Health insurance premium may rise with increase in hospitalisation cost

With lockdown lifted in most parts of the country and the number of Covid cases coming down from the peak of the second wave, people are rushing back to the hospital for non-covid treatments with insurance companies getting a flood of claims. Most of these claims are in the nature of elective procedures which were deferred due to the pandemic for fear of patients getting infected. According to statistics, during the lockdown period, non-life insurers saw close to a 40% dip in non-Covid-19 claims.

There is, however, a double whammy for insurers as apart from rising non-covid claims, the cost of treatment has also risen recently. The hospitals have also increased their tariffs, which could have an impact on the loss ratio of insurers leading to an increase in the premium rates.

“Claims in these three months surpassed what happened in the previous year. Now, things are settling down. We are seeing reduced hospitalisations and the severity of the disease has reduced all over the country. However, we have suddenly seen the cost of non-covid claims increasing, which means the hospitals have increased their general tariffs. We are seeing an increase in claims which means claims outgo is much higher than the premium level. It is a double whammy for insurers as they suffer because of Covid and now non-covid claims. Claims outgo will be a stress on insurance companies,” Shreeraj Deshpande, COO, Future Generali India Insurance told Money9.

Can a rise in the cost of claims lead to an increase in premium? “Insurance companies are collecting premiums from people and they are managers of funds. If that fund is not sufficient, insurance companies will have to raise their prices. So, this will lead to an increase in premium over a period of time. In corporate policies also, we are seeing an increase in premium.”

One of the causes of concern is the absence of any regulator for the healthcare sector. During the time of the peak of the second wave, it was seen how patients were overcharged in the absence of any standard procedure. “If you want the health insurance to grow you want the healthcare sector also to get regularised (regulated). The problem is we don’t have any regulation in the healthcare sector so it is unregulated whereas insurance companies are heavily regulated. There are different modes of grievance handling. The healthcare sector needs to have some rationalisation and uniformity in the pricing strategy of hospitals. So if it happens it would help insurance companies to serve the customers much better,” said Deshpande.