companies must determine premiums using fair and transparent actuarial principles.

Insurers analyse several variables before pricing a policy, including claim history, risk exposure, medical inflation, demographic trends and policy coverage features.

However, the government and the insurance regulator also ensure that premium revisions remain justified and transparent, preventing excessive increases that could burden policyholders.

On November 13, 2025, the government sat down with insurance companies and hospitals to tackle the problem of rising healthcare costs. They talked about how to make healthcare more affordable and easier for everyone to access. People in the room brought up the need for hospitals and insurers to be clearer about costs, cut out some of the red tape in insurance, and make cashless treatment simpler for patients.

Meetings like this are just one piece of a bigger effort to find some common ground between insurers, hospitals, and the people who rely on their services.

Tamil Nadu issue: Government clarifies reports

Some reports had raised concerns that policyholders in Tamil Nadu were facing higher difficulties, including premium hikes, claim rejections or delays in cashless treatment.

Responding to these concerns, the government stated that the insurance regulator Insurance Regulatory and Development Authority of India (IRDAI) has no data suggesting that policyholders in the state are facing disproportionately higher problems compared with other regions.

Rule on premium increase above 10 per cent

The government also clarified that there are regulatory safeguards when premiums increase sharply for certain policyholders.

If an insurer proposes to increase premiums by more than 10 per cent for senior citizen health insurance policies, the company must first consult the IRDAI before implementing the revision.

However, the government said there is currently no proposal to extend this rule to all categories of health insurance policies.

FAQs:

1. Why are health insurance premiums increasing in India?
Premiums rise mainly due to higher medical costs, ageing policyholders, larger insurance coverage and additional policy benefits.

2. What was the average health insurance premium in FY2024–25?
The average premium for a family floater policy was around Rs 7,020 per person.

3. What was the average premium for individual health insurance?
The average premium for an individual policy was around Rs 11,187 in FY2024–25.

4, Is there a rule for premium increases above 10 per cent?
Yes. For senior citizen health policies, insurers must consult IRDAI before raising premiums by more than 10 per cent.

5. What support does the government provide to senior citizens?
Under PMJAY, the government has expanded health coverage to include about six crore citizens aged 70 and above.