IRDAI to introduce Basic Health Covers, Rate Insurers and Hospitals

• 01 Apr 2026
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The Insurance Regulatory and Development Authority of India (IRDAI) is planning to introduce simple and low-cost health insurance policies along with performance scorecards for insurers and hospitals, as reported by The Economic Times. 

This initiative aims to enhance transparency as well as accountability in the health insurance sector. At the same time, it intends to address longstanding issues like claim delays, billing disputes and low insurance penetration. 

Basic Health Plans to Enhance Insurance Coverage

The Insurance Regulatory and Development Authority of India (IRDAI) is planning to introduce basic, no-frills health insurance products. The goal of the Authority is to make these policies more affordable as well as easier to understand by individuals. It is expected that these simplified plans would help more individuals access health insurance, particularly those individuals who find the currently existing policies either complex or costly. 

This initiative also aims to improve insurance penetration in India. Currently, our country’s insurance penetration remains among the lowest in the world. The Confederation of Indian Industry (CII) is collaborating with IRDAI to design these new products, as per the report.

Performance Scorecards for Insurers & Hospitals

Apart from working on introducing basic plans, the insurance market regulator is also planning to introduce performance scorecards for insurance companies as well as the hospitals. It is anticipated that these scorecards will be rolled out in the month of June this year. These scorecards will take into account key factors like the speed at which claims are settled, billing practices and documentation standards. 

The aim of introducing the scorecards is to assist the policyholders when it comes to making better choices by offering them clear details regarding the performance of insurance and hospitals. It is expected that the scorecards would also improve behaviour in the insurance sector by enhancing transparency. 

Performance-Linked Payments

The insurance regulator is also developing a policyholder-first framework that connects hospital payments to their performance. Hospitals that settle claims in a quick manner and adhere to timelines may receive better rates. Conversely, delays, billing issues and inadequate documentation could result in lower payments. 

This initiative is expected to promote greater discipline in hospital billing as well as claims processing. Additionally, the IRDAI is advocating for a shift towards preventive healthcare and wellness-based engagement. 

This move by the regulator represents a departure from the existing model, which gives primary focus to hospitalization. The new strategy aims to support better health management as well as to reduce the requirements for hospital treatments over time.

Rules for Dispute Reduction

The insurance market regulator plans to introduce formal contracts with crystal clear rules to address the frequent disputes that tend to arise between the insurers and the hospitals. The contracts would cover details related to billing practices, processing of claims and dispute resolution mechanisms. 

In addition to the above, the IRDAI wants to make sure the cashless treatment is not withdrawn all of a sudden due to commercial disagreements. Under the new system, it is anticipated that ad hoc suspensions of hospital networks would be discouraged.

The report of the ET outlined that the insurance sector is facing ongoing criticism from patients and also experiencing financial pressure. Earlier, the IRDAI had described the industry as being in an "unstable equilibrium." 

It is anticipated that the proposed changes would enhance stability as well as predictability within the sector. They would ultimately improve the overall experience for policyholders. By prioritizing simpler products, greater transparency and stricter regulations, the regulator seeks to make health insurance more reliable and easier to access by the broader population.

Source:- India Today