Synopsis

India is considering sweeping health insurance reforms to standardise treatment rates, coverage and billing, while expanding a nationwide claims exchange, sources said. A regulatory panel is expected to submit recommendations by year-end as authorities seek to curb medical inflation, reduce fraudulent claims and encourage greater insurance coverage across the country.

Mumbai:India is weighing wide-ranging reforms of health insurance, from benchmarked treatment rates to a nationwide claims exchange, as it looks to boost transparency in a struggle to hold down some of the highest medical inflation in Asia, two sources said.

Medical inflation of roughly 12% to 14% a year, according to industry estimates, puts pressure on families and prompts authorities to hunt ways to standardise pricing and coverage, said the sources, who are directly familiar with the matter.

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Reform recommendations are expected by year-end from ‌a panel of regulators, ⁠industry leaders, ⁠hospitals and the Confederation of Indian Industry (CII) group, with implementation to be rolled ut later, added the sources, who sought anonymity as the discussions are private.

"The idea is to benchmark treatment rates, agreed between insurers and hospitals, to reduce disputes and fraudulent claims," said one of ​the sources.

Industry estimates suggest 10% to 15% of health claims are unwarranted or fraudulent, one of the sources said.

The chief of the Insurance Regulatory and Development Authority of India (IRDAI) chairs the panel, the sources said.

The regulator IRDAI did not ​respond to requests for comment. A CII spokesperson declined to comment.

India wants more of its population of 1.4 billion to invest in health insurance, where ​such spending stands ​at less than 4% of GDP, as compared to a global average in excess of ⁠7%.

It has lifted curbs on foreign investment and reformed distribution of its $130-billion insurance ​industry in the effort to do so.

More than 40 insurers, including joint ventures ​of global groups such as Lombard, ERGO and AIG, operate in India's health insurance market, generating premiums of about 1.17 trillion rupees ($12.3 billion) in the fiscal year ended March 2025.

Just this week, lawmakers urged government action to make private healthcare more affordable, as rising costs for consumers prompt authorities to focus on health insurance.

Standardised tariffs and billing transparency are seen as the biggest levers to slow the rampant growth of costs over time, said one of the sources.

The ‌reforms envisage a common health insurance product that all insurers will be required to offer alongside existing plans, aiming to standardise coverage and rates for a range of illnesses and procedures, the sources ​said.

It could also include a ⁠uniform list of admissible treatments that makes coverage provisions easier for policyholders to understand.

The widely varied rates and coverage now on offer from providers prompt consumers to switch policies more often in search of the best deal.

The committee will also push for wider adoption of the National Health Claims Exchange, a platform developed by India's health ministry and the insurance regulator, the sources said.

It would offer hospitals and insurers a common format to share claims and billing data, allowing faster settlement by speeding up verification and making prices more transparent.

"By functioning as a bridge ... the common exchange can significantly speed up time to settle claims at the time of discharge," said Amit Chhabra, the chief business officer of online insurance marketplace Policybazaar.