Govt mulls restrictionson medical cover costs; stricter disclosurenorms on the table

The government has begun discussions with the insurance regulator, industry executives and hospital groups on ways to rein in surging health insurance premiums, as rising medical costs and uneven claim settlements strain the system.Officials are considering measures including caps on premiums, limits on agent commissions and stricter disclosure norms. Some of these proposals have been sent to the Insurance Regulatory and Development Authority of India (Irda) for review.The government is also pushing for closer coordination through the National Health Claims Exchange to digitise and streamline the claims process, while keeping a close watch on whether insurers are passing on the benefits of the recent goods and services tax (GST) reductions to policyholders. ET Bureau Monitoring Lower Payouts“Some of these suggestions have been shared with Irda, and the regulator will take a final call,” a government official told ET. The GST Council had in September cut taxes on a host of goods and services, bringing it down to nil on individual health insurance premiums.Live EventsThe regulator has flagged persistent gaps in the health insurance market, including instances of lower-than-expected claim payouts. Earlier this month, Irda chief Ajay Seth reiterated this, adding that it’s closely monitoring the amount settled in health insurance claims, which are sometimes lower than expected. Another official said Irda may also examine commission practices, which currently come under insurers’ management expenses, and may look at tightening the framework. The regulator recently restricted annual premium hikes for senior citizens after noting steep increases in some products.Agent commissions are part of expenses of management, and in the case of stand-alone health insurance companies, the limit is 35% of the gross written premium by the insurer. For health insurance, new policies generally offer up to 20% commission on the premium amount, and up to 10% on renewals. Irda didn’t respond to queries.The discussions come amid heightened pressure on the sector, with insurers pointing to galloping medical inflation, inconsistent billing practices and the growing use of high-cost technologies. Hospital groups have pushed back, arguing that their margins remain thin relative to insurers. The finance ministry met insurance and hospital representatives last week and urged them to work together to reduce costs and improve transparency as the government weighs possible interventions in the pricing and claims ecosystem.As per Aon’s Global Medical Trend Rates Report 2025, medical inflation in India is pegged to rise 11.5% in 2026, higher than the global average medical trend rate of 9.8%.Add as a Reliable and Trusted News Source Add Now! (You can now subscribe to our Economic Times WhatsApp channel) Read More News oninsuranceinsurance coversmedical insuranceinsurance premiumsGST on insurance (Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online....moreless (You can now subscribe to our Economic Times WhatsApp channel)Read More News oninsuranceinsurance coversmedical insuranceinsurance premiumsGST on insurance(Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online....moreless