Delhi’s Air Quality Crisis May Push Health Insurance Premiums Up By 15%

Health insurance premiums in Delhi could soon become more expensive as insurers consider the impact of air pollution on policy pricing. According to media reports, "Industry executives have revealed discussions underway to impose a 10-15 per cent increase in premiums for new health insurance policies in Delhi following a surge in pollution-related claims in 2024.

If the Insurance Regulatory and Development Authority of India (Irdai) approves this proposal, it would be the first time in India that air pollution directly influences health insurance costs, potentially setting a trend for other polluted urban areas.

Air Pollution Worsens In Delhi NCR

Delhi’s air quality takes a severe hit every winter, driven by vehicle emissions, industrial pollution, construction dust, and smoke from crop burning in neighboring states. On November 18, the Air Quality Index (AQI) in the capital soared to "491 out of 500," a level classified as extreme and capable of affecting even healthy individuals. Should insurers gain approval to factor air pollution into pricing models, this could influence premium adjustments in other cities facing similar air quality challenges.

Surge In Pollution-Related Medical Cases

2024 brought unprecedented air pollution to Delhi, triggering a spike in hospital admissions for respiratory and cardiovascular issues like asthma and chronic obstructive pulmonary disease (COPD). Reports indicate that "respiratory-related hospitalizations jumped to nearly 18 per cent in the second half of 2024, up from five to six per cent in the first half." A joint study by the Boston Consulting Group and Medi Assist noted, "Health insurance claims tied to respiratory illnesses in Delhi increased by 8.3 per cent between the financial years 2023 and 2025," with the city also seeing the highest rise in healthcare costs nationwide during this period.

Insurers Push For Pollution-Based Pricing

Major insurance companies are advocating for air pollution to play a role in premium calculations. However, insurers must first present Irdai with concrete evidence linking toxic air to higher claim rates before such changes can take effect.

Rising Costs Of Health Insurance

Currently, a family health insurance policy in Delhi with coverage between Rs 8 lakh and Rs 33 lakh costs between Rs 8,000 and Rs 32,000 annually. A premium hike could make quality healthcare less affordable, particularly for vulnerable groups like senior citizens, children, and outdoor workers, who are most affected by pollution. Adding to the burden, the GST Council offered no relief in its December meeting, maintaining an "18 per cent GST on health and life insurance premiums."