Insurers may be burning their fingers in urban health portfolios for some time now, but the government’s rural healthcare initiatives, including its decision to provide free generic drugs to public hospitals, are set to offer fresh avenues of growth for them.

The recent government decision to provide free generic drugs to government hospitals at an expense of $5.4 billion (Rs 29, 820 crore) could be a game-changer for the health insurance business in India. While insurers suffer a high claim ratio in urban centres, in excess of 100 per cent, the cost of health insurance in rural centres is expected to come down with the new regulation.