Co-payments can widen health insurance access if customer costs stay manageable: Policybazaar's Amit Chhabra

India’s general insurance industry is at a crossroads. While rising healthcare costs and growing awareness are creating demand for more comprehensive protection, affordability, inadequate coverage, and concerns over claims continue to constrain adoption. The debate over mandatory co-payments in health insurance has brought these challenges into sharper focus, raising questions about how much of the financial burden should fall on policyholders when they need medical care. 

Amit Chhabra, chief business officer – General Insurance at Policybazaar, believes cost-sharing mechanisms can help make health insurance more affordable, provided customers’ out-of-pocket expenses remain reasonable, and predictable. He also sees major growth opportunities beyond the metros, particularly in health, motor, home, cyber, and SME insurance. In an exclusive interview with Fortune India, Chhabra discusses the industry's evolving priorities and what it will take to build customer trust. 

Co-payments can improve affordability, but the balance matters 

According to Chhabra, co-payment is a well-established global insurance construct, with cost-sharing mechanisms being used across several mature insurance markets. The broader rationale is to create a more balanced sharing of risk between the insurer and the policyholder, while also helping address the affordability and long-term sustainability of health insurance. 

A defined co-payment can also translate into lower premiums, making comprehensive health insurance more affordable and potentially bringing more customers into the insurance fold. In a market like India, where affordability remains one of the barriers to wider health insurance adoption, this is an important consideration. 

At the same time, any move towards a mandatory co-payment needs to strike the right balance. The purpose of health insurance is to provide meaningful financial protection when a customer faces a major medical expense, and the customer's out-of-pocket exposure therefore needs to remain reasonable and predictable. 

Health and motor will drive the next phase of growth 

The biggest hurdle is that insurance is still not seen as an essential part of financial planning by a large section of the population. There is awareness that insurance is important, but the understanding of how much cover is needed and what risks need to be protected is still evolving. 

Affordability is another important consideration. The industry needs to continue innovating around product design and pricing so that meaningful protection can be made accessible across different customer segments and price points. Cost-sharing options can play a role here by helping bring down premiums and making health insurance more affordable. 

There is also a significant gap between insurance penetration and insurance adequacy. Having a policy does not necessarily mean being adequately insured. This is particularly relevant in health insurance, where medical costs can be substantially higher than the cover many customers carry. The conversation therefore needs to move beyond simply increasing the number of policies to improving the quality and adequacy of protection. 

Simplicity is another important piece. Insurance can be difficult for customers to understand, particularly when it comes to exclusions, waiting periods, deductibles, co-payments and other terms. Products and communication need to become simpler so that customers have a clear understanding of the protection they are purchasing. 

And ultimately, trust is built at the time of a claim. A customer may not fully appreciate the value of insurance when buying a policy, but that value becomes very clear when a major medical event, accident or other unexpected event occurs. A seamless claims and servicing experience can therefore have a much larger impact on long-term insurance adoption than simply improving the sales journey. 

Smaller cities account for 65–70% of Policybazaar's business 

Health and motor will remain the two principal engines of the general insurance market. In health, the opportunity is particularly significant because the conversation is moving beyond simply having a policy to having adequate coverage. Rising healthcare costs, greater awareness and increasing willingness to spend on better healthcare are all creating a structural need for higher and more comprehensive health cover. 

Motor will continue to be a large and recurring market, but there is still substantial opportunity to grow further. Vehicle ownership is expanding beyond the largest cities, the used-car market is growing, and the transition towards electric and connected vehicles will create new insurance needs. The opportunity is therefore not just in selling more motor policies, but in making motor insurance more relevant to the changing vehicle ecosystem. 

Beyond these two established categories, there is significant headroom in home, cyber and SME insurance. As household wealth increases, the pool of assets requiring protection is also expanding, creating an opportunity for home insurance to become a more meaningful part of household financial planning. Similarly, as consumers and businesses become increasingly digital, cyber risk is becoming a much more tangible financial consideration. 

SMEs are particularly important because India's small and medium businesses are becoming more formalised and digitally integrated. Their risk profile is consequently becoming more complex, spanning physical assets, inventory, employees, business continuity and digital risks. This creates an opportunity for insurance to play a much larger role in the overall risk-management framework of these businesses. 

Travel will also continue to benefit from rising disposable incomes and greater domestic and international mobility. 

Tier-II and Tier-III cities now account for approximately 65–70% of the business, and importantly, this segment is growing faster than the larger cities. The larger cities are continuing to grow as well, so this is not a story of one market replacing another - it is a story of insurance demand becoming much more broad-based geographically. Over the last three years, there has also been a significant shift in the regional mix, with the South growing faster than the North and West. 

Claims are the real test of an insurer's promise 

Claims are where the insurance promise is ultimately tested. Buying a policy is only the beginning, the real moment of truth is when a customer or family needs to use it. That is why the focus needs to move beyond simply looking at claim settlement ratios to the quality of the claims and servicing experience. 

At Policybazaar, there has been a significant expansion of the support provided through the claims journey. In FY26, 2.45 lakh health claims were supported, with a 90% customer satisfaction score. 

There are also very tangible examples of where intervention can improve the experience. Through Claim Samadhan Diwas, more than 577 long-pending health claims have been resolved, amounting to over ₹7.8 crore. On the motor side, Claim Kavach and the Assured Delivery Programme now work across 300+ garages in 193 cities and have helped reduce repair turnaround times by nearly 30%. 

At the time of a claim, a customer may be dealing simultaneously with the hospital, TPA, insurer, documentation and approvals. The next step in the industry is therefore to make these touchpoints work as one connected system, so that the customer does not have to navigate each stakeholder independently. That is the thinking behind initiatives such as PB Care+, which is designed to support customers through documentation, approvals, and discharge formalities. 

For customers, the best way to avoid claim-related complications is to start at the time of purchase. Complete and accurate disclosure is critical, particularly for health insurance. Customers should disclose pre-existing conditions and relevant medical history rather than assume that something will not matter later. 

It is equally important to understand the policy before buying it - particularly exclusions, waiting periods, room-rent limits, deductibles, co-payments and sub-limits. A policy should be evaluated on the protection it provides, not simply on the premium. 

EVs will push insurers towards more data-led pricing 

EVs will require the motor insurance industry to develop a different understanding of risk, particularly because the economics of an EV are different from those of an internal-combustion vehicle. 

The battery is a substantial component of an EV's value, and battery damage, replacement costs, repairability, and residual values can affect the economics of a claim very differently. Repair ecosystems are also evolving, and the industry is still building a meaningful claims history for EVs. 

That data will become increasingly important. Conventional motor insurance benefits from decades of information on accident frequency, repair costs and component-level risks. EVs do not yet have the same depth of historical data. As the base grows, better data on battery health, vehicle usage, driving behaviour, repair patterns, and claims outcomes should allow insurers to assess risk more precisely.