IRDAI caps elders’ health cover spike

The Insurance Regulatory and Development Authority of India (IRDAI) on Thursday directed general and health insurers offering indemnity-based individual health insurance products to senior citizens against raising the premium by more than 10% a year.

“The insurers shall not revise the premium for senior citizens by more than 10% per annum,” it said in a circular that confirmed the concerns of policyholders about spiralling health cover premiums.

“As part of the ongoing monitoring of insurance products... it is observed there has been steep increase in premium rates under some of the health insurance products offered to senior citizens (aged 60 years and above),” the regulator said. Senior citizens are most vulnerable age group with limited sources of income, and are worst hit when health cover costs rise. Seeking to further rein in insurers, the IRDAI said they can neither withdraw such products for senior citizens without prior consultations with it.

The diktat comes ahead of the Union Budget and after the GST Council decided to deliberate more on a possible cut in the 18% Goods and Services Tax levy on health policies.

The premium rate is primarily based on the estimated claims outgo and the expenses, including the cost of acquiring and servicing policies. The claims outgo largely depends on amounts charged by hospitals for various treatments. The hospitalisation expenses are not negotiated centrally and not standardised across hospitals. It translates into higher hospitalisation costs and higher claims outgo under the health cover products offered by insurers, IRDAI member (non life) Deepak Sood noted in the circular.

Insurers have been attributing the rising premia to a surge in healthcare costs. Medical inflation is very high and insurance players are seeing this consistently across the board “without any let up so, we will have to make price corrections when necessary,” the head of a standalone health insurer had said in October.

Advising insurers to give “wide publicity of the various measures [it had initiated], including the latest decision,” the IRDAI asked them to take steps for common empanelment of hospitals and negotiate treatment package rates.

A close watch will be kept on indemnity-based individual health insurance products offered to senior citizens, it warned.