Irdai Caps Hike On Health Insurance Premium Renewal For Senior Citizens At 10%

With renewal premiums on health insurance policies skyrocketing, ranging from 15 per cent to even 100 per cent in some cases, senior citizens are increasingly facing a disadvantage.

But now the Insurance Regulatory and Development Authority of India (Irdai) has issued a directive, dated January 30, 2023, directing insurers to limit the hike on renewal premiums for senior citizens at 10 per cent annually.

What New Irdai Rule Means

The regulator came up with this decision in response to increasing concerns of affordability from the elderly policyholders.

Irdai stated in its directive: “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). In this context, 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 premiums. This matter has been engaging the attention of Irdai and is a regulatory concern."

Now, insurers need to get prior approval from Irdai if they want to increase the premium above this cap. In addition, they also need to seek regulatory clearance before closing all health insurance products.

Renewal Terms Need To Remain

Fair While this move goes a long way in making old-age health insurance more affordable, industry experts believe that insurers must not compensate by changing the renewal terms of coverages.

Some also warn that insurers might attempt to introduce unfavourable changes, such as imposing new sub-limits on treatments or capping room rent per day, effectively reducing the benefits of the policy without technically increasing the premium beyond the prescribed limit. If such practices go unchecked, the intent behind Irdai’s intervention could be diluted, they say.

Switching Policies Must Be Voluntary

The regulator has further clarified that policyholders cannot be compelled to move to another insurer or migrate to a product under the same insurer. It must be purely and simply the decision of the policyholder.

This directive by Irdai is also a welcome step to ensure that insurers do not jack up the premiums for elderly policyholders and to keep health insurance affordable for the senior citizens.

Strict monitoring would, however, be required to ensure that insurers do not find a loophole to bypass this rule by modifying terms in such a manner that the benefits get reduced. The senior citizens along with their families must be alert and must examine the renewal terms so that they are not caught off guard with some hidden changes.