While the COVID-19 pandemic has created awareness among consumers about the need to have a health insurance cover, on the other hand, amid inflationary pressures, insurers who have hiked premiums have been able to buy policies for a section of people. can act as a hindrance.
“It is true that many health insurers have increased their premiums by 10-15% in certain products. The increase in premium is due to higher claims received by the insurers in the last two years. Usually, insurance companies increase the premium when there is an increase in the loss ratio of their health products,” said Rakesh Goyal, director, Probus Insurance Broker, a digital insurance broker.
In the last financial year (2021-22), insurers have paid COVID-19-related claims worth ₹25,000 crore as compared to around ₹8,000 in the financial year 2020-2021. With such an explosion in claims, premiums had to be increased as health care costs increased and insurance companies stayed away from raising premiums due to the pandemic, he said.
According to a report by Motilal Oswal Financial Services, among Asian countries, India saw the highest medical inflation rate at 14% in 2021, followed by China (12%), Indonesia (10%), Vietnam (10%), and the Philippines. (9%).
The high loss ratio coupled with medical inflation has prompted insurers to raise the prices of both retail and group health plans. It added that while new customers have been hit by higher prices, existing customers have been hit by the double whammy of age-related hike and price hike.
According to Motilal Oswal, for a health insurance plan offered by a public sector insurer with a sum insured of ₹68 lakh, covering an adult who is 68 years of age, the premium increased to ₹59,640 in FY12, which 40,195 in FY 2011.
In the same company, for an adult of 30 years of age, a health policy with a sum insured of Rs 2 lakh only marginally increased to 4,559 in FY22 from 4,341 in FY2015.
Similarly, in a private insurer, a health plan for a person aged 42 years, covering two adults and two children with a sum insured of ₹8 lakh, increased the premium to ₹28,977 in FY22, according to the report. 27,598 in FY15, which was Rs.
Star Health and Allied Insurance managing director S. Prakash pointed out that at the end of the last financial year, his company had increased premiums on some products by an average of 9-10%. “We have taken the amendment after more than 3.5 years. There is medical inflation, but price revision alone cannot be the solution to medical inflation. In proportion to medical inflation, we cannot continue to increase premiums. Instead, we need to bring in some efficiency in claims management and serving customers and we are working towards that.”
Mr Prakash said retail health insurance penetration was less than 10%.
“Health insurance is a big numbers game. As more people are covered, the premium hike will not be frequent,” he said.
Mr. Balasubramaniam, a retired HR professional, said his son had recently renewed a policy covering the parents and the premium had gone up from ₹30,000 to ₹34,000. He said that if the hike is being done continuously, it will make it ineffective.
Consumer activist T. Sadagopan said the high premium was only one part of the issue and alleged that the other part is related to inflated medical bills by some hospitals and that many claims have been rejected on various grounds.
Saurabh Bhalerao, Associate Director, BFSI Research, Care Age Ratings, said the health insurance segment premium grew by 27.4% to ₹8,695.2 crore in April 2021 from ₹6,824 crore in April 2021. Dear, some people may go for lower cover to tackle inflation even though they maintain some health insurance coverage,” he said.
Naval Goel, Founder and CEO, PolicyX.com, an online insurance marketplace, said the increase in health insurance premiums was not significant and added that customers should expect premiums to increase every year due to inflation and healthcare costs.
Mr Goyal of Probus explained that if one insurer has increased premiums and others are offering similar coverage at lower premiums, customers can consider porting the policy.
“Customers should go for the optimum mix of Base Cover and Super Top-up, instead of continuously increasing the Sum Insured on their Base Cover. This may help in reducing the premium cost by 20-25%, but adequate precautions have to be taken,” he said.