Health Insurance Premium Up At Renewal Despite No Claim? Here’s Why

Policyholders may be surprised to see their premium jump at renewal, particularly when they have not made a claim during the year.

But staying claim-free does not always mean that the premium will remain the same. The amount charged at renewal can change for several reasons, including the policyholder’s age, rising medical costs and the way the insurer reviews the pricing of the product.

Insurers also look at the overall claims experience of a health insurance product while deciding premiums. So, even when an individual policyholder has not made a claim, changes made at the product or portfolio level may still result in a higher premium at renewal.

Why Premiums Can Rise Even Without A Claim

Age is an important factor in health insurance pricing. Premiums may increase when a policyholder moves into a higher age band, as the likelihood of illness and hospitalisation generally rises with age.

“The premiums can rise according to the premium rating approach behind the product as designed by the insurance company. One of the factors is the demographic age band,” says Hari Radhakrishnan, expert, Insurance Brokers Association of India (IBAI).

The insurer may also re-price a product periodically to account for emerging medical inflation and disease trends. This means that an increase in renewal premium can occur even when an individual policyholder has not filed a claim.

Claims experience can also affect pricing, but this is assessed at the portfolio level rather than by simply penalising one policyholder for making a claim.

“Individual experience-based loading cannot be done as per Insurance Regulatory Development Authority (Irda) regulations. Hence, insurers do portfolio-based loadings to adjust for overall claims experience of the product,” says Radhakrishnan.

Such loading may vary across age bands or geographies depending on claim incidence and trends, based on actuarial assessment. Since the loading is applied at the product level, it can reflect in renewal pricing for policyholders covered under that product.

How Policyholders Can Manage Higher Premiums

Those worried about steep annual increases can consider buying a multi-year policy for three years, where available. The premium remains locked for the tenure of the policy, helping the policyholder avoid annual changes during that period.

Another option is to avoid increasing the base sum insured every time more cover is needed. Instead, a policyholder can consider adding a top-up or super top-up policy to supplement the existing cover.

Opting for a compulsory deductible can also help bring down the premium. However, the policyholder should be comfortable bearing the agreed deductible amount before the insurer’s liability begins.

Policyholders can also review optional add-ons and retain only those that are useful to them.

Porting is another possibility, but it should not be done merely to save on premium. Radhakrishnan advises considering a switch when the existing insurer’s service or product features are inferior. Policyholders should compare benefits, exclusions, waiting periods and service before moving to another insurer.

FAQs

1. Why can health insurance premiums rise even if no claim was made?

Premiums may increase due to age, medical inflation, disease trends and insurer-wide repricing based on the product’s overall claims experience.

2. Can an insurer increase my premium because I made a claim?

Individual claim-based loading is not allowed. Insurers may instead revise premiums at the product or portfolio level based on overall claims experience.

3. How can policyholders manage a steep premium increase?

They can consider multi-year policies, top-ups or super top-ups, higher deductibles, and reviewing add-ons before deciding whether to port.