Despite a steep increase in premium for health insurance policies for the last one year, there has not been any decline in renewals and the demand for new policies, according to experts.
According to industry estimates, the health cover premiums increased in the range of 10 to 15 per cent across various general and standalone health cover providers in the last one year.
“Increase in health cover premiums are to be understood in the context of rising medical inflation in the country and we don’t see any adverse impact on the renewal of cover on account of increase About 25 per cent of our premium comes from renewals,” Priya Deshmukh, Head – Health products, Operations and Services, ICICI Lombard told businessline.
According to Narendra Bharindwal, Vice President, Insurance Brokers Association of India there has been a higher increase in retail health cover policies compared to the same in the corporate group cover segment.
One of the reasons for frequent hike in premium is the practice of the bracketing of age groups in deciding the price of cover, he said adding: “The younger the person, the cheaper the cover.”
Post Covid 19, those who are in the age group of 35 to 45 have realised the importance of buying health cover and this is one of the drivers for demand for the new policies as well as continuation of them through renewals, according to Bharindwal.
Except in the case of senior citizens above 60 years, there is no upper cap on the increase in health cover premium by the insurers as per the regulation of the Insurance Regulatory and Development Authority of India (IRDAI).
While expressing concern over a general increase of premium, the regulator last month directed the insurers not to increase health insurance premiums beyond 10 percent per annum for senior citizens per annum.
While accepting that there was a `phenomenal hike’ in the premium in the case of some ailments like cancer, a CEO of a private general insurance company said the hike will not actually affect a policyholder as there is greater hike in medical inflation.
“There is a need to bridle the private hospitals to control medical inflation which automatically brings down the cost of the cover. We have data to show that there has been a 20 percent increase in the cost of corporate medical care providers,’” he said.
Disparity
There is a disparity in the pattern of hike in premium in the corporate group health cover polices and the retail policies, according to senior official of a public general insurer.
In order to bag corporate group cover policies in large numbers, some private insurers have resorting to reduction of price beyond reasonable level and are trying to make it up from the retail premium, he said adding that retail policy holders are now `subsidising’ the corporate group cover.
