May 02,204
Following recent regulatory modifications by the Insurance Regulatory and Development Authority of India (IRDAI), the insurance sector is poised for adjustments that could impact policy premiums. The revised guidelines include a reduction in waiting periods, now capped at a maximum of three years, down from the previous four years.
This alteration, mandated by IRDAI, is anticipated to prompt most insurers to consider adjustments in premiums across various policies.
Some insurance companies, including HDFC ERGO, have already communicated adjustments in premium rates to their customers.
HDFC ERGO said they will have to increase premium rates by an average of 7.5% to 12.5%.
“We have an obligation to ensure long-term financial stability of our products. After a careful assessment of product performance in recent years and taking into account both the current and projected medical costs, we are constrained to undertake an increase in premium rates. Do note the actual rate increase could vary basis the age and location of insured members,” the insurer said in a mail sent to its customers.
The company said that premium increase may be a bit concerning for policyholders but such adjustments are made only when absolutely necessary and with communication to IRDAI.
“This adjustment in rates may impact the renewal premium and policyholders will receive timely communication closer to renewal due date,” HDFC Ergo said.
“Insurers can increase the cost in range of 10% to 15%,” said Rupinderjit Singh, Vice President – Retail Health, ACKO General Insurance.
The recent regulatory changes also include the elimination of age restrictions on health insurance policies by IRDAI, removing the age limit of 65 years for individuals.
Singh of ACKO General Insurance explained that premium adjustments often correlate with age due to heightened health risks associated with aging.
“On average, premiums tend to increase by approximately 10% to 20% for every five-year age bracket, reflecting insurers’ experiences and the challenge of increasing health inflation, which stands at around 15% in India,” he told CNBC-TV18.com.
Data from online insurance broker PolicyBazaar reveals a surge in the average ticket size of retail health insurance in India.
Over six years, from FY19 to FY24, the average ticket size has increased by nearly 48%, reaching ₹26,533, according to a Business Standard report.
Source: NCBCTV18