Health policy premium jumps by up to 50% in a year, ‘set to rise further’

After the 25-50 per cent rise in the health insurance premium in the past one year, insurance companies are likely to hike health premiums by another 10-15 per cent in the coming months.

The reason for another round hike is likely to be the Insurance Regulatory and Development Authority of India’s (Irdai) decision to change the norms, said an industry source, adding, that it was “a surprise” that Irdai had allowed insurers to jack up premium steeply in the past two years.

According to a survey conducted by LocalCircles, 52 per cent personal health insurance policy owners said their premium has increased by over 25 per cent in the last 12 months. Out of the 11,000 health insurance policy owners who responded, 21 per cent of health insurance policy owners indicated that the increase in premium was 50 per cent or more in the last 12 months while 31 per cent indicated that it has risen by 25-50 per cent, it said.

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Of the remaining respondents, 31 per cent indicated an increase of 10-25 per cent, while 2 per cent indicated 0-10 per cent increase in premium rates and 15 per cent denied any increase in premium as it “was same as last year”. In essence, 52 per cent of health insurance policy owners surveyed say their premium has increased by over 25 per cent in the last 12 months, the survey said.

LocalCircles said insurance regulator has updated the definitions of the pre-existing condition and moratorium period (MP) in health insurance policies from April 1, 2024. While the waiting period for pre-existing disease (PED) coverage in health insurance policies has been reduced from four years to a compulsory three years, the moratorium period of PED has been shortened from 96 to 60 months. Insurance companies enforce a “no look back” policy during this period. The move comes at a time when consumers are struggling to get their health claims processed.

While the Irdai is yet to come out with a proposal to check the ballooning health policy premiums, policy holders are deeply concerned with a significant rise in premium in 2024 after already experiencing high double digit increases in the last 2 years.

The health insurance sector recorded a premium of close to Rs 1,00,000 crore in FY24, reflecting a robust compound annual growth rate (CAGR) of 20 per cent.

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“A comparative study with the survey results of 2022 shows that the personal health insurance policy owners who had seen an increase in their premium by over 25 per cent has dipped from 62 per cent in 2022 to 52 per cent this year,” the survey said. The year 2022 was marked by heavy increases in health insurance premiums as many insurance companies were projecting another wave of COVID in 2022-23 and had increased premiums in anticipation.

Also Read | IRDAI abolishes age restriction on health insurance product

“While on the premium front, the insurance companies want a hefty increase each year, the claims processing continues to be inefficient with one in two who files a health insurance claim struggling. It is time Irdai steps in to rationalise the increase in premiums along with processing of claims so health insurance becomes citizen centric,” LocalCircles said.

Almost one-third or 1.6 lakh cases out of total 5.5 lakh pending consumer complaints received by the Department of Consumer Affairs are of the insurance sector. In the latest LocalCircles survey released last week, 43 per cent citizens who filed a health insurance claim in the last three years explicitly indicated that they had difficulty in getting it processed. Complaints ranged from outright rejection to exclusions to deduction and most commonly, delays, it said.

The survey received over 11,000 responses from personal health insurance policy holders located in 324 districts of India. 67 per cent respondents were men while 33 per cent respondents were women. 39 per cent of respondents were from tier 1 locations, 30 per cent were from tier 2 locations while 31 per cent were from tier 3, 4 and rural locations, it said.

Settled 2.5 crore claims worth Rs 75,000 crore: GI Council

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MUMBAI: The general insurance industry settled health policy claims of around Rs 75,000 crore involving over 2.5 crore cases in 2022-23, according to the General Insurance Council (GI Council), the apex body of general insurers. “This figure is expected to rise significantly in 2023-24 as efforts to streamline processes continue even further. Today more than 60 per cent of claims are settled on a cashless basis, with this only expected to go up over time, especially with ‘Cashless Everywhere’,” GI Council said.

The GI Council said it has constantly engaged with providers (hospitals) as well as TPA over the issue of streamlining experience for customers and making claims a friction-free process, through joint dialogue and collaborative solutions.

Currently, policyholders can avail themselves of cashless treatment at over 40,000 hospitals across various insurance networks, the council said. “Furthermore, policy renewals are now guaranteed, and individual premium loading based on health status is no longer permitted,” it said.

“A lot has already been achieved and we firmly believe we are on the right path to completely revolutionize the way health insurance is perceived. The aim is to alleviate concerns and simplify the lives of people, ensuring that they have the confidence and support they need to secure their health needs,” said Tapan Singhel, Chairman of the General Insurance Council.