Faced with health insurance premium hikes and claim disputes? Here’s what policyholders can do

Health Insurance

The post-COVID era has seen a sharp rise in health insurance premiums, driven largely by healthcare inflation in the country. In 2024, on an average, health insurance renewal premiums rose 10-15 percent, as per industry estimates.

According to a study conducted by Policybazaar.com, majority of its customers – 53 percent – saw renewal premium hikes of under 10 percent. However, close to 5 percent of its customers have seen premiums rising by over 30 percent, going up to even 200 percent in the last ten years (2015 to 2025).

Senior citizens, in particular, saw far steeper hikes of up to 100 percent. In fact, the Insurance Regulatory and Development Authority of India (IRDAI) in January 2025 took cognisance of the sharp spikes and directed insurers to limit annual renewal premium hikes to 10 percent for senior citizens.

In addition, there is considerable discontent with respect to health insurers’ claim settlement record as well. An Insurance Brokers’ Association of India (IBAI) report for 2022-23 on the industry’s claims paid record did not paint a pretty picture, with 11 out of 28 non-life insurers logging claims paid (by amount) ratio of less than 70 percent (claim amount paid out of total sum claimed by policyholders), with most standalone health insurance companies that cater largely to retail policyholders faring poorly on this count.

Also read: IRDAI’s 10% cap on senior citizens’ health insurance renewal premiums: Here’s what it means for policyholders

Read on to understand why renewal premiums are going up and what policyholders can do to mitigate the impact:

Why are policyholders across age-groups, but especially senior citizens, witnessing sharp surge in their renewal premiums?

The primary cause is the rising cost of healthcare in the country. Insurers and hospitals are often at loggerheads over treatment pricing, with the former calling for a healthcare regulator to rein in the “arbitrary” cost of treatment, particularly at corporate hospitals in metro cities.

“During COVID-19, most companies did not raise premiums due to prevalent health crisis then. Post this period, price correction has set in. Moreover, healthcare inflation is in the region of 12-15 percent, prompting insurers to increase premiums. However, most of our customers have not seen alarming rate of premium hikes,” says Amit Chhabra, Chief Business Officer, Policybazaar.com.

The IRDAI, too, has identified rising hospitalisation costs as one of the reasons for the steep premium hikes. “Unlike in case of Pradhan Mantri Jan Arogya Yojana (PMJAY) scheme where the hospitalisation expenses are negotiated centrally for package rates and are thus standardised across various hospitals, there is no such standardisation in case of health insurance products. This is leading to higher hospitalisation costs resulting in higher claims outgo under health insurance products offered by insurers,” the regulator said in January 2025.

What steps has the insurance regulator taken to address the rise in premium burden?

So far, it has only acted to contain the premium hikes for senior citizens by imposing a cap. “…the most vulnerable age group is the senior citizens having limited sources of income and this group is impacted the most when there is a steep increase in health insurance premium. The insurers shall not revise the premium for senior citizens by more than 10 percent per annum,” it said in a circular issued in January 2025.

It also prohibited insurers from withdrawing existing health insurance products issued to senior citizens and replacing them with newer, more expensive products without prior regulatory approvals. While the intent is positive, independent consumer activists do not see the move bringing any lasting relief to policyholders. “If they seek prior IRDAI approval and the regulator allows them to withdraw existing products, then the purpose of this exercise would be defeated. Insurance companies cannot, as per rules, compel the insured to migrate and opt for a different policy,” consumer rights activist Jehangir Gai told Moneycontrol. Also, the cap on renewal premium hikes could lead to insurers giving fresh senior citizen insurance applications a wide berth.

What concerns do policyholders have regarding their health insurers’ claim settlement record?

A survey conducted by social media portal and survey firm LocalCircles between June and December 2024 found that five in ten policyholders had experienced either partial or complete rejection of their claims.

The Insurance Ombudsman annual report for the year 2023-24 noted that 95 percent of health insurance complaints pertain to partial or complete rejection of claims.

Besides, according to IBAI officials, one of the reasons why the claims paid ratio in terms of amount settled tends to be lower is because insurers tend to pay out smaller claims without much ado, but take much longer to process larger claims, resulting in heartburn for customers.

Can policyholders take any measures at their end to cushion the premium hike impact?

If you are in the younger age-groups, you can consider to porting to a new health insurer who might be willing to offer better coverage terms at lower premiums. Alternatively, you can settle for certain options that your insurer offers to keep a tight lid on the renewal premiums.

You can opt for voluntary deductibles – a small sum that you agree to pay from your own pocket in case of a claim – that bring down premiums. For example, even a deductible of just Rs 15,000 can reduce your premiums by 15 percent.

“Opting for a limited network of hospitals can help save up to 15 percent on premiums, providing access to quality care at a lower cost,” says Chhabra. Insurers can afford to offer a discount in such cases as they would have negotiated better (read lower) rates for various procedures.

You can also consider paying premiums for two-three years at one go in return for a discount of 7.5-15 percent.

Also read: Health insurance claim rejected? Approach the insurance ombudsman for complaint resolution

Likewise, what is the recourse available to policyholders who feel their claims were unfairly rejected or partly-paid?

If you are unhappy with your insurance company’s decision on your claim, write to its grievance redressal officers (GRO) with your complaint. You can also file your grievance through IRDAI’s Bima Bharosa portal. If the insurer is unable to resolve the complaint to your satisfaction within 30 days or fails to respond, you can approach the insurance ombudsman offices in your district.

If the ombudsman feels that the issue can be resolved through mediation, an order will be passed within one month of having received the mutual written consent for such mediation. In other cases, the ombudsman will pass an ‘award’ within three months from the date of receipt of all the documents and other information from the aggrieved policyholder.

Finally, if all else fails, you can always approach the consumer courts if you are not satisfied with IRDAI’s grievance redressal policy.