New Delhi, April 6 Financial protection gap for critical illnesses is widening even as employers and insurers ramp up preventive care and cost sharing mechanisms to shield workers and families from rising treatment costs, a report said on Monday on eve of World Health Day.
The professional services firm Aon said that employers in India are increasingly investing in preventive care, outpatient benefits, and digital health and wellness solutions, reflecting a broader shift toward proactive health management due to this gap.
"Employers are increasingly recalibrating plan structures, introducing cost-sharing mechanisms such as voluntary top-ups, co-pay models, and employee-funded riders," the report said.
The firm highlighted that India’s protection gap is high when compared to peers globally creating a huge room for insurance industry growth.
While employer-provided health insurance is widespread, it is typically focused on inpatient care, with average coverage levels of Rs 3–5 lakh. Critical illness riders, where available, tend to be limited to Rs 5–10 lakh amounts that are often inadequate for serious health events involving prolonged treatment and recovery.
The report flagged a widening gap between the true cost of critical illnesses and the financial protection available to individuals and families.
The critical illness protection gap is the shortfall between the actual financial impact of a serious illness and the protection available through insurance, employer benefits, and personal savings.
Globally, the gap is widening, and especially in high-growth regions such as Asia Pacific, the Middle East and Africa, and Latin America, where medical inflation continues to outpace wage growth and benefit expansion.
Healthcare inflation in India — estimated at around 11.5 per cent — creates hurdles for employer-sponsored health plans to provide adequate coverage.
The report urged a holistic approach that integrates insurance design, employer benefits, and individual financial planning to close the gap.
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