In recent years the issue of health insurance fraud in India has surged into the spotlight. According to a new joint report by Boston Consulting Group (BCG) and Medi Assist Healthcare Services, the country’s health-insurance ecosystem is losing about ₹8,000-10,000 crore each year due to fraud, waste and abuse (FWA).
These leakages are straining insurer profitability, driving up premiums and undermining trust in the system.
Key Figures & Trends
- The estimate of ₹8,000-10,000 crore annual leakage comes from the BCG-Medi Assist study
- The gross written premium of the health-insurance market is about ₹1.27 lakh crore in 2025, and projected to grow to roughly ₹2.6-3 lakh crore by 2030
- The report identifies that roughly 90% of claims are “risk-free”, about 2% are confirmed fraudulent, and the remaining ~8% lie in a grey zone of abuse/inefficiency which presents the biggest opportunity for improvement.
- Fraud risk is particularly high in “mid-ticket” claims: claims in the range of ₹50,000 to ₹2.5 lakh show higher incidence of misuse.
- Claims below ₹50,000 are also emerging as fraud hotspots because paperwork is minimal and checks are weaker.
Why It’s Happening: Root Causes of Health Insurance Fraud India
Fragmented systems & weak controls
Data systems across payers, providers, third-party administrators (TPAs) and hospitals remain fragmented. The absence of standardised billing codes, weak authentication and insufficient cross-checks allow abuses to flourish.
Incentive misalignment & lack of deterrence
When mid-ticket claims are easy to manipulate, the incentives favour small-scale fraud. With limited audits and weak penalties, the deterrence is low
Rising claim sizes & healthcare inflation
The average claim size has jumped about 40% in five years, partly due to healthcare cost inflation (12-14% annually, possibly higher). This amplifies the effect of even modest levels of abuse.
Impacts of Health Insurance Fraud India
- Higher premiums: Insurers pass on costs of fraud to policy-holders in the form of higher premiums, reducing affordability.
- Reduced insurer margins: With persistent leakage, profitability is constrained; the report suggests that a 50% reduction in FWA could lift profitability by ~35%.
- Undermined public trust: When genuine claimants face stricter checks because of rising fraud, the trust in insurance models erodes.
- Out-of-pocket burden: As insurers tighten scrutiny, some legitimate claims may be delayed or rejected, increasing out-of-pocket payments by households.
What Must Change: Measures to Curb Health Insurance Fraud India
The report outlines a three-pillar framework: Prevention, Detection, and Deterrence. Key recommended actions:
- Standardised medical coding & shared data-ecosystems: Align claims, hospitals and TPAs via unified codebooks and integrated platforms such as Ayushman Bharat Digital Mission (ABDM) and the National Health Claim Exchange (NHCX) for real-time verification.
- AI and automation: Use anomaly-detection, predictive analytics, generative-AI to flag suspicious claims and shift from retrospective audits to real-time prevention.
- Stronger regulatory and legal frameworks: Include fraud monitoring committees in insurers, shared intelligence repositories, clearer deterrence mechanisms and criminal liability for deliberate fraud.
- Targeting the “grey zone” (~8% of claims): Efficiently reduce the area of ambiguous abuse rather than focusing only on large fraud cases.
Outlook for India’s Health Insurance Market
With the market projected to double in size by 2030, tackling fraud is not optional — it is critical for sustaining growth. If losses continue unchecked, the sector may face:
- Rising premiums that hinder insurance penetration
- Smaller-ticket insurers dropping out or becoming unviable
- Slower adoption of health-insurance products by consumers
Conversely, effective implementation of fraud-control strategies could accelerate growth, improve profitability and bolster trust.
Final Thoughts
Health insurance fraud in India has graduated from being an occasional issue to a systemic threat — draining up to ₹10,000 crore annually from the system. A shift toward integrated data, smart detection and regulatory reform is urgently needed. For insurers, policy-holders and the health ecosystem at large, addressing health insurance fraud in India means lower premiums, better access and stronger financial sustainability.
