Policyholders have been grappling with significant health insurance premium hikes in the past year, and a recent survey reveals they may need to brace themselves for further increases. Health insurance premiums have surged between 25-50 percent in the last year, and insurance companies are likely to propose additional hikes of 10-15 percent in the months ahead. These projected increases come on the heels of a decision by the Insurance Regulatory and Development Authority of India (Irdai) to amend norms – a move that caught industry insiders by surprise given the steep premium raises allowed over the past two years.
The findings from a survey conducted by LocalCircles paint a stark picture: 52 percent of personal health insurance policy owners reported a premium jump exceeding 25 percent in the preceding 12 months. Based on data from 11,000 health policy owners, 21 percent faced a drastic 50 percent increase, while 31 percent experienced rises in the 25-50 percent range. Other respondents indicated more moderate hikes, with 31 percent seeing a 10-25 percent increase and only 2 percent noting a marginal 0-10 percent rise. A fortunate 15 percent reported no change in premiums year-over-year.
LocalCircles shed light on regulatory changes, noting that Irdai has revised the definitions of pre-existing conditions and the moratorium period in health policies to take effect from April 1, 2024. Notably, the waiting period for pre-existing disease (PED) coverage is now mandated to reduce from four years to three, and PED’s moratorium period has been cut from 96 months to 60. During this ‘no look back’ period, insurers will not reassess the PED. These changes emerge at a time when consumers already face difficulties with claim processing.
Despite the ongoing restructuring in health policy norms, the regulatory authority has yet to present a strategy to curb the spike in health policy premiums. Policyholders, having endured substantial premium increases in recent years, now face the prospect of further hikes in 2024. The health insurance sector itself has shown a strong compound annual growth rate (CAGR) of 20 percent, closing the previous financial year with close to Rs 1,00,000 crore in premiums.
Comparative analysis reveals a decrease from 62 percent in 2022 to 52 percent in 2023 in the proportion of policyholders who have seen premiums soar by over 25 percent. The year 2022 saw health insurance premiums climb significantly, partly because insurers anticipated another COVID-19 wave and preemptively raised premiums.
As insurance companies seek sizeable annual premium increases, policyholders continue to struggle with inefficient claims processing. LocalCircles emphasizes the necessity for Irdai to harmonize premium augmentation with claim processing improvements. This would make health insurance more consumer-centric, according to the platform.
The insurance sector is not without its contentious issues, as evidenced by the Department of Consumer Affairs. With 5.5 lakh pending consumer complaints, almost one-third (approximately 1.6 lakh cases) are insurance-related grievances. Citizen challenges with health insurance claims are notable: 43 percent of those who filed a claim in the past three years reported complications, ranging from rejections and exclusions to deductions and, most frequently, delays.
According to LocalCircles, their recent survey drew over 11,000 responses from policyholders across 324 Indian districts. The demographic breakdown revealed that 67 percent of respondents were men and 33 percent were women, with a geographical distribution of 39 percent from tier 1 areas and 31 percent from tiers 3, 4, and rural settings.
In the financial year 2022-23, the general insurance industry settled health policy claims totaling Rs 75,000 crore over more than 2.5 crore cases, cites the General Insurance Council (GI Council), the highest authority of general insurers. The industry endeavors to enhance claim processing, with over 60 percent of claims currently settled on a cashless basis—a number set to rise. Moreover, policyholders now are offered cashless treatment at upwards of 40,000 hospitals, and policy renewals are guaranteed without individual premium loading based on health status.
With a steadfast commitment to refining customer experiences and claim settlements, the GI Council is optimistic about the future of health insurance. Tapan Singhel, Chairman of the GI Council, believes in the transformative potential of the ongoing efforts: “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.”
