Rising medical costs continue to be a major burden for health insurance policyholders, and the frequent underestimation of these expenses often leaves them blindsided when it’s time to make a claim.

A recent study from Future Generali India Insurance shows that more than eight out of every ten insured feel unsure about the efficacy of their health cover amid soaring medical costs. Moreover, when faced with a claim, two out of every three individuals feel insecure and inadequately covered as they encounter unexpected bills.

The survey was conducted among 800 insured individuals aged 25-plus. It claimed that India had one of the highest medical inflation rates among other Asian countries in 2021, at approximately 14 per cent, which is higher than China (12 per cent), Indonesia (10 per cent), Vietnam (10 per cent) and the Philippines (9 per cent).

“Rising cost of medical treatment is a cause of concern for a vast majority of people in India, despite having a health cover,” Anup Rau, managing director and CEO, Future Generali India Insurance Company Ltd, said.

A survey from Policybazaar covering 3,955 respondents across 27 metros, tier-2, and tier-3 cities, shows Indians continue to severely underestimate healthcare costs — nearly 48 per cent of policyholders opting for coverage of ₹5 lakh or less and a staggering 75 per cent of health insurance buyers have coverage of ₹10 lakh or less. The survey further showed that only 28.3 per cent of respondents ranked health insurance above equities, mutual funds, and government bonds.

Two more data points remain a cause of concern in the industry. First, the rising medical costs being reflected in rising average claim sizes, and out-of-pocket expenditure on healthcare which continues to remain elevated.

A study by Acko General Insurance in 2024 shows an 11.35 per cent average increase in claim size, which is attributable to a rise in healthcare costs. Moreover, National Health Accounts data shows that out-of-pocket expenditure on healthcare has remained constant at around 1.5 per cent of GDP since 2018-19.

On top of medical inflation, healthcare costs also widely vary across cities, and while efforts are ongoing for standardisation of treatments costs, it is still some time before cross country parity on certain treatments could be achieved.