India’s health insurance sector is experiencing its highest-ever renewal rates, according to new data from Policybazaar.
The company’s latest data, reported by CNBC TV 18, indicates that both the number of policies renewed and the gross written premium (GWP) associated with renewals have steadily increased over the last five years.
Specifically, the persistency rate for the number of policies has grown by about 4%, while GWP persistency has risen by roughly 7% during this period.
The report attributes these improvements to the increasing popularity of modular health insurance products, which offer policyholders a range of customisation options.
Features such as cumulative bonuses, flexible add-ons, and expanded coverage choices are encouraging more customers to maintain their existing policies through renewal cycles.
One of the main drivers behind the uptick in renewals is the adoption of cumulative bonus plans. These policies automatically boost the sum insured each year, regardless of whether a claim is made, making them more attractive for long-term policyholders.
Policybazaar notes that this mechanism effectively lowers the cost per unit of coverage over time.
Another significant trend is the growing awareness of lifestyle-related illnesses, including diabetes, hypertension, and heart disease. The report highlights a 25% increase in new customers disclosing lifestyle conditions, reflecting a broader shift in consumer attitudes toward health risk management.
Policyholders are also increasingly opting to upgrade their coverage at the time of renewal. Popular add-ons include critical illness riders, daily hospital cash, consumables cover, aggregate deductibles, and discounts for using preferred hospital networks.
Notably, policies with sums insured above ₹10 lakh are being renewed at higher rates compared to those with lower coverage limits.
Analysis of renewal patterns shows that individuals aged 30 and above represent about 80% of the renewing customer base, with this group demonstrating higher persistency than younger policyholders.
Family floater plans are slightly more likely to be renewed than individual policies. Renewal behaviour appears consistent across metropolitan and non-metropolitan areas.
Jitin Jain, head of health insurance at Policybazaar, said renewal rates have reached their highest levels as policyholders increasingly view health insurance as a growing asset rather than a mandatory expense.
“Modular products with cumulative bonuses and flexible riders are giving them reasons to stay invested year after year,” he said, as reported by CNBC TV 18.
Looking ahead, India’s health insurance market is expected to grow substantially. According to GlobalData, the sector is projected to account for 11% of India’s total insurance market by 2028, up from 9.5% in 2023. Market value is forecast to reach US$23.8 billion by 2028, reflecting a CAGR of 12.8% from 2024.
A study by SkyQuest projects that the sector will expand from US$15.99 billion in 2024 to nearly US$38.2 billion by 2032, representing a compound annual growth rate of 11.5%.
Rising healthcare costs, evolving consumer preferences, and wider access to insurance products are cited as key factors behind this anticipated growth.
The expanding middle class is playing a pivotal role in driving demand for both group and individual health insurance products.
While employer-sponsored group plans remain prevalent, individual policies are gaining favour for their flexibility and tailored coverage.
Health insurance offerings in India are segmented by provider type, policy structure, network configuration, and user demographics.
Private insurers continue to hold a larger share of the market than public-sector counterparts, largely due to a broader product range and enhanced service delivery.
Hospitalisation coverage remains the most common policy type, but demand for critical illness insurance is rising, particularly for conditions that can disrupt income.
Regionally, the National Capital Region leads in market size, while states such as Tamil Nadu and Karnataka are seeing the fastest growth, supported by improvements in healthcare infrastructure and increased public awareness.
Recent regulatory changes by the Insurance Regulatory and Development Authority of India (IRDAI) have made it easier for older adults and those with pre-existing conditions to obtain coverage, a move expected to further boost market penetration.
Competition among standalone health insurers and general insurance companies remains intense, with leading firms including HDFC ERGO, ICICI Lombard, and Star Health.
Mergers, acquisitions, and rebranding efforts continue to reshape the competitive landscape.
Digital transformation is also accelerating, with insurers leveraging technology for online policy issuance, claims processing, and telemedicine services.
