IRDAI has recently issued guidelines barring insurers from denying a health insurance for a series of ailments; this will push costs upwards
Health policy premiums may soon see a 10-15 percent increase with insurers being asked to cover additional ailments from October 1. This will be applicable to new policies filed and sold after this date.
The Insurance Regulatory and Development Authority of India (IRDAI) recently issued guidelines barring insurers from denying a health insurance policy for genetic disorders, mental health procedures, puberty and menopause-related illnesses, among others.
"Since there is a rise in the number of ailments, the cost will go up for the additional diseases to be covered. New policies that will be filed will see an immediate premium increase of at least 10-15 percent," said the head of underwriting at a health insurer.
As part of its regulations on standardising exclusions in health insurance, IRDAI listed out several instances where a health cover cannot be denied.
Take mental health care for instance. The Mental Healthcare Act 2017, which came into force from May 29, 2018, mandates every insurer to ensure medical insurance for mental health ailments.
As per the law, this would be similar to a regular health insurance available for physical illnesses. However, the number of products available are far and few in between.
IRDAI has also gone deeper and said that even if the use of a drug, stimulants or anti-depressant impacts intellectual facilities of an individual, they are entitled to get covered.
Due to a lack of adequate data, it is likely that these niche covers for mental health will cost at least 25 percent more than a standard health insurance policy.
From October 1 all policies filed cannot have the prohibited items in its exclusions. This will mean that all the new policies will be subject to additional premium.
Health insurance policies are priced depending on the coverage and the list of ailments included. Those like genetic disorders and mental health do not have adequate historical data for insurers to price products that include these ailments. Hence, insurers compensate by charging a higher premium.
In the next three to five years, depending on the claim incidents and payouts, there is also a possibility that the premiums could be revised downwards.
Unlike other insurance policies, which are usually considered push products, companies said a large number of policyholders are opting to buy medical policies voluntarily. This is due to the 18-19 percent rise in medical inflation.