India: IRDAI Weighs Cap on Health Insurance Premium Hikes
The Insurance Regulatory and Development Authority of India (IRDAI) is considering capping annual premium hikes on health insurance policies, a move aimed at striking a balance between affordability for policyholders and sustainability for insurers. The proposal is expected to be detailed in a consultation paper that IRDAI will release soon, inviting feedback from insurers, policyholders, and industry experts.
The regulator’s intervention comes amid rising concerns over health insurance pricing practices in India. Many policies are initially introduced with relatively low premiums, only to see steep hikes in later years. This trend has left policyholders—particularly younger consumers—with fewer affordable options.
Health insurance has become increasingly central to the general insurance industry, accounting for nearly 40% of overall premium collections in FY25. Insurers such as New India Assurance derive as much as 50% of their premium income from health insurance, while ICICI Lombard and Go Digit General Insurance rely on the segment for 30% and 14% of their premiums, respectively.
Earlier this year, IRDAI capped premium hikes for senior citizens at 10% annually, a measure welcomed by older policyholders who had long faced steep increases. However, insurers argue that the cap could shift the financial burden onto younger customers, who may face sharper hikes in other segments if portfolio-level adjustments are not addressed.
Industry observers also point out that insurers need to focus more on operational efficiency and cost reduction. Without such measures, the rising expenses of healthcare delivery and claims management are likely to continue pushing premiums higher.
The forthcoming consultation paper will outline IRDAI’s proposed framework and seek industry-wide participation in shaping the policy. Given the sector’s dependence on health insurance and the sharp rise in medical costs post-pandemic, the regulator’s decision could have significant implications for both insurers and policyholders. – News Agency