Health premiums likely to get costlier from next fiscal
On an average, premiums could go up by 20 percent. Product prices can only be revised every three years
Health insurance premiums are likely to get costlier from FY18 with general insurers seeking a price revision from April 2017.
Both public sector as well as private sector general insurance companies have sought a premium hike of 18-20 percent in the health policies.
A senior public sector insurance executive said that they have written to IRDAI seeking a revision of premiums. They have sought a hike of 20 percent in premium. Group policies are renewed every year and premiums are revised upwards or downwards based on the claims experience in the particular group of customers.
As per current rules, premium of a health product cannot be changed for a period of three years after a product has been approved. Any change in price has to be approved by Insurance Regulatory and Development Authority (IRDAI) before it can be charged to customers. The regulation, as they stand now, stipulate that once pricing is changed, it could again be hiked only after three years.
As per the IRDAI Health Insurance Regulations 2016, premiums that have been revised after three years can be revised again after one year based on the claims experience.
The regulator had mandated that insurers can offer individual health products with a minimum tenure of one year and a maximum tenure of three years, provided that the premium remains unchanged for the tenure.
Health inflation is said to be in the range of 15-18 percent and this is linked to medical costs including room rent and price of devices. With this, health insurance claim costs have also gone up, both in cashless and reimbursement policies.
Premiums for health insurance products are worked out on the basis of the type of the policy, inclusions, network hospitals and location. Hospitals in the metro region have a higher claim payout due to higher room rent and allied costs of surgery and doctors.
For instance, a cover of Rs 1 crore with critical illnesses and other benefits covered for a 25-year-old male could cost Rs 45,000-Rs 50,000. If he is a smoker, the premiums go up since the risks of ailments associated with it is also higher.
Company officials also said that since the health sector does not have a regulator, hospitals also tend to overcharge customers with a health insurance policy and the insurer in turn is required to bear the costs.
While there is a call to have standardised rates across hospitals for similar procedures, this is yet to be implemented in the country.