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

Will IRDAI's ceiling on senior citizens' health insurance premium hikes be effective?

Amid growing concerns over the steep rise in health insurance renewal premiums – 15 percent to even 100 percent in some cases, particularly for senior citizens – the Insurance Regulatory and Development Authority of India (IRDAI) decided to clamp down on such uncontrolled annual hikes.

The new IRDAI rules on elderly premiums

The regulator on January 30 directed insurance companies to ensure that the renewal premium increases do not exceed 10 percent in the case of senior citizen policies.

“As part of the ongoing monitoring of insurance products offered in the Indian insurance market, it is observed that there is a steep increase in premium rates under some of the health insurance products offered to senior citizens (aged 60 years and above),” the IRDAI said.

It directed non-life and health insurance companies not to revise senior citizen health insurance premiums by more than 10 percent per annum.

Also read: Health insurance premiums to get costlier: How policyholders can keep their premiums in check

Renewal premium hikes and withdrawals

However, it has left some room for insurers to increase the premiums beyond this limit, after ‘prior consultations’ with the IRDAI. They will also have to seek its approval before withdrawing health insurance products offered to senior citizens.

“Rules restricting withdrawal of products and forcing policyholders to switch to new, likely expensive ones are already in place, but are not being enforced by the IRDAI. Insurers can only withdraw products introduced on a pilot basis. So, it remains to be seen if things will change now. 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,” says consumer rights activist Jehangir Gai. If the policyholders want to switch to another insurer’s policy to migrate to another product offered by the same insurer, she has to do it out of her own volition and cannot be forced to do so.

Also, the directive ought to be implemented in spirit, say industry-watchers. Companies should not be allowed to alter the terms and conditions of the policy at renewal – for example, imposing sub-limits on specific diseases or on room rent per day. “The law on the subject is clear and well-settled by the Supreme Court - a mediclaim policy is renewable, so long as the insured pays the premium, and the insurer has no right to arbitrarily refuse renewal,” says Gai, citing the Biman Krishna Bose v/s United India Insurance Co. Ltd. [III (2001) CPJ 10 (SC)] case, where the Supreme Court has held that the renewal of an insurance policy means repetition of the original policy. “So, it would be extended for a further period on identical terms as the previous policy. In short, the old policy would stand revived and would continue for a further period of one year,” Gai says.

Also read: Insurers cannot discontinue a health insurance policy and force customers to buy a new one

New policy issuance to get more stringent?

This apart, there are concerns that insurance companies could raise the entry barriers for senior citizens looking to buy fresh policies. “Insurers will not be able to increase the premiums significantly for older policies now, but they could put in place more stringent underwriting requirements for senior citizens looking to buy new policies. The premiums could be higher, or they could introduce exclusions and waiting periods to reduce the coverage benefits. In fact, they may even find it difficult to buy the policies in the first place,” says Shilpa Arora, Chief Operating Officer, Insurance Samadhan, a platform that assists policyholders get their grievances against insurance companies resolved.