As India emerges from lockdown, companies will be mandated to follow Standard Operating Procedures (SOPs) when returning staff to the active workforce. One of the new requirements issued under the SOPs is to provide health insurance for all employees of industrial and commercial establishments, offices, and workplaces, whether they are full time or contractual.


The Insurance Regulatory and Development Authority of India (IRDAI) issued Order No. 40-3/2020-DM-I(A) dated 15 April 2020, which included a provision requiring employers to offer health insurance to employees as part of the SOPs in reopening the business. The regulator advised insurers to offer comprehensive, affordable health insurance coverage to individuals and groups to facilitate compliance with the government’s directions.

Key details

The mandate applies to employers in the industrial and commercial sector, offices, and workplaces, whether the employee works full time or on a contractual basis.

Although no minimum coverage requirements were included in the circular, in response to insurance regulators advice, the leading insurance companies have introduced highly subsidized coverage to ensure organizations are able to comply with the regulations without significant financial impact. Coverage under these plans is very restrictive; highlights include:

  • Maximum sum insured is INR 200,000.
  • Coverage is not extended to dependents or parents.
  • Maternity and preexisting conditions are excluded.

Companies that already offer all employees group health insurance do not have to take any action to comply with the new legislation. Similarly, employees who are covered under the government Employees’ State Insurance (ESI) scheme (those earning below INR 21,000) would not require a new policy to be compliant.

Organizations that have chosen to only provide the statutory benefit under ESI with no private medical coverage for non-ESI employees will need to purchase insurance plans in accordance with the IRDAI directive.

Next steps

Companies should identify staff without existing compliant coverage and should be ready to implement coverage once the directive is finalized.