Recently the Insurance Regulatory and Development Authority of India (IRDAI) made a few changes to health insurance rules. While they have been made keeping the customer in mind, they may drive up insurance premiums.
Let us look at some of the changes that have been made. Health insurance policies do not provide coverage from day 1 but only after a certain period, which is known as the waiting period. These waiting periods exist for pre-existing diseases like diabetes and so on. Earlier, health insurance policies could have a waiting period of up to four years for a pre-existing disease. Now, the maximum waiting period has been reduced to three years.
The reduction of waiting periods for pre-existing conditions from four to three years is expected to substantially impact health insurance premiums. "Shortening waiting periods might indeed impact premiums, as it could result in more immediate coverage and potentially higher claim payouts for insurers, which may lead to adjustments in premium rates," says Rakesh Goyal, Director, Probusinsurance.com, an insurance broker.
While the aim is to make health insurance more inclusive, these changes may come with a cost adjustment to maintain the viability of insurance offerings. Insurers will likely factor in the increased risk and liability associated with covering pre-existing conditions, resulting in a potential increase in premiums to mitigate the anticipated rise in claims.
Another change that has been announced regarding senior citizens where regulatory body has said that insurers need to sell insurance to all age groups. Earlier, there was a rule they had insurance policies should provide an entry age of at least 65 years, however there were several policies which were providing coverage to those aged 65 years and above. From April 1, the number 65 years has been removed, so nothing much changes for senior citizens. It is just that insurance companies can now design products specially meant for senior citizens.
"The removal of the age limit of 65 by IRDAI may increase health insurance premiums for senior citizens. Insurers must now design products for all age groups, including senior citizens at risk, and especially for senior citizens with pre-existing conditions the premiums might be on the higher side," says Rahul M. Mishra, Co-founder and Director, Policy Ensure, an insurance broker.
The general principle behind this is that older people are more likely to seek insurance due to age-related health problems. To compensate for the increased risk, insurers may charge higher premiums for senior health plans. Though not having an age limit gives insurers more flexibility, it exposes them to potentially higher claims for old people. Therefore, premiums for seniors may increase as insurance companies adjust their prices to account for the added risk of coverage for this demographic.
The extent of the rise in premiums will depend on various factors such as the insurer's risk assessment, market competition, and regulatory guidelines.
"While there are no specific numbers, we can anticipate a moderate rise in premiums. The industry trends suggest a potential increase of about 10-15 per cent for senior citizens' health insurance premiums due to the new IRDAI regulations. This is to cover the higher risk associated with insuring older age groups," says Mishra.
So, while news is awaited, health insurance premiums are likely to go up, especially for senior citizens.
