BENGALURU: Annual premium on health covers have risen by 40-70% for policyholders after insurance companies hiked rates following a regulatory diktat to widen coverage and standardise conditions with regard to exclusions.

For S Vadivel (49), the premium on his family-floater health cover rose 40% to Rs 31,200. “We are a family of 4, including my wife, son and mother. Our agent said this is happening across the board irrespective of age group. If it were not for Covid, I would seriously consider opting out,” he said.
Insurers say the hikes are necessary as the Irdai has asked them to cover a range of conditions excluded earlier.

‘Irdai OK for health policies’ rates’

From pandemics like Covid-19 to age-related ailments such as cataract surgery, knee-cap replacements, Alzheimer’s and Parkinson’s, insurers could earlier exclude them. With regulatory changes in the last one year making it mandatory for them to cover Covid-19, HIV/ AIDs, artificial life maintenance, treatment of mental illness, mental disorders, age-related degeneration, internal congenital diseases, insurers say price rise is inevitable.

“It must be remembered that Irdai has approved these prices for health policies. It is not like insurers are arbitrarily deciding to increase rates,” said an United India official.

Covid coverage, insurers say, is the heaviest burden in recent weeks. Last month, the General Insurance Council appealed to the Supreme Court along with policyholders over exorbitant rates charged by private hospitals for Covid treatment. While most health insurance policies had got Irdai approval before the pandemic, brokers say that insurers are raising rates by pricing policies at the highest end of the rate band approved by the regulator, instead of pricing it mid-range.

Insurers say that standardisation of the cooling period for exclusions is pushing up costs. Irdai had ruled that every health insurance product should scover all pre-existing diseases disclosed after the expiry of 48 months or lower time period.

Another industry-wise trend that industry observers are seeing - is the change in slab-based pricing. "So earlier, insurers used to have larger age-wise bands of 25-35, 35-45, 45-55. As policyholders crossed these age-bands there would be a price increase. But increasingly, the market has been flooded with new products, which have a shorter age-band of 5-years. So that means every 5 years, prices change for customers. There are even products, where every year, the insurer can change the price. However, this is to the customers benefit, as it ensures customers pay the most accurate premium at the right age," says Amit Chhabra, business head, health, Policybazaar.com