IRDAI red flags sharp hike in health premium for senior citizens, caps increase at 10%

Admitting that health premium for senior citizens has gone through the roof, IRDAI said, “it is observed that there has been steep increase in premium rates under some of the health insurance products offered to senior citizens (aged 60 years and above).”

Over two out of three health insurance policy holders surveyed said their premium increased 50-200 per cent cumulatively over the last 3 years, said Local Circles, a social media platform, which conducted a survey.

Unlike in case of Pradhan Mantri Jan Arogya Yojana (PMJAY) scheme where the hospitalisation expenses are negotiated centrally for package rates and are thus standardised across various hospitals, there is no such standardisation in case of health insurance products. “This is leading to higher hospitalisation costs resulting in higher claims outgo under health insurance products offered by insurers. In this context, the most vulnerable age group is the senior citizens having limited sources of income and this group is impacted the most when there is a steep increase in health insurance premium,” IRDAI said.

“This matter has been engaging the attention of IRDAI and is a regulatory concern,” it said.

The premium rate is primarily based on the estimated claims outgo and the expenses including acquisition costs incurred by the insurance company for acquiring and servicing the insurance policies. The claims outgo is largely dependent on the amounts charged by the hospitals for various treatments/ surgeries, the regulator said.

According to Hanut Mehta, CEO and Co-Founder of Bimapay Finsure, a division of Hindon Mercantile, IRDAI’s latest directive on revising premium rates for senior citizens marks a crucial step towards enhancing affordability and accessibility in the health insurance landscape. “This initiative is set to bring stability, transparency, and trust while simultaneously promoting sustainable practices within the insurance sector,” Mehta said.

“By capping premium increases at a maximum of 10% per year, the regulation introduces pricing predictability, ensuring that senior citizens are not burdened by steep cost escalations. This measure will help insurers retain their customers and prevent policy lapses driven by unaffordable premiums, thereby fostering a more reliable insurance ecosystem,” he said.

IRDAI said the insurer should take necessary steps for common empanelment of hospitals and negotiate package rates on the lines of PMJAY scheme. As part of the ongoing monitoring of insurance products offered in the Indian insurance market, IRDAI will continue to keep a close watch on indemnity based individual health insurance products offered to senior citizens, it said.