The insurance sector needs a dedicated health regulator, health insurance leaders said on Tuesday at the Business Standard BFSI Insight Summit. However, views remain split on whether to wait for one or address the disconnect between hospitals and insurers immediately.
Panellists said rising healthcare costs, lack of transparency in hospital billing, and disputes over claims were affecting policyholders’ experience. While some called for a regulator to standardise treatment protocols, rates and procedures, others said the industry could begin resolving several of these issues without waiting for a new regulatory framework.
“Every critical industry in our country is regulated, and health is something very, very critical for the people. Forget insurance, it is a basic necessity of people. How can we leave it unregulated? I am unable to understand why the policymakers are leaving this sector to regulate itself,” said G Srinivasan, managing director and chief executive officer (MD & CEO), Galaxy Health Insurance, arguing that a dedicated health regulator was needed to improve transparency and standardisation.
Srinivasan said patients should know how much a particular treatment would cost before entering a hospital. Standard treatment protocols, transparent rates, and uniform procedures across hospitals were also needed, he added.
The National Health Claims Exchange, described as a government initiative to improve the claims process, had not taken off as hospitals had not adopted it adequately, Srinivasan said.
However, another panellist said the industry should not wait for a regulator to address problems that insurers and hospitals could resolve themselves. The disconnect between the design of insurance products and their delivery at hospitals was a key source of friction, the speaker said.
Hospitals often deal with products from 34 insurers and more than 500-600 policies, making it difficult for them to understand the terms and coverage of each product. The resulting mismatch between what insurers offer and what hospitals deliver contributes to an unpleasant experience for policyholders, said S Prakash, CEO for Health Insurance Ecosystem and Strategic Partnerships at the General Insurance Council of India (GIC).
“There are a lot of things in our hands, sir. Today we discuss, tomorrow we can go and implement. This minute, somebody is taking a decision on health and they are suffering. Millions of people are suffering. And we are talking about getting a regulator. What is that we can do tomorrow to reduce grievances and sufferings of a common man,” Prakash asked.
The GIC is working on a dispute-resolution forum to address disagreements between hospitals and insurers over payments, empanelment, delays, and clinical decisions. The proposed forum would have equal representation from hospitals and insurers, along with an industry body and a legal representative, the panellist said.
The Council is also working to empanel hospitals in suburban and peripheral areas to improve access to affordable treatment. Around 4,950 hospitals have been empanelled through an arrangement intended to provide access to all 34 insurers through a single memorandum of understanding (MoU), the panellist added.
A medical specialists’ group is also being set up to help insurers assess treatments in specialised and evolving fields, including oncology and robotic surgery.
The panellist said standard treatment workflows, standardised costs, and automated claims approvals could help reduce disputes and make treatment more accessible at smaller hospitals, rather than pushing patients towards expensive tertiary-care facilities for procedures that could be handled closer to home.
The debate also focused on the need to bring down healthcare costs, which, panellists said, were contributing to affordability concerns and disputes over insurance claims.
“Unfortunately, nobody in India talks of reducing healthcare costs. I don't think when I go to a hospital, I am looking for 7-star facilities. I am looking for quality healthcare. I think the providers or the hospitals need to see how they can bring down the cost of healthcare,” Prakash said.
The speaker said higher treatment costs could make health insurance less affordable, particularly for people who do not have coverage. Hospitals and insurers needed to work together to ensure patients understood what their policies covered and what they would have to pay out of pocket.
The panellists said the industry also needed to improve awareness of policy terms and the importance of disclosing relevant information when buying insurance. Consumers often assume that everything will be covered, only to discover exclusions when they make a claim, the panellists said.
Amit Roy, partner and leader for insurance and allied businesses, PwC India, also highlighted the limited coverage available for outpatient department (OPD) expenses. Around 67 per cent of India's healthcare spending goes towards OPD expenses, while only a single-digit share of health insurance premiums is directed towards OPD coverage, he said.
The speaker also said that about 29 per cent of claims paid in India were settled on a reimbursement basis, requiring consumers to pay first and seek repayment later.
The industry needed to look beyond health insurance towards broader health financing, particularly as people live longer and healthcare requirements increase with age, he said.
Roy said the sector needed greater institutional support to improve awareness of health insurance, including making it part of formal education. Lifestyle diseases were affecting younger people, making early awareness and access to coverage increasingly important.
The panellists said discussions between hospitals and insurers on a code of conduct, hospital categorisation, and standard treatment protocols were progressing, though differences over medical inflation and other costs would take time to resolve.
They cautioned that a regulator alone would not resolve every issue, but agreed that greater standardisation, transparency, and cooperation between healthcare providers and insurers were necessary to improve the experience of policyholders.
 "BFSI Insight Summit: Health insurance leaders split on dedicated regulator")
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