A surge in health insurance adoption has been recorded across India, with the number of first-time buyers on the online platform Policybazaar increasing by 277% between the 2022 and 2026 financial years. According to the platform, this influx resulted in nearly 18 lakh new customers entering the health insurance system during the four-year period. The trend reflects a broader shift in market participation, with smaller urban centers playing a pivotal role in the expansion of coverage.
Data indicates that Tier 2 and Tier 3 cities have become the primary drivers of this growth, accounting for 67% of all new first-time purchasers in FY26, compared to 56% in FY22. Between FY22 and FY26, the number of buyers from these smaller cities grew by 351%, consistently outpacing the national growth rate in each of the four years. Approximately seven out of every 10 new first-time buyers during this timeframe originated from these regions.
Regional data highlights significant momentum in specific areas, particularly in Kerala. Cities such as Malappuram recorded a 128.34% year-on-year growth, while Kottayam, Alappuzha, Thiruvananthapuram, and Palakkad saw increases of 122.66%, 120.76%, 114.74%, and 113.63%, respectively. Outside of Kerala, cities like Nagpur and Coimbatore also reported substantial interest, with growth rates of 53.33% and 57.40% respectively.
The demographic profile of these new policyholders suggests that young and middle-aged professionals are the most active segment. Individuals aged between 26 and 35 comprised 27.66% of the new buyer base, while those aged 36 to 45 accounted for 21.98%. Combined, the 26 to 45 age group represented nearly half of the total first-time buyers. Conversely, only 7.36% of these new policies were purchased for households where the eldest member was over the age of 65. A notable gender gap remains in the data, with men accounting for 82.81% of new buyers, compared to 17.19% for women.
Beyond the volume of new policies, there has been a significant change in the value of coverage being purchased. The average sum insured for first-time buyers doubled from Rs 6.3 lakh in FY22 to Rs 13.1 lakh in FY26. By the 2026 fiscal year, 68% of new policies provided coverage of Rs 10 lakh or more, a stark increase from 32% in FY22. Among these, the Rs 10 lakh cover became the most popular option, representing 51% of all policies. Industry observers noted that coverage levels saw a particular increase following the removal of GST in September 2025.
Sarbvir Singh, joint group CEO of PB Fintech, the parent company of Policybazaar, attributed the sector's growth to the successful integration of new customers into the formal insurance system. Singh noted that these individuals are often in their late twenties or thirties, focused on protecting their families, and are opting for higher initial coverage amounts than buyers in previous years. He emphasized that the company’s objective remains to simplify the selection process for first-time buyers while providing support during the claims process.
This growth trend aligns with broader efforts by the Insurance Regulatory and Development Authority of India (IRDAI) to expand insurance reach to the “missing middle”—a segment of the population that has historically remained outside the formal insurance net. As the market continues to evolve, the increasing uptake in smaller cities suggests that the accessibility of digital platforms is playing a critical role in bridging the insurance gap across the country.
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