Insurance Regulatory and Development Authority of India (IRDAI), the Indian insurance regulator and the General Insurance Council of India (GIC), a body of the general and non-life Indian insurers, have begun talks with the federal government for the establishment of an independent healthcare regulator in the country according to a report by moneycontrol.com.
The media report said this initiative has been spurred by two major issues - fraudulent practices and discriminatory pricing by hospitals based on a patient’s insurance status. India has several other regulators for the financial industry and markets like IRDAI for insurance, Securities and Exchange Board of India (SEBI) for capital markets and the Reserve Bank of India (RBI) for banking, however, there is none for the healthcare industry that lacks pricing standardisation and oversight.
The moneycontrol.com report quotes GIC Re CMD Mr Ramaswamy Narayanan, “Today, when a patient walks into a hospital, the first question asked is whether they have an insurance policy. If the answer is yes, the hospital’s attitude, and pricing, often changes dramatically.”
In a recent interaction with Asia Insurance Review, Insurance Samadhan co-founder and COO Shilpa Arora had said, “The insurance industry has made notable strides towards standardisation in health insurance. A lot more, however, needs to be done to ensure complete standardisation of the healthcare sector. Setting up a dedicated healthcare regulator, enhanced government collaboration and increased cooperation between insurance industry and healthcare community would be important to achieve this goal.”
Indian insurance industry leaders have said that healthcare costs are rising significantly and are expected to double in six years. Hence, to make healthcare more affordable for all Indians, it is important to increase the outlay for public healthcare to 2.5% of GDP.
Out-of-pocket healthcare spending in India has reduced from 64.2% in 2013-14 to around 40% in 2021-22, but further steps are needed to achieve Universal Health Coverage. Health insurance has become a vital safety net for Indian families.
The move for a healthcare regulator could not have come at a better time than now, when healthcare costs are rising faster than inflation. According to ACKO Health Insurance Index 2024 medical inflation in India is at around 14% annually, more than double the retail inflation rate. This rapid surge is causing medical bills to balloon, escalating the financial strain on families and pushing many to incur debt for healthcare expenses.
Looking at the growth of healthcare sector in India, establishing a healthcare regulator is an imperative for improving health insurance penetration and trust in the insurance industry.
The moneycontrol.com report quotes Aon’s 2025 Global Medical Trend Rates Report which says that the Indian insurance sector has seen a 30% increase in health insurance claims over the past three years, between 2021-22 and 2024-25 fuelled by inflated billing practices, especially for the insured patients.