Insurance divide widens: Group health cover outpaces retail with 20% annual growth

A new study by employee health insurance platform Plum has revealed that Indians continue to treat insurance as a reactive purchase, often waiting for major life events or emergencies before securing personal coverage. The analysis, based on over 10,000 personal insurance consultations and a survey of 350+ respondents, highlights how employer-sponsored group health insurance is driving awareness but also exposing gaps in the country’s insurance habits.

According to Plum’s findings, 59% of employees surveyed do not own a personal policy and rely solely on their employer’s group health insurance for protection. For many, this serves as their first experience with insurance. A smooth claims process often acts as a trigger to explore personal policies—40% of policies booked through Plum in the last six months came after employees filed a claim under their employer’s cover.

Group health insurance has also become the growth engine of the sector. Data from the IRDAI handbook shows that penetration through employer-sponsored schemes is growing at an annual rate of 20%, while the retail policy segment remains stagnant.

Individual health cover

However, delaying the purchase of individual health cover comes with serious drawbacks. Over the past six months, 54% of Plum’s personal insurance consultations led to either policy rejection or higher premiums. Insurers outright rejected 20% of applications due to high health risks, while another 34% faced premium loading of 10–50% because of pre-existing conditions such as diabetes or hypertension.

“This is particularly concerning as 71% of India’s workforce is already at risk of chronic disease,” Plum noted in its Employee Health Report 2025. Maternity coverage has its own hurdles—90% of users requesting maternity add-ons did not proceed because of two-year waiting periods, even though most were already planning or expecting.

Shifts in buying behaviour

Plum’s analysis also sheds light on how Indians approach personal cover once they decide to buy. Floater plans covering self and family account for 42% of purchases, while 30% opt for individual policies. Encouragingly, 95% of buyers choose a sum insured of ₹10 lakh or more, reflecting rising awareness of inflation-proof coverage.

Parental insurance remains a strong priority: 23% of customers buy policies specifically for parents, and a quarter of millennials under 30 prioritise parental cover over individual protection. Meanwhile, about 21% of consultations involve porting existing policies due to dissatisfaction with coverage.

Despite increasing awareness, the study underlines India’s reactive mindset. 52% of respondents admitted they sought insurance only after a major life event—such as marriage, a career change, or a health scare.

As group health insurance expands, experts argue that translating this first exposure into timely personal coverage is key. Without it, many Indians risk discovering the importance of insurance too late—when higher premiums, exclusions, or outright rejections are already unavoidable.