Non-life and standalone health insurers settled a record 32.6 million health insurance claims in FY25, improving settlement ratios even as the average payout per claim fell. According to the Insurance Regulatory and Development Authority of India’s (IRDAI) annual report, about 87% of all registered claims were settled during the year, up from 83% in FY24.
The share of repudiated claims dropped to around 8% from about 11% a year earlier, while pending claims edged down to roughly 5% from 6%, reflecting faster processing and tighter oversight of claim decisions. Total payouts rose to ₹94,248 crore in FY25 compared with ₹83,493 crore in the previous year.
However, the average amount paid per claim declined to ₹28,910 from ₹31,086, driven by a higher proportion of lower-ticket claims as retail and group health insurance penetration widened. The data suggest that more people are using health insurance for smaller-value hospitalisations and treatments, spreading benefits across a broader base of policyholders.
Cashless settlement continued to dominate outgo, accounting for about 66.35% of the total claim amount in FY25, broadly stable from 66.17% in 2023–24, on the back of higher ticket sizes for hospital-based cashless treatments. Reimbursement claims made up around 29.34% of payouts, down from 31.35% a year ago, while roughly 3% of claims were settled through a combination of cashless and reimbursement modes.
The improvement coincided with regulatory pressure to make claim settlement faster and more transparent. Irdai has asked insurers to move towards 100% cashless processing, with strict timelines mandating pre-authorisation within one hour and discharge approvals within three hours and has directed that any delays be borne by insurers from shareholders’ funds.
The General Insurance Council has also intensified efforts to expand cashless coverage by working on common hospital empanelment and negotiating reasonable treatment rates. At the same time, the regulator has tightened governance around claim repudiations, requiring all rejections to be approved by a product management committee or a claims review committee.
Third-party administrators (TPAs) continued to handle most claims, but their share declined modestly. In FY25, about 69% of claims by number were processed through TPAs, down from 72% in the previous year, while in-house settlement rose to 31% from 28% as insurers invested in internal claims capabilities.
