Some health insurance policies costlier 50 per cent or more in last one year: LocalCircles

According to a survey conducted by India’s leading community platform and citizen pulse aggregator, LocalCircles, 21 per cent respondents have reported that their health insurance premiums have risen by more than 50 per cent in last one year. While, it was also revealed that 52 per cent respondents reported health insurance premium hike of 25 per cent in last one year. The survey was conducted among 11,000 people in 324 districts of the nation. According to insurance industry experts, insurance companies are gearing up to hike premiums by up to 25 per cent this year as well despite such a substantial hike last  year. According to them, insurers are gearing up to send a fresh proposal to insurance regulator IRDAI to get approval for further premium hike of heath insurance policies.

Leading health insurance provider, HDFC Ergo, has said it is gearing up to increase health insurance premiums by an average of 7.5 to 12.5 percent. While, Acko General Insurance Company has said that health insurance premiums could increase by 10 to 15 percent.

Wealth management service provider, Midas Finserve’s MD Rajesh Bansal said insurers could hike health insurance premiums by 20 to 25 percent going forward from here.

So, why is health insurance becoming costlier and costlier in the country?

Let’s see prominent reasons why insurers have hiked health insurance premiums in the past and why there is a high probability for further hike this year:

1. No cap on treatment cost:

Currently, there is no cap levied on illness treatment cost that patients have to undergo in any hospitals in the country. Hospitals can charge any amount for patients’ treatment. And medical centres in India have taken full advantage of this. Patients are being burdened with inflated medical bills. Those who have taken health coverage, their insurers have to pay high treatment costs. As a result, not only patients, but also, insurance companies have to suffer from inflated medical bills. This has increased burden on insurers which have faced high claim amounts by policholders . So, insurance companies have to hike premiums to compensate for high amounts of claim.

2.    Recent changes by IRDAI:

IRDAI, has recently made some changes in the rules and regulations that govern the health insurance industry of the country. According to insurance industry experts, due to these recent changes, the insurance companies are left with no option other than to further hike premiums from here. Lets see  what changes were made by the regulator:

a.  Moratorium Hike:

IRDAI has made it mandatory for insurers to reduce the moratorium to five years from eight years earlier. Moratorium means period till the end of which if the policy was kept active, then, after the end of which the insurer can’t deny any claims filed for coverage of any types of illnesses unless and until that malady was a part of exclusion list of that insurance company. Reduction in moratorium can lead to  higher number of claims that would be filed by policyholders resulting in high cost on part of the insurer forcing it to hike premium as a cost compensation measure.

b.  3 years pre-existing disease period:

According to IRDAI’s rules and regulations, earlier, the expiry of non-coverage of pre-existing disease was four years. Now, the insurance regulator has reduced it to three years. This would also result in more number of claims being filed against the insurer, consequently amplifying the costs incurred.  As a result, insurance companies would be left with no choice other than to hike premium to compensate for higher expenses.

c. Cashless treatment:

Earlier, the insurance companies were allowed to provide  cashless  treatment feature  only in case of those patients who had undergone medication in empaneled hospitals.  But now, the insurance regulator has made it mandatory for the insurers to provide cashless treatment feature undergone even in those hospitals which are not empanelled. IRDAI’s this step too is expected to increase burden on insurers thereby forcing the companies to hike premiums as cost optimising measure.