The Insurance Regulatory and Development Authority of India (IRDAI) has asked insurance companies not to increase health insurance premiums for senior citizens by more than 10 per cent per annum. This strategy is intended to safeguard seniors from significant premium hikes while assuring ongoing coverage.
Why the decision?
Clarifying on the move- Rakesh Goyal, Director, Probus says soaring premium rates have imposed a significant financial strain on seniors. Many experienced 20 to 30 percent rises every several years, making it impossible to maintain insurance. The IRDAI’s decision seeks to provide stability and affordability, avoiding unexpected hikes that disturbs overall financial planning.
While insurers must adjust prices to reflect inflation and medical expenses, these modifications should not disproportionately affect senior people, who are among the most vulnerable policyholders. The cap guarantees that any increases are predictable and controllable, minimizing anxiety for retirees on fixed incomes.
Impact on policyholders
Previously, price increases every few years caused in substantial hikes, leading some seniors to discontinue insurance. The ten percent restriction assures predictable, controllable increases, letting policyholders to keep coverage without abrupt financial burden.
Health insurance is critical for seniors, given the escalating expenses of hospitalization and medical care. The measure also encourages more people to keep their health insurance for longer periods of time, so increasing overall financial stability.
Impact on Insurers
While this circular protects the policyholders, insurers must consider budgetary restraints. Rising medical expenditures and claim rates may jeopardize their viability. Some insurers may rethink selling insurance for older persons, therefore lowering market alternatives. However, the cap allows insurers to gradually modify prices rather than instituting large increases, resulting in a more sustainable strategy.
Insurers may need to look for new methods to cut costs, such as promoting preventive care and negotiating better prices with healthcare providers. This transition might result in a more efficient and sustainable insurance environment.
