Preparations for big relief on health insurance, IRDAI's new proposal - limit may be imposed on premium increase
IRDAI: After GST relief on health insurance premium, IRDAI is now preparing to fix the limit of premium increase. The regulator may soon issue a consultation paper, so that the premium increases according to medical inflation. This can provide relief to policyholders, especially those whose policy becomes expensive later.
After relief from the health insurance premium under GST, one more decision can bring smile to policyholders. IRDAI can set the cap on the annual increase in health insurance premium. A consultation paper is expected soon on this. Pertinent guidelines will be provided in it.
The regulator is working on a plan to strike a balance between the stability of the health insurance sector and the affordability of policyholders. IRDAI is considering a proposal that will set the limit of health insurance premium increase in line with medical inflation. There are many concerns over the current state of health insurance pricing in the country.
Many health insurance policies are launched with low premiums. Later, a huge increase is made. This leaves policyholders with limited options as premiums are increasingly going out of their reach. Other citizens other than senior citizens are bearing the brunt of premium hikes. This is because at the beginning of the year, IRDAI had imposed a limit of 10 per cent increase in premiums for senior citizens in a year. Health insurance contributed 40 per cent to the premium of the general insurance industry in 2024-25.
IRDAI is concerned that young policyholders may have to bear the cost due to higher premiums in other sectors. If insurance companies reduce expenses, the premiums will decrease further. The rising cost of claims and healthcare delivery falls on the customers.
ICICI Lombard earns 30% of the total premium from health insurance products. New India Assurance is earning 50 per cent of the total premium from health insurance.
