In a significant move to streamline the health insurance process, the Centre is planning to mandate that insurers approve cashless authorisation requests within one hour and settle final claims within three hours, according to sources close to the development.
The proposed changes are part of broader efforts to enhance consumer trust and improve health insurance penetration across the country. Alongside faster approvals, a professional agency may be roped in to design simplified, standardised claim and application forms. These forms would be easier for consumers to understand and fill out, while ensuring quicker and full settlement of claims.
Efforts to expand insurance access
“The idea is to have BIS-type standards in the insurance sector that streamline operations,” said an official, referring to the Bureau of Indian Standards. The reforms are aligned with the Centre’s aim to provide affordable insurance coverage to all citizens by 2047, as outlined by the Insurance Regulatory and Development Authority of India (IRDAI) in November 2022.
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Outstanding claims are rising sharply
According to IRDAI, outstanding insurance claims surged to 25 million as of March 2024, up from 17.5 million in March 2023 and 8.5 million in 2022. Meanwhile, gross direct premiums underwritten by general insurers during April–November FY25 stood at ₹2.05 lakh crore, marking an 8.89% growth over the same period last year.
Healthcare spending is still low
India continues to spend less on healthcare compared to both developed and several developing nations. As per WHO data, the country’s healthcare expenditure as a percentage of GDP lags behind nations such as Brazil, Nepal, Sri Lanka, and Thailand.
Insurance penetration in India rose marginally from 3.9% in 2013–14 to 4% in 2022–23, while insurance density increased from $52 to $92 in the same period.
Experts say the move could boost coverage
Shashwat Alok, associate professor of finance at the Indian School of Business, welcomed the proposal. “Insurance coverage remains low partly because people are unsure if their claims will be honoured. Faster claim approvals could build trust, expand the customer base, and help insurers price products more competitively,” he said.
However, he cautioned that the success of the reforms would depend on strict accountability for insurers and hospitals, along with parallel efforts to raise awareness and affordability.
PNN
