Group health insurance

What is group health insurance?

Group health insurance is a health policy bought by one entity, the master policyholder, to cover a group of people who share a relationship with it. The most common form is an employer policy covering employees and, often, their spouses, children and parents. Banks, housing societies, associations and digital platforms also buy group covers for their customers or members.

The group is priced and underwritten as a whole, so individual members usually do not fill in detailed medical questionnaires. That is why group covers often include features retail policies restrict, such as cover for pre-existing diseases from day one or no waiting period for maternity, depending on what the master policyholder negotiates.

How group health insurance works in India

The IRDAI (Insurance Products) Regulations, 2024 define a group as people who come together with a common purpose or a common economic activity. There are two kinds:

The second rule matters: a group cannot be formed only to buy insurance.

IRDAI's 2024 Master Circular on Protection of Policyholders' Interests sets out how group policies are run:

• In an employer-employee policy, the employer shares the policy with every member, and claims are paid directly to the employee or beneficiary.
• In a non-employer-employee policy, the insurer issues each member a certificate of insurance showing benefits, period, premium, terms and exclusions.
• To make cashless cover work from the first day, the insurer must collect member details from the master policyholder early, and no claim can be denied because member details were not available.
• Each member of a group policy must receive the Customer Information Sheet, not only the master policyholder (2024 health master circular).

Group health policies can be indemnity or benefit based. General and standalone health insurers can offer both; life insurers can offer only benefit based group health products. Insurers must allow portability of group health policies at renewal, and the PMC of each insurer must set guidelines for withdrawing a group product, including notice to the master policyholder.

GST. The GST exemption that applied from 22 September 2025 covers individual health policies, including family floaters. The exemption entry applies only where the insured is not a group, so group health policies continue to attract GST at 18%. In January 2026 the Kerala High Court, hearing retired bank employees covered under a bank-sponsored group policy, held that the exemption is limited to individual policies.

What group health insurance means for distribution

Group health is the biggest single segment of health premium for many general insurers, and it is sold mainly through insurance brokers and insurers' corporate teams, with banks and platforms driving the affinity side.

Points that shape the business:

• Annual renewal and price competition. Corporate policies are usually renewed every year on claims experience. A bad year of claims brings a large premium increase or a move to another insurer, so loss ratios in this book are watched closely.
• Service decides retention. HR teams judge an insurer by the claims and cashless experience of their employees. TPA performance, on-site help desks and a single point of contact often matter as much as price. IRDAI requires insurers to monitor TPAs against board-approved criteria and forbids linking TPA pay to the claims ratio.
• Member onboarding. Delays in sending employee data to the insurer used to block cashless claims for new joiners. The rule that no claim can be denied for missing member data shifts that risk to the insurer, so insurers push employers for clean, timely data.
• Employee exits. Cover usually ends when a member leaves the group. Distribution teams can offer exiting members a retail policy, and customers should ask about porting to an individual policy with credit for the time already covered.
• Affinity groups and conduct risk. Covers bundled with loans or accounts must have a genuine group relationship and clear disclosure. Members should know they are covered, what the cover is, and what happens when the loan or account closes. Unclear bundling leads to mis-selling complaints.
• Upsell. A group cover is often a member's first health insurance. Voluntary top ups for parents or higher sums insured, offered through the employer, are a common add-on sale.

Group vs retail health insurance